DUBAI, (Reuters) – The CEO of Deyaar, Dubai’s second-largest property developer by market value, has been detained and is under investigation for alleged financial irregularities, the company and Dubai authorities said.
Dubai’s economy has been surging on a near six-fold increase in oil prices since 2002 that has spurred a real estate boom after the family ruled emirate opened its market to foreign ownership, attracting home buyers from around the world.
Deyaar said in a statement on Thursday that Chief Executive Officer Zack Shahin had resigned, without giving a reason.
“He’s been detained,” Deyaar Chairman Nasser al-Shaikh told Reuters on Thursday. “There is an investigation by the Public Prosecution.”
An official at the Dubai Public Prosecution, who did not want to be identified, confirmed that Shahin had been detained and was under investigation.
Shaikh would not be more specific about the allegations saying only that they are “financial” in nature.
“From our side we saw a few things that raised our concern and we are now going through the legal system for the benefit of our company and our shareholders,” Shaikh said.
“Whatever is going on right now, it will not have any real impact on Deyaar profitability,” Shaikh said.
Shahin could not immediately be reached for comment on his mobile phone.
Deyaar named Adnan Tareen, head of finance, as acting CEO.
Shares of Deyaar closed 0.85 percent lower on Thursday, extending this year’s decline to more than 20 percent, compared with a fall of less than 6 percent of the main stock index .DFMGI.
Dubai-based investment bank Shuaa Capital started coverage on Deyaar in September with a “buy” rating and a fair value estimate of 2 dirhams.
The bank at that time expected growth to remain “strong” with net profit of 480 million dirhams and 649 million dirhams in fiscal 2007 and 2008 respectively, it said.
Profit last year was 411 million dirhams, according to Reuters data. The stock last traded at 2.33 dirhams.