The forensic audit committee formed by the Emirates Securities and Commodities Authority (ESCA) to investigate struggling Dubai firm Drake & Scull International (DSI) is part of the company’s restructuring plan, it said in a statement posted to the Dubai Financial Market (DFM).
The management “welcomes this decision and reaffirms its continued commitment to fully cooperate in this regard and in any matter that benefits the company and its shareholders,” the company said.
The ESCA’s audit committee is investigating the reasons behind DSI’s floundering financial position and accumulated losses, which totalled $1.23 billion (AED4.5 billion) in net loss in 2018, having surged from a loss of $321 million (AED1.18bn) in 2017.
The company claimed the losses include those that were sustained in 2009-16, but which were left unreported by previous management.
DSI’s announcement of its 2018 results is also part of its commitment towards shareholders, investors and financial markets, as well as transparency, responsibility and governance in line with the restructuring plan which was approved in the general assembly meeting held on April 8 this year.
A committee has also been formed with the banks to examine the company’s obligations and find solutions that support the continuity of its operations and portfolio of investments, it said.
“The company thanks ESCA for its efforts and support for the restructuring plan which has already started,” it said.
Examine decisions
The audit committee will examine both past and present decisions taken by DSI’s board of directors, management and external auditors.
It will also inspect financial reports shared by the company and all information submitted to shareholders in the period before and after 2017, the year Tabarak Investment joined the board as a strategic partner, investing $136m (AED500m) as part of a restructuring.
In April, DSI terminated its group CEO Tawfiq Abu Soud after just four months at the company, as well as two other senior executives amid widening losses and falling revenue.
It said that its board of directors had approved the termination of Abu Soud, as well as group CFO Khaled Jarrar and chief learning officer Mohamed Ghanem.
“The day to day business of the company will be managed by executive committee which will consist of 3 executive managers till the appointment of a new GCEO and a new GCFO,” the company said.
DSI appointed Abu Soud on January 23, when he assumed the responsibility of leading DSI’s operations from his predecessor, Yousef Al Mulla. Abu Soud was managing director for DSI’s MEP and Water and Power subsidiaries for 14 years between 1997 and 2014.
In July 2018, an internal probe by DSI into alleged violations by the previous management concluded that former Drake and Scull CEO Khaldoun Al Tabari and his daughter owe the firm as much as $272.3m (AED1bn), an amount that exceeds the market value of the company whose shares plunged about 70 percent that year – the most among companies listed in Dubai.
Al Tabari had denied the allegations and vowed to initiate libel claims against “unfounded news” made against him.
He had stepped down as CEO in October 2016, sold his stake in the company and resigned as a board member.
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