Dubai court can hear case against Deloitte unit after collapse of Hezbollah-linked bank

Members of Lebanon's Hezbollah wave their flags during a rally. The collapsed Lebanese Canadian Bank has been linked to funding for Hezbollah. (Reuters)
Updated 14 February 2018
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Dubai court can hear case against Deloitte unit after collapse of Hezbollah-linked bank

LONDON: A Dubai court could hear evidence relating to the alleged role of auditor Deloitte & Touche (M.E.) in the collapse of Lebanese Canadian Bank – which went bust after being linked to an international drug smuggling and money laundering racket with ties to Hezbollah.
It follows a ruling in a legal row between a group of investors in the collapsed Lebanese Canadian Bank and the regional Deloitte partnership of the auditor, over whether or not the Dubai International Financial Center (DIFC) Courts had jurisdiction to hear the case.
The shareholder group is led by Nest Investments Holding SAL, which was founded by Gulf entrepreneur, Ghazi Abu Nahl. They claim they lost some $128 million from the collapse of the bank.
A Nest spokesperson said: “The allegations against Deloitte & Touche (M.E.) are serious in nature – involving complicity in money laundering and terrorist financing through the Lebanese Canadian Bank. The defendant plays a prominent role in the Middle East audit market and remains the auditor in liquidation at the bank. It is therefore particularly important that the allegations against DTME be heard and answered in a competent court.”
The case stems from a US government probe into the Beirut-based Lebanese Canadian Bank which alleged that it was at the center of a global drug trafficking and money laundering network that shipped narcotics from South America to Europe and the Middle East through Africa, with the proceeds laundered through Lebanon’s financial system.
The investigation led the US authorities to issue a so-called “FinCen” notice on Lebanese Canadian Bank as a “financial institution of pri­mary money laundering concern.”
Such notices, issued under the US Patriot Act, typically sound the death knell for banks because they effectively prevent them from accessing the global financial system.
A group of 11 shareholders including Nest launched proceedings at the Dubai International Financial Center Courts in 2016, alleging that Deloitte & Touche (M.E.) acted negligently during its audit of the bank and failed to identify grounds for concern under anti-money laundering laws.
The audits were undertaken by Deloitte’s Lebanon partnership between 2006 and 2009.
One of the central claims made by the shareholder group was that the audits of the bank failed to disclose various illicit activities at the lender, that included terror financing and money laundering.
Specifically, it was claimed that Lebanese Canadian Bank had intentionally or negligently aided and abetted terrorist activity by maintaining bank accounts for Hezbollah entities.
Deloitte & Touche (M.E.) had argued that the case should be dismissed for jurisdiction-related and other reasons — including that Lebanese law, not DIFC law, applied.
But a judgment handed down by Justice Roger Giles in the DIFC Courts found that while Lebanese law was indeed applicable, the “matters were open to factual and legal investigation at trial and were not so clear that the claimants had no real prospect of success.”
He added that “further materials were likely to become available to show the relationship between the claimants and the Lebanese auditor.”
Nest hailed the decision as a “landmark” ruling.
“This is the first claim of its kind to be considered by the DIFC Courts – targeting a leading audit brand for negligence and deceit in their audits of a client bank that was allegedly acting as the financial arm for drug traffickers and terrorist financiers,” it said in a statement.
A Deloitte & Touche (M.E.) spokesperson said in a statement to Arab News that  the claim against the firm was “without merit” and that it would vigorously resist any attempt to pursue it.


Indonesia’s Go-Jek close to profits in all segments

Updated 18 August 2018
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Indonesia’s Go-Jek close to profits in all segments

  • Go-Jek is Indonesia's first billio-dollar startup
  • Ride haling app evolves into online payment platform

JAKARTA: Go-Jek, Indonesia’s first billion-dollar startup, is “extremely close” to achieving profitability in all its segments, except transportation, its founder and CEO Nadiem Makarim told Reuters.

Launched in 2011 in Jakarta, Go-Jek — a play on the local word for motorbike taxis — has evolved from a ride-hailing service to a one-stop app allowing clients in Southeast Asia’s largest economy to make online payments and order everything from food, groceries to massages.

“We’re seeing enormous online to offline traction for all of our businesses and are close to being profitable, outside of transportation,” said the 34-year old CEO.
The startup is expected to be fully profitable “probably” within the next few years, Makarim added.

Already a market leader in Indonesia, where it processes more than 100 million transactions for its 20-25 million monthly users, Go-Jek is now looking to expand in Southeast Asia.

Ride hailing services in Southeast Asia are expected to surge to $20.1 billion in gross merchandise value by 2025 from $5.1 billion in 2017, according to a Google-Temasek report.

Go-Jek said in May it would invest $500 million to enter Vietnam, Singapore, Thailand and the Philippines, after Uber struck a deal to sell its Southeast Asian operations to Grab — the bigger player in the region.

Go-Jek is seeing strong funding interest from its backers as it targets an aggressive expansion, Makarim said.

“Since its Aug. 1 launch, the app has already grabbed 15 percent of market share in Ho Chi Minh,” Makarim said. The firm this week opened recruitment for motorcycle drivers in Thailand.

The startup expects anti-monopoly concerns swirling around the Grab-Uber deal, which Singapore said had substantially hurt competition, to help clear a path for its expansion.

“We’re bringing back choice. The Singapore government is particularly eager to bring back competition,” Makarim said, adding that the order of overseas rollouts had not been set.

Go-Jek’s offshore push comes at a time when Singapore-based Grab is stepping up funding to expand in Indonesia and transform itself into a consumer technology company, starting with a partnership with online grocer HappyFresh.

“Mimicking Go-Jek’s strategy is the highest form of flattery,” laughed Makarim.

Grab told Reuters in a statement, “The super app strategy has been around for a while now and no Southeast Asian player can claim to have pioneered it.” The company also said Grab has not lost market share in Ho Chi Minh since August, but declined to provide market share data.

Makarim believes Go-Jek’s understanding of food merchants will give it an edge over Grab, which counts investors such as Chinese ride-hailing firm Didi Chuxing and Japan’s SoftBank Group Corp. among its backers.

Makarim, who sees food delivery as Go-Jek’s core business, said he was not concerned about funding, without giving details.

Go-Jek was reported in June as being in talks to raise $1.5 billion in a new funding round and was valued at about $5 billion in a prior fundraising, sources have told Reuters. The firm had said in March it was considering a domestic IPO.

Makarim noted Go-Jek’s backers were sharing both capital and expertise. The company is collaborating with Alphabet Inc’s Google on platform mobility, Tencent on payments strategy, JD.com on logistics operations, and Meituan Dianping on merchant transactions and deliveries.

Go-Jek has set up a venture capital arm, Go-Ventures, to invest in startups in Southeast Asia “with strategic importance to our business,” the CEO said.