Home > Ethics > Dubai based Millennium Finance Corporation investment bank: the inside story, Oct 2009

Dubai based Millennium Finance Corporation investment bank: the inside story, Oct 2009


These confidential bank documents from the investment bank MFC (Millennium Finance Corporation), suggest that the company is out of cash, among other matters. The documents give exact balance per division. This collection and background information form a follow up to our previous leak on the MFC.

According to our source:

1.As of august 10th, MFC wasn’t compliant with the regulatory capital requirement (as shown on the attached internal document). However the DFSA hasn’t removed the company’s licence as it would arm its shareholders reputation (Dubai Islamic Bank and KIPCO) which are linked to the Dubai Emirate’s ruling family.

2.Sajid Barkat, Head of Administration, came back on duty in September despite his suspension by the Interim Management Committee in May 2009 due to the role he played in the letsbuyit.com fraud.

3.Following his takeover in August, Keba Keinde fired an additional dozen from the 25 people staff remaining. Staff was reported to be in excess of 60 in January 2009.

4.In addition to that, several employees have been suspended regarding an investigation about the Wikileaks online leak.

5.In the meantime each member of the management team is still paid more than USD 250,000 yearly of base salary (+ bonus), the highest salary bracket of the firm if we exclude the CEO position. Next to that, most of the cost rationalization measures they took consisted in low-wage support staff layoffs -with minimal severance package. See “compensation per employee” file.

6.Zana Masle the Head of HR has been fired by MFC in Q1-09 following an internal investigation regarding a DIFC visa fraud (she issued a visa to an unauthorized person under the company’s sponsorship). Neither shareholders, the Regulator (DFSA) or her new employer have been informed by the CEO of these findings.

7.In March 2009, the management started a roadshow, which costs have been incurred to the company, to raise fresh funds in order to exit, Dubai Islamic Bank, one of the three major shareholders (see attached documents showing exit scenarios) and solve the out of cash situation. This action has been taken without informing the shareholders.

8.An investigation is being conducted by the Government of the Islamic Republic of Iran’s VEVAK agency regarding the advisory mandate given to MFC for the issuance of the 3rd mobile licence. Several bidders (including Etisalat and Zain) complained about irregularities during the process through their respective governments. The fee due to MFC is estimated to be over USD 30 million, which is far above the sector standards. It has been reported that MFC is responsible for the failure of the process, due to its internal issues and willingness to preserve the personal interests of the CEO and his AFA partners. The licence has been finally awarded to a local consortium while 5 international bidders were on track one year ago (link below).

9.The Office of Foreign Assets Control (“OFAC”) of the US Department of the Treasury has been involved in the UAE Government’s investigation.

US Securities & Exchange Commission case against KIPCO:


Washington, D.C., July 23, 2009 — The Securities and Exchange Commission today charged a trader located in Kuwait and three related foreign entities for engaging in an illicit scheme through which they reaped millions of dollars in profits when trading around hoax offers to acquire U.S. companies. The SEC has obtained an emergency court order to freeze more than $5 million in trading profits located in various U.S. accounts in their names.

The SEC filed its charges and obtained the asset freeze within days of the latest hoax offer. The SEC alleges that Hazem Khalid Al-Braikan and the related entities traded around false news of a purported tender offer by a Middle East investment group to acquire Harman International Industries. Aphony announcement publicizing the hoax offer was faxed to media outlets on Sunday, July 19, and subsequently reported on the Internet. Harman’s share price climbed more than 40 percent in pre-market trading on Monday, July 20.

Additional Materials

The SEC further alleges that two of the entities similarly traded around a hoax tender offer in April 2009, when a Kuwaiti newspaper reported that a consortium of Middle East companies were offering to purchase Textron Inc. This offer also turned out to be false. Al-Braikan and the entities amassed positions in securities of a company shortly before a bogus offer was publicized. They then sold their securities at prices inflated by the false information to reap their illicit profits.

“This case exemplifies the SEC’s swift and surgical investigative skills and our determination to follow the trail wherever it leads,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.

The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, alleges that Al-Braikan traded in an account in his own name and has been associated with each of the three entities that also traded: United Gulf Bank (B.S.C.); KIPCO Asset Management Company (KAMCO); and Al-Raya Investment Company.

Upon the SEC’s request, the Honorable John G. Koeltl issued a temporary restraining order freezing the defendants’ assets. The order also grants expedited discovery and an order permitting alternative means of service.

The Commission alleges in its complaint that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, antifraud provisions of the federal securities laws. The complaint seeks a permanent injunction, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.

The Commission appreciates the assistance of New York Stock Exchange Regulation and the Options Regulatory Surveillance Authority in this matter.

The Commission’s investigation is continuing.



Press articles related to the situation:

UPDATE 1-Iran consortium to get 3rd mobile phone license-paper

Oct 19 (Reuters) – A domestic consortium will be awarded Iran’s third mobile phone license, Etemad newspaper quoted Ramezan Ali Sadeghzadeh, deputy head of the development unit of Iran’s Industries Organisation, as saying.

He did not give any further details.

In July, another Iranian newspaper said Iran had pulled its third mobile licence from Kuwait’s Mobile Telecommunications Co (Zain) and would hold a fresh tender, saying Zain had not fulfilled its obligations.

Iran handed Zain the licence in May after stripping it from Emirates Telecommunications Corp (Etisalat).

Iran said at the time Etisalat and Iran’s Tamin Telecom, which won the tender in January, had not fulfilled the necessary collateral and payments of the licence fee at the appropriate time.

Etisalat, one of the largest Arab telecommunications companies by market value, had said it expected to invest up to $5 billion over five years in its Iran operations.

Iran has a mobile penetration rate of less than 60 percent in a market where about half of its 70 million population is under 25 years of age.

The current telecom operators in Iran are the state-owned Iran Telecommunication Company (TCI) and Irancell, which is 49 percent owned by MTN Group (MTNJ.J), sub-Saharan Africa’s biggest mobile phone company.

Iran’s nuclear row with the West has deterred many foreign companies from doing business in the country.

U.S. sanctions bar U.S. companies from operating in Iran and United Nations sanctions have made other firms wary of investing. However, analysts say the size of the market and its energy riches could still make it an attractive prospect.

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