Dubai's financial watchdog links up with US agency to combat fraud

The Dubai Financial Services Authority (DFSA) has signed a cooperation agreement with a US government agency designed to combat financial wrongdoing in the emirate's financial free zone and overseas.

The US Public Company Accounting Oversight Board (PCAOB) entered an agreement with the DFSA to exchange confidential information to better oversee company auditors operating in the US and the Dubai International Financial Centre (DIFC).

The US organisation was created by the Sarbanes-Oxley Act following corporate accounting scandals involving companies such as Enron and WorldCom.

The DFSA has also taken a firm line against UAE companies that have suffered from corporate fraud, such as fining Damas International a total of US$700,000 (Dh2.5 million) in 2010 after the discovery of property deals and withdrawals of cash and gold that were conducted without shareholder approval.

The latest agreement adds another link between regulators in both countries that are intended to stamp out malpractice, said Paul Koster, the DFSA chief executive.

"The ability of audit regulators to cooperate and share information is critical in the current environment when the need to protect investors and the public interest has never been more important," he said.

The agreement allows the two regulators to exchange confidential information, helping to uphold the 2010 Dodd-Frank Wall Street Reform, intended to rein in the US financial sector after the excesses that brought about the collapse of Lehman Brothers.

The DFSA has worked in concert with a number of international regulators to strengthen oversight of deals conducted from Dubai, as the emirate finds itself host to greater numbers of businessmen accused of financial irregularities.

In September, the regulator fined two Indian businessmen, Arun and Satish Panchariya, a total of $24,000 for failing to declare that they were targets of an investigation by India's stock market regulator at the height of a scandal that forced the resignation of the president of a DIFC bank.

"The PCAOB has long considered the DFSA's approach to cross-border regulation to be a model of cooperation, which furthers the goal of protecting investors," said Rhonda Schnare, the director of international affairs at the US agency.

ghunter@thenational.ae