Dubai shipping magnates facing £72.2m fraud claims have £62m in assets frozen

A Dubai shipping family accused of an international fraud have had £62 million in assets frozen.

The fraud claims involve £72.2m.

Shipping broker Muhammad Tahir Lakhani, 58, and his sons, Ali and Hasan, are facing allegations in the UK’s Commercial Court involving five private equity funds.

Mr Lakhani is the founder of the Dubai Trading Association and the fraud accusation centres on the sale of 13 mortgaged tankers for scrap.

US court papers containing the allegations said there was a $80.2m multinational maritime fraud.

“Applicants were deceived, assets were concealed and false papers were lodged with multiple foreign governments,” the court papers say.

“The fraudsters are borrowers that pledged merchant cargo ships as loan collateral to applicants.”

The papers allege the men concealed the existence of the applicants’ mortgages by forging documents and making fraudulent filings to different government authorities.

They sold mortgaged vessels to ship breakers in Bangladesh and Pakistan for demolition and conversion into scrap metal, the papers said.

They said that allowed the borrowers to destroy the collateral and keep the sale proceeds that they were contractually required to pay to applicants.

A joint case has been brought by finance houses in the UK, the US and Malaysia.

A seizure application in a Malaysian court in March said the vessel Wu Xian was due to be scrapped.

Another 12 vessels were scrapped in Bangladesh “without notice to, authorisation from or payment to” the finance houses behind the mortgages.

“The applicants hold equitable proprietary tracing claims rights with respect to all of the proceeds of the vessels, which were beached and scrapped without regards to the applicants’ mortgage rights under the applicable facility agreements,” the papers said.

“In an apparent attempt to conceal the fraud as a mere cashflow insolvency, the holding company of the borrowers put itself into voluntary liquidation in Nevis.

“However, the liquidator appointed by the Nevis court has thus far ascertained and confirmed that the fraudsters paid the sale proceeds of the mortgaged vessels to entities other than applicants.

“The authorities in multiple jurisdictions have been alerted.”

The group is seeking assistance from the US District Court in New York to obtain documents from 13 financial institutions in relation to the receipt, transfer and proceeds of the mortgaged vessels in a bid to prove the existence of any fraud so they can recover the funds.

A worldwide freezing order was issued this month on Mr Lakhani’s assets in the Commercial Court in London and on Wednesday the order was extended.

“The English court will determine issues relating to the default of the loans and the liability of the guarantors under the loan agreements,” the papers add.

“It will adjudicate the existence of the fraud; which entities and individuals participated in the fraud and received proceeds from the fraud as transferees.”

On Wednesday, lawyers for the applicants said that the case was based on “documents that evidence what we say was clear fraud”.

Barrister Richard Waller QC told the court that the defendants have not denied the allegations to date.

“The claimants have been the victims of a serious and sustained campaign of deception by those controlling the borrower companies,” the written argument states.

The Lakhani family were not represented at the hearing and had told the appellants they had been unable to acquire legal representation.
Source: The National