Dubai: Ex-CFO fined Dh122,000 over misleading financial statements

A former finance executive in Dubai has been fined Dh122,000 for being involved in account breaches and making misleading statements for a publicly listed company, the emirate's Financial Services Authority (DFSA) said in a decision published on Thursday.

The DFSA identified him as Remi Ishak, who served as the chief financial officer of Equitativa and Emirates REIT, a public fund and Nasdaq Dubai-listed fund whose portfolio of properties is composed of commercial, retail, and educational assets.

In December 2021, the DFSA penalised Equitativa for making misleading statements in relation to the Emirates REIT; not preparing financial statements in accordance with International Financial Reporting Standards (IFRS); and failing to take reasonable steps to ensure that relevant information was reported to its auditors.

The DFSA found that Ishak was involved in those breaches.

Specifically in 2018, as the CFO, Ishak made public statements in relation to a school, which had been vacated by the previous tenant with unpaid rent of over Dh9 million, to the effect that a new tenant had been secured to start in the following academic year. Those public statements implied that the asset’s revenue and valuation would be unaffected and, therefore, were misleading since there was no binding offer or agreement in place at the time.

The executive also signed off on Emirates REIT’s 2018 half-year financial statements without including a provision for the unpaid rent or any impairment of the asset value for the school as required under IFRS.

Instead, the asset was reported as 100 per cent occupied on the assumption that there was a long-term tenant in place, the authority added.

As CFO, Ishak failed to take reasonable steps to ensure that Equitativa or its employees reported certain information, relevant to the recoverability of the asset, to Emirates REIT’s external auditors for their review of the 2018 half-year financial statements.

Consequently, he breached Principle 2 of the DFSA's 'Principles for Authorised Individuals' by failing to act with due skill, care, and diligence when carrying out his role as a finance officer at Equitativa, the authority said.

“CFOs of public funds and listed funds play a critical role in ensuring that financial statements and any associated public announcements are fair and accurate," said Ian Johnston, chief executive of the DFSA.

"CFOs need to ensure that all the facts relevant to the preparation of financial statement are provided to external auditors in a full and transparent manner.”

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