Tuesday, January 25, 2022

Pensioners/stockholders fleeced in Turnstar Holdings Dubai shady deal

Thousands of Botswana pensioners and stockholders who have invested in Turnstar Holdings’ shares may lose tens of millions of Pula following the Botswana Stock Exchange (BSE) listed company’s investment in a shady real estate deal in Dubai.

The Botswana Public Officers Pension Fund (BPOPF) is one of the biggest institutional shareholders in Turnstar Holdings with a stake of 11% while Debswana Pension Fund has a shareholding of 1,87%.

Botswana’s largest listed property company announced three years ago that it had extended its portfolio to the Middle East by acquiring a P85 million five-storey building at one of Dubai’s upcoming commercial areas. The 15.6 square metre Palazzo Venezia house has eight units, one shop and a double-parking basement. 

Sunday Standard has turned up information that the whole deal was a scam and the property value was inflated by more than 50%.

While Turnstar Holdings in its 2021 annual report states the value of the Dubai property at P87 million, the actual value of the property is about P40 million. This means the property value in the annual report is overstated close to P50 million.

Sunday Standard investigations have turned up a valuation of the property by the Dubai Land Commission which shows that the property is currently valued at AED 12, 722925,38 which is about P40 million. The value of the property would actually be much lower, but was helped by the appreciation of the Dubai Dirham against the Botswana Pula between the time the property was bought and now.

Turnstar Holdings bought the property for AED 28 million in 2017 which is P90 million at the current exchange rate.

Sunday Standard investigations have further revealed that the value of the property was inflated by padding the rentals paid by the tenants. The seller Global Capital Partners for two years subsidized the rentals paid by the tenants to Turnstar holdings. Although a source close to the transaction claim that Gulaam Abdoola, Turnstar Holdings Managing Director was in on the deal, Abdoola insists that he only learnt about the padding of the rentals in March this year after which he reported the apparent fraud to the Dubai police.

Abdoola last week told the Turnstar Holdings board that, “I wish to inform the board of directors of an unfortunate series of developments in relation to the acquisition by Turnstar, via its subsidiary Turnstar Investments Limited, on or about 24th August 2017, of the shareholding is Palazzo Venezia Holdings limited…..

“The original owner of the property, from whom the above acquisition by Turnstar Investments was made, is Mr Sameer Lakhani and his operating company, Global Capital Partners. Involved in assisting in the sale process, as Turnstar Investment’s agent in Dubai is Mr Uzair Razi.

“As may be expected Turnstar Investment effected a due diligence on the property via reputable entities in Dubai. Regrettably, it appears that Mr Lakhani and GCP, with the connivance of Mr Razi, perpetrated commercial fraud upon Turnstar and Turnstar Investments in that: The leases which underpinned the due diligence were false and all tenants were nonexistent; there was thereby indicated a false rate of return on investment of 10% in AED. There was thereby created an inflated valuation in respect of the property, which now is expected to be worth less than the AED approximately 28 million paid by Turnstar via Turnstar Investments.

It appears that additional fraudulent activity has taken place in that, as per the requirements of UAE law the Dubai Land department transfer Duty of 4% is required to be paid by a purchaser to the Dubai Land department and Turnstar remitted 4% od AED 28 million, instead of the lower amount comprising 4% of what the actual value will turn out to be

“Furthermore, no portion of the amount of the transfer fee paid by Turnstar has in fact been remitted to the Dubai Land Department by Mr Lakhani and GCP, with the attendant consequence that there has been no transfer of registered ownership from Mr Lakhani/GCP to Turnstar Investments. However, we have been advised by our Dubai Attorneys that the property is legally owned by Turnstar Investments and there can be no question as to losing the property in anyway.

“As Turnstar Investments’ agent in Dubai Mr Razi should have known of the falsity of the leases and the fraudulent sale structure. That he was complicit in the fraud appears to be evidenced by a letter dated 22 April 2021 from Davidson & Co (Mr Lakhani/GCP’s attorneys in Dubai). The letter indicates that Mr Lakhani/GCP paid and made over to Mr Razi the sum of AED 1,422,3000 as commission fees and AED 1,153,840 for the transfer fees. It is unclear why Mr Razi received any commission and why, if indeed he was given the amount indicated for transfer fees, he did not pay it over to Dubai Land department. It seems from the above that Mr Lakhani/GCP and Mr Razi have themselves had some sort of falling out. Turnstar Investments have retained the services of Ahmed law firm in Dubai. There are currently in the relevant Dubai courts civil and criminal claims by Turnstar Investments against both Mr Lakhani/GCP and Mr Razi.

It however appears from the report that Mr Abdoola did not disclose to the board that the Dubai Preliminary Dispute Committee dismissed the Turnstar Holdings claim against Mr Lakhani and GCP.

“The evaluation given by the seller should have been rejected by Turnstar Investments Ltd and they should not have completed the sale until after submitting an appraisal from the Dubai Land Department. Turnstar Investments failure to object to this makes it a partner in the responsibility for the breach with the seller.

“As stated in the expert’s report, Turnstar Investments provided the Expert Office with a table showing the valuation of shops and offices at an amount of 12,722,925,38 Dirhams.

The transfer fee has already been refunded to the complainant and the account is settled between its commissioner (second disputant) and the seller. It its final decision the Dispute Committee cleared the dispute.

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