Executives at Al Barakah, the property development company whose chief executive is sought by Dubai Police over allegedly bounced cheques worth more than Dh40 million (US$10.8m), have invited investors to drop all claims against the firm in return for shares in a new holding company. The company sent the proposal to every investor and took out advertisements in newspapers Sunday inviting them to submit claims to Horwath MAK, an accountancy firm based in Dubai. Tariq Minhaj, a spokesman for Al Barakah, said the company representing the investors now planned to build long-delayed projects in partnership with a UK-based construction company. But one investor, Maha Abdulwahab, said: "This new company will be based in the British Virgin Islands. What is wrong with the UAE free zones?" "They are stripping you from all the rights you have, the post-dated cheques, the legal actions. And they want us to agree with only the verbal approval of the Ajman regulator?" Hundreds of investors, mostly foreigners, have been allegedly left out of pocket after putting money down on off-plan properties that have yet to be built. Many say they were lured by a guaranteed buy-back scheme in which the company pledged to reacquire its properties a few months after sale, with a 50 per cent profit on the downpayment. Some investors said they were given post-dated cheques as a guarantee, while others received only memorandums of understanding. When the cheques started bouncing last year, the chief executive, Imran Khan, vanished. Al Barakah has about a dozen projects on the drawing board in Ajman and Dubai. Mustapha Rajabali, a UK-based financial consultant who is also an investor in Al Barakah projects, said he was working closely with Mr Minhaj and had found a constructor from the UK willing to build all the projects. He declined to name the company, but said it would provide the much-needed finance to begin the various projects. "The reason why construction did not happen is because of the lack of funds," Mr Rajabali said. "The funds will now come from a line of credit that the construction company that I have negotiated the deal with have from their own bankers." The construction company would recoup its costs once the projects had been completed, Mr Rajabali said. "My proposal to the creditors is to become a joint equity holder with the proviso that they allow me a clean and clear hand at bringing this project to a fruition. They will have the first right to the funds. I will take on the administrative control," he said. In the written proposal to investors, Al Barakah suggested creating a holding company in a UAE free zone and a company representing the creditors that would be in the British Virgin Islands. "The UAE law does not enable to create companies with more than 10 shareholders," Mr Minhaj said.. Investors could trade their claims against shares in the company and get refunded after 30 months, the letter said. Investors would hold 70 per cent of the company but no voting rights, while Mr Rajabali's future company would hold 30 per cent and all the voting rights. If two thirds of the investors consent in principle, Mr Rajabali said he would create the company and then seal the deal with the constructor. In return, investors would need to drop their case against Mr Khan. "Some of the post-dated cheque holders have commenced legal procedures," Mr Rajabali said. "I am not interested in embroiling myself in the legal issues of the past. I am interested in a clean slate with a focused view to complete the projects." According to the cheques department of the Rashidia police station in Dubai, 16 cases had been filed against Imran Khan by February this year for allegedly bounced cheques amounting to more than Dh40m. Investors remain sceptical. "They are going to pay back the investors only after three years. It sounds like they are trying to buy time," said one investor named Sheraz. Arshad Hussain, who holds a post-dated cheque from Mr Khan, said: "I am very much pessimistic because they don't give us any option. You return your cheque and they give you a stake in the company, otherwise you get nothing. The document says nothing about the finance of the construction. And Mr Rajabali will have all the voting rights and we nothing! Are they out of their minds?" Kumar Mehta, who filed a case for a cheque worth Dh7.74m and has taken legal action, said he wanted to see all the names of the people involved in the restructuring. "If a UK constructing company has so much money why would they need to put it into building projects in Ajman?" he said. "Why don't they just sell the plots of land?" ngillet@thenational.ae
