UAE: Family member misuses power of attorney, siphons off Dh17 million

A family member siphoned off Dh17 million after he was given a general power of attorney (PoA) to run the family business in the owner’s absence.

In an interview with Khaleej Times, Khalid Farooq, CEO of Resilience Chartered Accountants and Advisory Services, said one of his clients came back from a short sabbatical to find Dh17 million of his funds missing and expenses overstated. He had given the PoA to a family member.

“He reached out to us and we uncovered that the expenses were indeed overstated and maliciously accounted. The individual who was responsible for these expenses was a family member and was misusing the powers that were granted to him by the PoA,” he said.

“People generally don’t understand the consequences of giving the general PoA to individuals — be it their own family members or someone else. The risks pertaining to this action weigh more than its benefits,” said the leading forensic and financial expert in the region.

The case is now closed and recovery in process.

Family businesses contribute massively and play an important role in the UAE and GCC economies. They make up to 90 per cent of private firms and employ 70 per cent of the private sector’s workforce in the country.

Farooq said family disputes are on the rise in the region. This is particularly prevalent when the business owner dies.

Since family disputes are sensitive, according to Farooq, it takes a lot of time to settle them because reconciliation is a priority in such cases.

Sharing details of another case of misuse of PoA, Khalid Farooq said 14 siblings fought for their rights against a family member.

“In this instance, one of the family members took control of all the assets through the misuse of a generic PoA and transferred all the assets worth hundreds of millions of dirhams to himself. As a result, several civil and criminal cases are filed against him.”

He added that family business disputes take a long time and sometimes it is difficult to reach an amicable solution due to lack of transparency, lack of information sharing, no proper accounting records and trusting individuals blindly.

“People should understand that PoA needs to be taken very seriously to avoid such disputes. People have a false notion of PoA being just a paper that allows the other person to operate. It is actually much more than just that. We have seen huge liabilities being dumped on to the person who gave the PoA as the funds were obtained under his/her name,” he said.

ALSO READ:

• Dubai: Woman fined Dh19,000 for illegal stay, defrauding man of Dh17,000

• Dubai: Man jailed for assaulting another over parking space

• UAE