by Lee, M
Here’s what we know now — the vast majority of which we didn’t know then.
When Dubai’s economy collapsed, it reflected badly on the emirate’s rulers and the government. Police and security officials began looking for scapegoats for the sudden bust, arresting more than 600 expatriates, including 200 Australians, according to The Australian Financial Review. The operation targeted corrupt business practices, but people who had defaulted on their rents or had a cheque dishonoured were also caught up in it. There was no shortage of real corruption in Dubai, of course, much of it right out in the open, but the investigators had specific targets in mind.
One of the companies being investigated was Sunland. On 1 December 2008, David Brown, as Sunland’s Dubai Chief Operating Officer, was summoned for an interview with Mohammed Mustafa, the large man from the Dubai Ruler’s Court whom I’d met when I was arrested. Mustafa asked Brown about the process of purchasing Plot D17 and Brown said that Sunland had paid a ‘premium’ to Prudentia, a company associated with Angus Reed, for the land. Normally premiums are paid to secure land from another party but Reed did not own or have a sales agreement on the plot in question, D17.
Imagine Brown’s alarm when Mustafa told him that the Financial Audit Department investigators considered that premium as a bribe. This was the meeting Brown had referred to when he came into Nakheel, a few hours later, to talk to me about deferring payments, the meeting he’d mentioned to Matt Joyce. At the time Brown had said ‘some men’ he didn’t know had been asking about the D17 deal. In fact Brown had gone to the Audit Department offices so presumably he knew exactly who was asking the questions.
Two days later Brown emailed Mustafa, claiming that Angus Reed had instigated a conversation with Sunland about a possible joint venture between Prudentia and Sunland on plot D17. This was later shown to be untrue; Sunland had approached Reed’s company. On 10 December 2008 Brown sent a follow-up email in which he assured Mustafa that ‘no-one at Nakheel requested us to pay a premium or a commission at any time’.
On 21 January 2009, Brown was called into Dubai Police Headquarters. His phone was taken away from him and he was interrogated for seven hours. He was told that since Angus Reed did not own the D17 site, the payment Sunland had made to his company was illegal.
Brown claimed he had no idea that Reed wasn’t the owner. Then he claimed that he had been tricked into believing Reed owned the land by Reed himself, acting in collusion with some Nakheel employees: Anthony Brearley, Matt Joyce and me. The accusation — that we had swindled Sunland out of a large sum of money — went into his official statement of interview. Later, in an Australian court, Brown said he found the interrogation ‘very scary’. He was only allowed to leave late that night after he signed the statement, written in Arabic, and surrendered his passport. He was then effectively under house arrest, confined within the borders of the UAE, until further notice.
An Australian court would subsequently find that the statement he gave on this occasion was just one of a number of incorrect statements Brown made to Dubai police and prosecutors. More on that later.
The following day the police formally alleged to the Public Prosecutions Department that a group of Nakheel employees were prepared to rig the sales process in exchange for bribes. It’s important, at this point, to understand something about Nakheel’s status. Until 2011, it was a private company as its full name, Nakheel PJSC (Private Joint Stock Company), indicates. But in Dubai, corporate corruption was less of a crime than corruption within government departments. Prosecutors who wanted post-GFC scalps decided to treat Nakheel as a government department. When charges were eventually laid all those months later they would refer to me as a ‘government employee’.
I asked the man who would become our Emirati lawyer, Ali Al Shamsi, a number of times if Nakheel was part of the government or not. His answer: ‘Yes and no’. It was simply a matter of what best suited the government at any given point.
But back to David Brown. On 26 January, four days after Brown had been interrogated, the police applied for a search warrant of Sunland’s Dubai offices. The application added further detail about our supposed crime: it was, they claimed, done through various means, including selling plots at less than the market price. ‘A person named David Scott Brown,’ the application read, ‘has obtained the plot no. (D17), located at the Waterfront project, affiliated to Nakheel, at a price less than the market value’.
The application went on to note that D17 had been sold for AED120 per square foot ‘although it is evaluated at a price of AED185 per ft’. We would later learn that the price ‘evaluation’ was made by the investigators themselves and based on the fact that AED185 per square foot was what Sunland had paid for its other Dubai Waterfront plot, D5B. This failed to allow for the fact that one plot had direct beach frontage and one was quite a way back from the beach across a major road.
Brown was present at the search, which was overseen by Mustafa and a colleague. They told Brown he was ‘lucky to be out’ and that Matt Joyce and I were ‘frozen’, which Brown later said he assumed meant we were either under arrest or our passports had been seized. They also told him he should try to remember everything and withhold nothing or ‘it would be bad’ for him. Brown again told Mustafa that his contacts at Nakheel were ‘Lee, Joyce and Brearley’. On 2 February he would learn that Matt Joyce and I were being held in prison.
I’m too angry about what David Brown did to me to try and search for reasons. I assume he acted out of stupid, selfish panic under police interrogation. Knowing first-hand how intimidating that situation is, I suppose I can see how he might have clutched at straws in the hope of saving himself. What is unforgivable is the way he kept adding to his story, and the way others in Sunland, notably the CEO, Soheil Abedian, backed him up and consistently ignored pleas to set the record straight.
To be clear, the only reason I lost five years of my life is because David Brown included my name among a group he claimed had deliberately misled him at Nakheel. There were no other witnesses, no corroborating evidence, just a false accusation made, in my view, to save his own skin. As the findings in the second Australian court case, heard by the Supreme Court of Victoria’s Court of Appeal put it, ‘the evidence was replete with instances of conduct by Brown, Abedian and Sunland which was consistent with a motivation of ulterior purpose’. (There are extracts from the judgement at the back of the book.)
On 15 February 2009 Brown provided a brief to the prosecutor and the next day he elaborated on his story under interrogation at the Public Prosecution Headquarters. He said Reed specifically claimed to own the plot, that Matt Joyce told him that Sunland could only buy the land if it ‘reached an understanding’ with Reed, and that I had helped Matt Joyce and Angus Reed push the deal on him.
It wasn’t only the police and prosecutors Brown was talking to. Sunland had a board meeting scheduled for 9 February in Dubai. As a publicly listed company Sunland was obliged to keep its board and shareholders informed of anything that might be considered ‘market-sensitive information’.
Brown prepared a report for the board. I don’t have a copy, so I don’t know what it said, but it’s a safe bet that he didn’t tell them the company’s COO was under investigation for bribery. At Soheil Abedian’s direction, the company issued an announcement to the Australian Securities Exchange (ASX) on 20 February, that said, ‘In reference to today’s article on page 52 of The Australian Financial Review, International property Group, Sunland [sic] (ASX:SDG) advises that no allegations have been made against Sunland in respect of its activities in Dubai and there is no investigation into Sunland or its activities.’ Brown later admitted that this ‘did not reflect what was actually going on in Dubai’.
Abedian tried to claim he made the ASX market announcement in good faith because he did not know about the investigation. But he would later tell an Australian court he had read both Brown’s statement of events submitted on 1 February 2009 and the 15 February brief Brown submitted to t
he prosecutor. Abedian’s claim of ignorance, the Australian judge agreed, ‘cannot be considered an honest answer’.
In fact, Abedian tried to distance himself from every step of the process, claiming at first that he knew none of the details of the D17 purchase. He later admitted, ‘I was the person who was doing the deals and . . . I was concluding every single deal, selling or buying, to do the documentation, to agree with the price, to agree with the terms. Mr Brown never ever on any transaction was involved in the terms of it. Even if he signed as a director, I was telling him, “I agree with that, go ahead and sign”.’ The judge wrote, ‘Consequently, in my opinion, it can be concluded safely that Abedian was fully informed in relation to the D17 transaction and was well aware of the nature and extent of the Dubai authorities’ investigation of bribery allegations insofar as they involved or affected Sunland.’
One of the people who flew in to Dubai for the Sunland board meeting that February was lawyer Ron Eames, a long-term director of Sunland and chairman of its audit committee. He was also a partner in the law firm DLA Phillips Fox who acted for Sunland.
On 2 March 2009, Sunland made another announcement to the ASX, again authorised by Soheil Abedian:
Sunland Group Limited (ASX:SDG) reconfirms no allegations have been made against Sunland or its executives in respect of its activities in Dubai. Furthermore Sunland advises its Chief Operating Officer — Middle East, Mr David Brown, is a witness to the authority’s investigation. He is not the subject of investigations, nor has he been arrested or detained as is stated in the press articles. Sunland Managing Director Sahba Abedian said: ‘Sunland fully supports the Dubai Government’s commitment to ensure the region’s property market is transparent. We will continue to provide assistance where required. Maintaining the highest ethical standards in all our dealings has long been a core value of Sunland.’
I can’t even bring myself to comment on the last claim but the announcement was a little premature: it would be almost two months, 29 April, before the authorities told Brown he was now considered a witness, not a suspect, though they still didn’t give him his passport back. They also told him that without his cooperation the prosecutors would not have been able to prove the charges against Joyce and, by extension, me.
On 17 May, Brown met with the Dubai prosecutor again, this time on his own instigation. (I would come to learn that, at one point, Julie and my brother Wayne, desperate to try again to get bail for me, were sitting in the same prosecution waiting room as Brown. They were the only other westerners there but he didn’t even look their way.) Brown asked the prosecutor for an update on the investigation against Matt Joyce and me. Told that the prosecutor’s job was to deliver a conviction, Brown offered to assist in any way possible. He also told the prosecutor that Sunland was considering legal proceedings against Angus Reed and Anthony Brearley in Australia and wanted to check that the prosecutor’s office supported that.
Yes, he was told, they did. In fact, they recommended it be started as soon as possible, and that the prosecution would appreciate a copy of documents involved in the case. They still wouldn’t tell him when he’d get his passport back, but they hinted it wouldn’t be long.
The very next day Brown sent an email to Soheil and Sahba Abedian detailing his conversation with the prosecutor, cc-ing Ron Eames. In it, he suggested that Sunland prepare a report for the prosecutor.
With input from Brown, Eames then prepared just such a document, written in the form of a memo from Eames to Brown on DLA Phillips Fox’s letterhead, which became known as ‘the Eames memorandum’. It contained what the Australian judge described as ‘Brown’s story, as it had evolved to that point: that Joyce offered to introduce Sunland to Reed; that Joyce said Reed had the right to purchase D17; and, “Joyce advised Sunland that it had to come to an arrangement with Prudentia before Dubai Waterfront would enter into a Sales and Purchase Agreement with Sunland”.’
It also said that Joyce confirmed Prudentia ‘controlled’ plot D17. Even though it did not detail what I was supposed to have done, it said I would be liable for prosecution for deceptive or misleading conduct under the Trade Practices Act, along with Reed, Joyce and possibly Brearley. It bore Ron Eames’s name as its author, in his capacity as a lawyer. I believe the memorandum should have disclosed that Eames was also a director of Sunland, so that the Dubai authorities, the ultimate recipients of this memorandum, would be fully informed of his connection with Sunland when considering its contents.
On 31 May, Brown went to meet the Dubai prosecutor again, this time with Soheil Abedian in tow. They gave the prosecutor a copy of the memo. Brown asked again for his passport back, saying he needed to go to Australia in connection with these mooted Australian legal proceedings. The Australian judge later wrote, ‘It was noted that the meeting was very positive, the prosecutor was keen to finalise the case and that Sunland’s co-operation would play a key role in supporting the proceedings.’ Abedian’s denial of having had contact with the Dubai prosecutors was part of his ‘inconsistent and unreliable evidence’ on this matter.
Five days later Sunland sent what are called ‘letters of demand’ to Brearley, Reed and Prudentia in Australia. These letters demanded the return of the AED44,105,750 it had paid Prudentia. Sunland didn’t bother including Matt Joyce and me at this point, since we were safely locked up in the hell-hole of Dubai’s maximum security prison.
Six weeks later, on 16 July, Matt and I were charged. Five short days after this, on 21 July, David Brown got his passport back — he was officially a free man again. I will simply quote the Australian court proceedings here:
Sunland issued an ASX Media Release stating that the Dubai authorities had finished their investigations, Brown had his passport returned and Sunland was investigating civil remedies. It also said Brown was a witness in the Dubai investigations and was never investigated or detained. This was followed by a 17.2 per cent increase in [Sunland’s] share price.
Perhaps some shareholders weren’t deceived. On 12 August, James Packer made what was reported in Australian media as a ‘shock resignation’ from the Sunland board and the following month he sold his 11 per cent holding in the company.
Justice Clyde Croft of the Victorian Supreme Court found Sunland’s actions surrounding the Dubai investigation worthy of the attention of Australian Securities and Investments Commission (ASIC), Australian’s corporate regulator. He sent a request that ASIC consider ‘the corporate governance issues for Sunland (including its ASX announcements) which are raised by these proceedings and take such further action as considered appropriate’.
There is a 297-page Australian court judgement examining what really happened in the sale of D17, but the short version is this:
• In August 2007, the D precinct was being divided into proposed plots. On 14 August, Anthony Brearley, Dubai Waterfront’s senior lawyer, sent a draft Sales and Purchase Agreement (SPA) to Prudentia for the proposed plot that would become D17 if and when the plans were approved.
• The next day Jeff Austin of Dubai Waterfront met with David Brown about the other DWF plot Sunland had previously bought. During the meeting Austin told Brown about D17, which, when it was created, would be adjacent to the plot Sunland already owned. As part of this conversation, Austin showed Brown a plan of the area including the proposed new plot.
• Austin gave Brown the name of Prudentia and Angus Reed, who was said to have ‘a hold on the plot’. As Brown later admitted, he knew that Prudentia had not signed an SPA for the plot and had not paid a deposit. Brown also knew the plot would only be officially listed for sale and allocated a price once it had been through an internal approval process.
• The following day, 16 August, Brown phoned Reed in Australia about the plot and asked him if he was interested in a joint venture with Sunland for it. Reed said he was.
• For the next four weeks Sunland and Prudentia tried to nut out the details of a joint venture. From very early on these discussions included talk about ‘a p
remium’ to be paid by Sunland to Prudentia. The Australian court noted, ‘There appeared to be little if any resistance from Sunland to that notion’ (in reference to a premium payment).
• As the Australian court found, ‘On September 16 at Soheil Abedian’s suggestion, Brown telephoned Reed, said “this is all getting too hard”, and proposed that Sunland simply pay AED20 million for Prudentia to “walk away” allowing Sunland to buy the land in its own right. Prudentia was amenable to that proposal.’
• The week before, Sunland had become aware that it could buy the land at AED120/sqft. It appeared Brown and Reed’s discussions had been based on an assumed price of AED135/sqft — a figure that Nakheel had never attached to the land.
• The AED44 million Sunland ended up paying Reed consisted of AED20 million ‘walk-away money’ plus AED24 million to make up for the per-square-foot price difference between AED120 and AED135 — despite AED135 never having been the price.
• On 1 October, Sunland gave a cheque for the agreed AED44,105,780 (around AUD14 million) to Hanley Investments, a subsidiary of Prudentia that had been set up especially for this deal. Bank records showed that exactly half this amount went into an account owned by Matt Joyce called Eight Blue (held in Jersey, as so many expat accounts were). This was what Matt had referred to as the ‘escrow’ account which he had set up to help Prudentia out.
Matt would tell me in jail that he knew Angus Reed only a little. He didn’t tell me that they had been at Geelong Grammar together. Or that in January 2006 the two of them had signed an agreement for Matt Joyce to provide consultancy advice for Reed’s company in Australasia and the Middle East.
As Eric Campbell reported on ABC-TV, after the AUD7 million was deposited in Matt Joyce’s ‘escrow’ account, the Standard Bank of Jersey Island asked for evidence in writing about the source and nature of the funds. ‘Matt Joyce sent the bank his 2006 consultancy agreement with Reed,’ Campbell reported. ‘Angus Reed wrote to the bank on the same day, stating the money represented 50 per cent of the net proceeds pursuant to his commercial arrangements between Prudentia and Joyce.’