Federal prosecutors in the United Arab Emirates said Sunday they've launched a major investigation into Dubai-based real estate developer Union Properties.
A statement carried by the state-run WAM news agency said the investigation involved allegations of the firm selling property at less than its real value and hiding the name of the beneficiary of the sale, as well as forging documents and other violations.
Union Properties, known for building Dubai Motor City, did not immediately respond to requests for comment.
A stock market filing by Union Properties suggested the sale may have involved a March 2020 transaction in which a woman named Amna al-Hammadi purchased a property for 30 million dirhams ($8.1 million) that had been earlier valued at 49.5 million dirhams ($13.4 million).
A top Union Properties official, chairman Khalifa al-Hammadi, shares the woman's last name. It wasn't immediately clear if the two were related.
Union Properties' filing sought to explain the sale by noting it came amid “the spread of the COVID-19 pandemic and its accompanying negative effects — and in light of the company’s commitment to settle its debt towards its lenders.”
Other filings on Sunday to the Dubai Financial Market showed shareholders wanted a vote later this week to possibly remove its board of directors. Separately, the company said one of its subsidiaries was involved in a lawsuit seeking nearly $1 billion, without elaborating.
Shares in Union Properties fell over 9 percent in early trading Sunday after the announcement.
The firm's current shareholder structure wasn't immediately clear, though a profile from the data firm Refinitiv showed its major investor as the Bluestone Fund.
“Today's news was shocking, but we need to be clear that this is a good thing that there is a system, a system that adheres to punishing people who are responsible,” said Waleed al-Khatib, a managing partner at the Abu Dhabi-based trading firm Global For Shares and Bonds.