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.


GITEX Tech showcases Saudi Arabia’s regional innovation drive

Updated 50 min 14 sec ago
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GITEX Tech showcases Saudi Arabia’s regional innovation drive

DUBAI: Dubai’s GITEX Technology week showcased the region’s ability to take the lead in innovation technology, with Saudi Arabia on its way to take the driver’s seat, according to consulting firm Accenture’s country managing director in Saudi Arabia.
“Saudi Arabia will be a leader in supporting innovation and the development of new technology in the region,” Khaled Al-Dhaher told Arab News.
“I think we (Arab countries) can always complement each other in the region to make sure we have the best innovation that is relevant for us and focused on the needs of our markets,” he added.
Among the main drivers behind the Kingdom’s surge into innovation and incubation is the Center of Initiatives at Prince Mohammed bin Salman bin Abdul Aziz Foundation (Misk), which is an exclusive partner at GITEX Future Stars 2018.
Misk Innovation showcased 20 Saudi-based start-ups and incubators, ranging from 3D printing technology (SHAKL) to e-commerce (Zid) to online grocery shopping (ZADFresh).
Another prominent player from the Kingdom was the Badir Program, which helps to sustain and develop pioneering environments within the Kingdom and stays in line with following the crown prince’s Vision 2030 plan.
The plan, unveiled in 2016, is a comprehensive blueprint for the future, laying out a strategy and clear targets to diversify Saudi Arabia’s economy, and develop public service sectors such as health, education, infrastructure, recreation and tourism.
“We see a big support toward start-ups in terms of seed funding, arranging funding rounds, investment funding rounds, which actually is very important to accelerate the growth of these start-ups,” Badir Program’s CEO Nawaf Al-Sahhaf told Arab News, adding: “They (start-ups) created more than 2,000 jobs in the last two years.”
The 38th annual exhibition, which kicked off on Sunday, centered around the rise of smart cities. Dubai’s government featured high-tech stands promoting the emirate’s ruler Sheikh Mohammed bin Rashid’s vision of a totally smart Dubai.
While Dubai is ahead of Saudi Arabia in this respect, the latter is not far behind.
“Saudi Arabia is building new cities now, and one of them is NEOM. Smart cities needs smart solutions and smart products, so Saudi Arabia is a big supporter of entrepreneurs and the private sector in order to come up with these smart solutions,” Al-Sahhaf said.
“Saudi Arabia is moving in this [Smart] direction and we are in good hands,” he added.
The Saudi Technology Development and Investment Company, Taqania, was also featured at the exhibition. Owned by the Kingdom’s Public Investment Fund, Taqania is one of Saudi Arabia’s main proponents in a non-oil dependent Kingdom aligned with Vision 2030, and invests in technology that contributes to the country’s economic diversification.
The exhibition is split among several categories including Gulf Comms & Mobility, Global Solution Providers, Smart Workplace & Smart Homes, Value-Added Distributors, Printing & Automation, Consumer Tech, Enterprise Software, Network & Security, Future Tech and IOT Big Cloud Data.
GITEX Technology week runs from Oct. 14 to 18, with GITEX Future Stars taking place from Oct. 14 to 17.