UAE fund in tug of war over Georgia hotel at center of fraud probe

The Sheraton Metechi Palace Hotel in Tbilisi is part of a complex web of legal cases connected to Khater Massaad, the former chief executive of Rakia. (Courtesy of Sheraton Metechi Palace)
Updated 04 September 2017
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UAE fund in tug of war over Georgia hotel at center of fraud probe

LONDON: The Ras Al-Khaimah Investment Authority (Rakia) has been drawn into a legal tug of war over a hotel in Georgia that is at the center of a $1.5 billion international fraud probe.
The Sheraton Metechi Palace Hotel in Tbilisi is part of a complex web of legal cases connected to Khater Massaad, the former chief executive of Rakia who is currently in Saudi Arabia.
Now the authority has been hit with a claim in the Georgian courts from an Austrian group called VI2 Partners, seeking the return of millions of dollars it claims it is owed following the aborted sale of the hotel five years ago. A VI2 Partners spokesman declined to comment.
The Austrian company won an initial judgment against Rakia in a Georgia court in July which Rakia is now appealing.
“We would expect to prevail on appeal,” said Jamie Buchanan, a spokesman for the RAK Government, in an exclusive interview in London.
Buchanan said there was a contractual clause in the original deal that determined in the event of a dispute, that the argument would be referred to arbitration.
“Further, there was a non-assignment clause, preventing assignment to any third party, such as VI2,” he said.
“Three individuals together with a number of companies paid us $20 million back in 2012 in part payment to buy the hotel and they would like their money back. The problem is who is “they?”
The latest row to emerge from the labyrinthine legal proceedings emanating from the UAE’s northernmost emirate relates to a failed deal to sell the Sheraton Metechi Palace Hotel in Tbilisi in 2011.
In a case launched last year, Rakia claimed more than $2.6 million in damages from Farhad Azima, an Iranian-American businessman who features in the Panama Papers.
The claim focused on his alleged role in brokering an aborted attempt to sell the hotel for $62.5 million to a company called Eurasia Hotel Holdings.
Rakia alleges in its claim dated Sept. 30, 2016 that Massaad agreed with Azima to receive a commission in return for referring potential third-party purchasers for the Tbilisi hotel.
It was agreed he would get 5 percent of the sale price, Rakia claimed.
It also claimed that Azima had without its prior knowledge agreed a side deal with the planned purchaser to receive a separate 10 percent interest in the hotel on completion of the sale — a stake that would be worth $6.25 million based on its intended sale price.
That complaint was met with a counter-claim from Azima alleging he had been unfairly blamed for the collapse of the deal and more significantly that his computers had been hacked.
This case and others arise from the legal pursuit by Rakia of its former chief executive Khater Massaad who for many years was the face of both the investment authority of the emirate and its largest publicly traded company — the tile maker RAK Ceramics.
Rakia accuses the dual Swiss-Lebanese national of being the central character in a series of fraudulent transactions bankrolled by funds from the investment agency. Massaad denies the claims.
It has spent millions of dollars in legal fees chasing individuals connected to the businessman, who it claimed were implicated in a series of fraudulent transactions.
Massaad was detained at Jeddah airport last September on an arrest warrant issued from the UAE that related to his conviction, in his absence, in Ras Al-Khaimah on charges linked to a wider fraud probe. So far authorities in the UAE have been unable to extradite him to the country.


OPEC rift deepens as Iran walks out of key meeting in Vienna

Updated 21 June 2018
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OPEC rift deepens as Iran walks out of key meeting in Vienna

VIENNA: Iran's oil minister walked out of a key meeting with OPEC peers on Thursday, as a rift deepened with regional rival Saudi over its push to ramp up the cartel's oil output.
"I do not think we can reach an agreement," Bijan Namdar Zanganeh told reporters at his Vienna hotel after storming out of talks with a group of ministers on the eve of a crucial OPEC meet.
The talks were meant to lay the groundwork for Friday's gathering of the 14-nation Organization of Petroleum Exporting Countries (OPEC), when the cartel will discuss easing a supply-cut deal with 10 partner countries that has cleared a global oil supply glut and pushed crude prices to multi-year highs.
The output curbs have been in place since January 2017 but Saudi Arabia, backed by non-member Russia, is now pushing to raise production again in order to meet growing demand in the second half of 2018.
But the proposal has run into resistance from Iran, Iraq and Venezuela, who would struggle to immediately raise output and fear losing market share and revenues if other countries open the spigots.
Iran is particularly vocal about its objections as it braces for the impact of fresh US sanctions on its oil exports after President Donald Trump quit the international nuclear agreement.
But Riyadh, which cheered Washington's exit from the nuclear pact, is under pressure from Trump to boost output in order to lower oil prices ahead of November's midterm elections.
Saudi Energy Minister Khalid al-Falih had earlier signalled a compromise could be in the works.
He acknowledged that a big production hike might be "politically unacceptable" to some OPEC countries and said it was important to be "sensitive" to those concerns.
The 24 nations in the pact, known as OPEC+, initially agreed to trim production by 1.8 million barrels a day but they have actually been keeping more than two million bpd off the market.
Observers believe a face-saving deal could be brokered if members simply stopped over-complying with the current pact, and agreed to stick to the original reduction quotas -- which would bring several hundred thousand more barrels to the market each day.
But that is easier said than done since much of the shortfall has come from Venezuela, where an economic crisis has savaged the nation's petroleum production.
Output has also plummeted in Libya, where fighting between rival factions has damaged key oil infrastructure.