Monday 11 April 2011

Sale of family jewels a chastening lesson for Damas brothers

There is no better wake-up call for lazy investors and cynical executives than the saga of Damas International, which last week was revealed to be more convoluted and parlous than previously thought.

Rather than look at the case as an individual incident at a company in Dubai, it should become the definitive guide for the region on how not to make the transition from a family-owned firm to a publicly traded company.

The beginnings of the story are well known. Three sons of the third generation of a 104-year-old jewellery business are held responsible by the regulator of the Dubai International Financial Centre for withdrawing Dh365 million of cash (US$99.3m) and nearly two tonnes of gold from Damas without shareholder approval. After being fined and censured, they resign their executive positions and sign a deal to pay back the company.

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