Morocco’s ‘$65 million’ real-estate swindle

A man wearing a vest showing the slogan, ‘Long live the king, down with the real estate mafia,’ joins a protest against a real estate group linked to the scandal. (AFP)
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Updated 03 April 2020

Morocco’s ‘$65 million’ real-estate swindle

  • Biggest-ever property scam sparks widespread anger at sector described as ‘hotbed of corruption’

CASABLANCA: “Give us our money,” demands a group of home buyers, standing on land that should by now be finished condos — one of many fictitious projects that together comprise what is described as Morocco’s biggest-ever property scam.

Adverts on state television had promised dream homes at three for the price of two, while brochures boasted of ornately carved wood finishings and copious marble.

But it was all a fantasy — more than 600 million dirhams ($65 million) allegedly disappeared, leaving more than 1,000 buyers out-of-pocket, according to one of the lawyers representing them.

In a country where corruption is endemic, the unprecedented scale of the alleged fraud has generated political waves.

Called upon by deputies to address the issue in Parliament, Prime Minister Saad Eddine El Othmani said the government was absolved of any blame, provoking indignation among defrauded investors who have appealed to King Mohammed VI.

The man accused of being at the forefront of the scheme has been charged and is in detention awaiting trial.

But the vast scam has prompted major questions about alleged negligence and complicity of some Moroccan institutions. 

Mohammed El Ouardi, as head of the Bab Darna group, allegedly received advances for apartments that never made it beyond the drawing board.

BACKGROUND

Sales based solely on paper plans frequently give rise to scandal in Morocco, ranging from apartments that do not match brochures’ promises to major delays in construction.

“The swimming pool would have been just over there,” says would-be apartment owner Soufiane, aged in his 40s, as he points across a building site in the commercial capital Casablanca.

Bab Darna consists of a group of firms that cashed advances from “at least 1,000 victims” who invested in around 15 fictitious real-estate projects in and around Casablanca over a decade, Mourad El Ajouti, one of the lawyers for the investors, said.

The money was allegedly embezzled by cashing “advances ranging from 20 percent” to the full cost of the apartment, he added.

Houria, 49, who works in e-commerce, said “highly persuasive sales agents” proffered a golden opportunity and swayed her into advancing 400,000 dirhams;
20 percent of the cost of a villa.

But the vendor “had neither the title deed nor construction permit,” El Ajouti said; basic requirements lacking in all contracts signed by the investors. Such practices did not prevent Bab Darna from exhibiting with great fanfare at real-estate shows in Casablanca, Paris and Brussels.

“The authorities were not aware (of El Ouardi’s activities)?” asked Houria, dumbfounded.

“Who protected him?“

She, like other victims that AFP spoke to, did not want their full names published.

El Ouardi, 59, is described as a smooth salesman who carved a path through the real-estate jungle.

But in November, with nothing to show for their investments, angry customers went to his home. When cheques for reimbursements that they say he penned personally bounced, their patience finally ran out and they hauled him to the
police station.

He is now awaiting trial with six alleged accomplices, including his finance manager, the notary and sales agents.

A trial date has not yet been set, but the suspects face between 10 and 20 years in prison for fraud or complicity in fraud.

Many of the victims come from Morocco’s diaspora, who number several million and often invest in property back home.

“I left Morocco to escape corruption and nepotism, but these things have entrapped me once more,” lamented another victim Youssef, 36, who lives in Japan and is self-employed.

Sifeddine, an entrepreneur living in Argentina, reserved an apartment thanks to a brochure promoting modern buildings covered in ivy, alongside elegant palm trees shading a turquoise pool.

The TV adverts, broadcast during primetime hours and using famous actors, reassured him.

“El Ouardi received me at his villa and was very persuasive, in front of a notary and agent,” he said. “It was 10 p.m., the sub-municipality’s office was opened specially at his request to sign the contract; he must have greased a lot of palms,” Sifeddine alleged.

Jalal, a salesman in his 40s of dual French-Moroccan nationality, took the plunge in 2018 when he visited a Moroccan real-estate show in Paris.

Bab Darna “had one of the best stands” at the show, known as Smap Immo, he said. He came back to Morocco to sign the deal, and took the presence of a notary and registration of the contract at a sub-municipality office as guarantees of legitimacy.

El Ajouti views the scandal as a collective failure.

“Authorities within the planning ministry, the town council, the urban agency” should all shoulder shares of the blame, he said.

He also criticized officials from the real-estate show, who, he said, should have scrutinized exhibitors’ credibility.

Smap Immo, which rejects it is in any way responsible for the scandal, has also filed a complaint against Bab Darna for fraud and harming the exhibition’s reputation.

Real estate is among the sectors most affected by corruption in Morocco, according to the head of Transparency Maroc, a local anti-graft advocacy group.

The sector is “a hotbed of corruption, conflicts of interest and insider trading between landowners, local authorities and urban agencies,” Ahmed Bernoussi said.


S&P 500 inches closer to record high

Updated 12 August 2020

S&P 500 inches closer to record high

  • US stock market index returns to levels last seen before the onset of coronavirus crisis

NEW YORK: The S&P 500 on Tuesday closed in on its February record high, returning to levels last seen before the onset of the coronavirus crisis that caused one of Wall Street’s most dramatic crashes in history.

The benchmark index was about half a percent below its peak hit on Feb. 19, when investors started dumping shares in anticipation of what proved to be the biggest slump in the US economy since the Great Depression.

Ultra-low interest rates, trillions of dollars in stimulus and, more recently, a better-than-feared second quarter earnings season have allowed all three of Wall Street’s main indexes to recover.

The tech-heavy Nasdaq has led the charge, boosted by “stay-at-home winners” Amazon.com Inc., Netflix Inc. and Apple Inc. The index was down about 0.4 percent.

The blue chip Dow surged 1.2 percent, coming within 5 percent of its February peak.

“You’ve got to admit that this is a market that wants to go up, despite tensions between US-China, despite news of the coronavirus not being particularly encouraging,” said Andrea Cicione, a strategist at TS Lombard.

“We’re facing an emergency from the health, economy and employment point of view — the outlook is a lot less rosy. There’s a disconnect between valuation and the actual outlook even though lower rates to some degree justify high valuation.”

Aiding sentiment, President Vladimir Putin claimed Russia had become the first country in the world to grant regulatory approval to a COVID-19 vaccine. But the approval’s speed has concerned some experts as the vaccine still must complete final trials.

Investors are now hoping Republicans and Democrats will resolve their differences and agree on another relief program to support about 30 million unemployed Americans, as the battle with the virus outbreak was far from over with US cases surpassing 5 million last week.

Also in focus are Sino-US tensions ahead of high-stakes trade talks in the coming weekend.

“Certainly the rhetoric from Washington has been negative with regards to China ... there’s plenty of things to worry about, but markets are really focused more on the very easy fiscal and monetary policies at this point,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Financials, energy and industrial sectors, that have lagged the benchmark index this year, provided the biggest boost to the S&P 500 on Tuesday.

The S&P 500 was set to rise for the eighth straight session, its longest streak of gains since April 2019.

The S&P 500 was up 15.39 points, or 0.46 percent, at 3,375.86, about 18 points shy of its high of 3,393.52. The Dow Jones Industrial Average was up 341.41 points, or 1.23 percent, at 28,132.85, and the Nasdaq Composite was down 48.37 points, or 0.44 percent, at 10,919.99.

Royal Caribbean Group jumped 4.6 percent after it hinted at new safety measures aimed at getting sailing going again after months of cancellations. Peers Norwegian Cruise Line Holdings Ltd. and Carnival Corp. also rose.

US mall owner Simon Property Group Inc. gained 4.1 percent despite posting a disappointing second quarter profit, as its CEO expressed some hope over a recovery in retail as lockdown measures in some regions eased.

Advancing issues outnumbered decliners 3.44-to-1 on the NYSE and 1.44-to-1 on the Nasdaq.

The S&P index recorded 35 new 52-week highs and no new low, while the Nasdaq recorded 50 new highs and four new lows.