Tawhid, Tawfique and Tamjid Abdullah, the second-generation brothers who run family-owned jewellery group Damas, have been fined for withdrawing unauthorised funds and forced to resign from the board of the company by the Dubai Financial Services Authority (DFSA).
The DFSA announced yesterday that it was imposing the sanctions on the brothers "for their failure to exercise appropriate corporate governance over the company and its subsidiaries," when they removed AED365 million ($99 million) and 1.9 million grams of gold for personal use.
The brothers will be forced to repay the "unauthorised transactions" and have been banned from serving on the company board for 10 years. This is alongside the forced resignation of the entire board by the DFSA, "to protect the company, its assets and its shareholders."
Paul Koster, the chief executive of the DFSA, said: "This action will remind the directors of public companies that they owe a duty to the company and their shareholders, which supersedes any duty they have to their private interests."
Damas said that it intends to comply fully with the sanctions. A company spokesperson said: "Damas International Limited continues to work closely with the Dubai Financial Services Authority to ensure that the company upholds the highest standards of corporate governance.
"The company undertakes the learnings from these historical incidents, and wishes to assure its shareholders and employees that the company is currently focused on ensuring its long-term stability and growth, based on a sound, strategic business plan."
The DFSA began its investigations into the Abdullah brothers and Damas in October when Tawhid Abdullah resigned as the chief executive and managing director for initially disclosing unauthorised transactions of $165 million. (Click here to read our coverage of the story) The sanctions were the result of this investigation.
Damas has its origins with the brothers' grandfather, who first began making jewellery in Syria in the 1900s. Their father moved the family business to Dubai in the 1950s and Tawhid, Tawfique and Tamjid became involved in the 1970s when the group began to expand from wholesale into retail stores and own brand jewellery.
The brothers still own more than 50% of the company that operates in 18 countries and recorded revenues for the period of January 2008-March 2009 of $1.6 billion.
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