A senior executive at BinHendi Enterprises, one of the Gulf's largest luxury goods retailers, has been accused of embezzling nearly Dh28 million (US$7.6m) from at least 28 clients. MB, a 61-year-old Emirati, and MZ, the administration manager of Federal Exchange, BinHendi's money exchange and transfer company, appeared in the Dubai Misdemeanours Court yesterday charged with breach of trust.
Public prosecutors said that MB and MZ allegedly "committed the misdemeanour of breach of trust". If either is convicted, the maximum sentence is three years in prison. Both defendants denied the charges. MB is out on bail, and MZ, a 33-year-old Algerian, has been remanded in custody. The case has been adjourned until May 3, giving the defendants' lawyers four weeks to prepare their case. BinHendi Enterprises, which has a portfolio of more than 60 brands and 100 stores across the country including Hugo Boss and Cafe Japengo, was established in Dubai more than 30 years ago. The family-run conglomerate also owns City 7 TV, based in Dubai, and Federal Exchange and BinHendi Construction.
Complaints were filed against MB and MZ on February 26 last year at the Naif police station. The 28 or more plaintiffs said that overseas remittances totalling Dh27,681,030 through the company did not reach their intended recipients. It is not clear whether the plaintiffs, who are of various nationalities, filed civil claims as well. Public prosecutors claimed that financial irregularities appeared at the money exchange after MZ started working as its administrative manager.
Prosecutors presented the court with financial records. The alleged embezzlement took place for an undisclosed period before February 26 last year. Prosecutors said they had been investigating MB and MZ since March 11 last year. Prosecutors also asked the court to take all steps necessary to ensure the return of the missing money. Last year was a tough one for luxury retailers in the UAE. In the first quarter of last year, BinHendi's luxury sales fell by 30 per cent from the same period a year earlier. Sales at its watch division last year fell by at least 45 per cent from the year before.
Last May, BinHendi said it was closing its two-storey branded wing in Deira City Centre. The 26-store mini mall, called BinHendi Avenue, was launched in 2005. But last year, sales at the 70,000-square-foot centre slowed as affluent shoppers shifted to newer, more upmarket shopping centres such as Dubai Mall. Luxury sales worldwide declined last year by about 8 per cent to ?153 billion (Dh750.48bn) as shoppers postponed unnecessary purchases, according to the business consultancy Bain and Company.
Against this background, BinHendi Enterprises introduced more-affordable products. BinHendi's food franchise, Cafe Japengo, however, was in expansion mode last year, with plans to franchise the home-grown brand across the GCC, and later in the US and Far East. In November 2008, BinHendi's television station, City 7, was under financial pressure. The management said it would need to undergo cutbacks, but would not shut down. Earlier that month, some of the 120 station staff had confronted managers after not being paid on time, a source familiar with the matter said. The confrontation fuelled rumours that the station would shut down.
BinHendi bought the TV station more than four years ago with the aim of creating an English-language news channel that would appeal to expatriates and Emiratis. It has since expanded its line-up beyond news to include children's, cooking, motoring and sports programmes. amustafa@thenational.ae aligaya@thenational.ae