Facing Jail But Staying to Fight Debt!

Raad Raad’s days in the UAE may be numbered, but he’s sticking it out.

As the owner of a small business based in Dubai, he has hit hard times – and the security cheques he signed to cover hundreds of thousands of dirhams worth of loans could bounce any day now.

“I’m probably going to jail,” says Mr Raad, 43, who hails from Canada and first started checking out the business landscape in Dubai six and a half years ago.

“But I’m struggling to make it work. I’m not running.”

In the last six months, several businessmen have infamously fled the country rather than face jail time.

Simon Ford, the founder of the Blue Banana alternative-gifts company, took off in June with his family, all the while pledging to repay his loans. Chris Fisher, a former Dubai DJ, also absconded to the UK after amassing a personal debt of around Dh280,000. He’s now living on a pittance in Liverpool while he tries to rebuild his life.

But Mr Raad has a different mission – to stay in the Emirates and force the businesses who owe him money to pay up.

“No one has the right to criticise what Simon or Chris did,” says Mr Raad, the managing director of MxN Middle East. “But I invested my life savings in my business. I’m not about to do a runner.”

Like businesses across the region, MxN Middle East has been set back by the financial crisis. MxN builds digital infrastructure to display information at businesses, including hi-tech screens and signage.

Business was going well in late 2007 when the company began meeting with Emirates Bank about building digital signs at 50 of its branches. Eventually, MxN Middle East signed contracts worth nearly US$2 million (Dh7.35m) with the bank for the signs and other work.

“I started growing my company,” he says. “I started making financial decisions based on the fact that we had this contract. I deferred some of our payables until later. Whether it’s good business or bad business, it was my decision.”

By March 2009, MxN had done a portion of the work for Emirates Bank, but had received only a few payments – and day-to-day operations of the business were getting tight. When Mr Raad sent a follow-up letter about payment, he was greeted with a statement that abruptly cancelled the contract.

While Mr Raad says he was disappointed to lose the business, he was ready to focus on new opportunities. According to the contract, Emirates Bank still owed him around $500,000.

Emirates Bank says it has informed Mr Raad that they consider the conflict a legal matter and added that as a matter of policy it does do not comment on legal issues relating to the bank’s business.

The problem was that he was getting deeply in debt. He had delayed paying his five employees for six months, and he was personally three months behind on his rent. His personal debt had risen to $1m, and his corporate debt had risen up above $750,000.

In June, he ended up in jail for one night after his landlord cashed a rent cheque for the second half of the year. He managed to find enough money in his accounts to pay his way out of the predicament, but he began to think that he could end up in jail for a long time if he could not get the money Emirates owed him.

According to the Central Bank, 544,196 cheques bounced in the first four months of 2009, 5.6 per cent of a total of about 9.74 million cheques issued.

The key to the problem is that all bounced cheques are considered a criminal case in the UAE. Whatever the circumstances, if someone presents a bounced cheque at a police station the issuer can face up to three years in prison. The issue has become so severe that the Dubai government has created a committee to look at ways to reduce the number of businessmen and debtors ending up in jail.

Lt Gen Dahi Khalfan bin Tamim, the head of the Dubai police, has publicly said that bounced cheques should not be considered fraud unless there was evidence of it. One idea being floated is the creation of a special arbitration centre that would handle bounced cheques before the cases end up in criminal court.

The fear of prison is hanging over his head, he says. These days he watches every dirham he spends.

“It’s got so bad that I took a drive to Ras al Khaimah today and I am hoping that I didn’t blow my money on a tank of gas to go to that meeting,” he said last week. “We have new business coming in, but this one client is killing us.”

Friends and lawyers have advised Mr Raad to file a civil case against Emirates Bank, but he says he does not have the money to afford a drawn-out case.

Still, he says he refuses to consider the possibility of fleeing the country with his wife and three children, adding that he actually has a positive outlook on his company’s business prospects in the region.

“I have no travel ban – we could leave if we wanted to,” Mr Raad says. “It would be easy, but it would not be right. I’m not going to lose everything I built from scratch.”

The National

bhope@thenational.ae

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