RAKIA), Rakeen determined to find solutions for La Hoya Bay Project and its investors

Published February 1st, 2010 - 10:24 GMT

RAK Investment Authority (RAKIA) is the owner of Al Marjan Island Project and appointed Rakeen Development as master developer of the same. This Project is one of the major real estate developments behind the success of Ras Al Khaimah as an investment destination and business hub.

In 2006, Mr. Frank Khoie, Chairman and CEO of Khoie Properties, approached RAKIA to purchase several plots on Al Marjan Island in order to develop its own project La Hoya Bay, which included different parts among which was the La Hoya Residence. Upon Mr. Khoie’s representations, several sale agreements were entered into by RAKIA and Khoie Properties.
 
Thereafter, Khoie Properties begun to sell off-plan units on all of the proposed plots of La Hoya Bay Project, in spite of the fact that he had only paid for the one plot designated for the La Hoya Residence, and received payments in hundreds of millions of Dirhams from numerous investors all over the world.

Khoie Properties was unable to make good of its obligations with RAKIA, as neither its payments due in 2006 (AED 13.73 million), 2007 (AED 91.93 million), 2008 (AED 84.05 million) and 2009 (AED 40.32 million) were effected nor its guarantee cheques dated 1/12/2008 (AED 57.00 million), 1/6/2009 (AED 57.00 million) and 1/12/2009 (AED 57.00 million) were honoured, whereby 3 cheques issued by its Chairman and CEO Mr. Frank Khoie were dishonoured due to insufficiency of funds. Khoie Properties remained incapacitated to meet its promises towards RAKIA, prompting RAKIA to file a criminal case for bounced cheque against its Chairman and CEO before the Courts of Ras Al Khaimah. Khoie Properties’ default is not only limited to its obligation to RAKIA. RAKIA has entertained and keeps continuously entertaining complaints and requests for assistance from investors and suppliers of Khoie Properties. 

Considering that RAKIA’s claim has been supported by evidence, RAK Court in June 2009 ruled the said case in favour of RAKIA, sentencing Mr. Frank Khoie for imprisonment for 3 years. There are 2 more cheques which were dishonoured by the drawee bank due to insufficiency of funds, and RAKIA is on the process of seeking court redress. 

RAK Court on its decision dated September 2009 appointed Rakeen as judicial custodian of Khoie Properties until the completion of La Hoya Bay. The said appointment is a significant move and will only prove that the legal authorities have full trust in Rakeen’s capability to solve this matter. Rakeen as judicial custodian furthermore has the full support of RAKIA.

Since this Court decision, Rakeen has been trying to implement this verdict, but unfortunately without success so far, due to the lack of cooperation from Khoie Properties’ side, who even appealed the judgment of the Court. Rakeen has faced daily groundless media communicated allegations of conspiring against Khoie Properties to steal the project.

RAKIA has further attempted to externally appoint independent auditors, with a first phase report of a formal audit to determine how much the exact amounts were collected from the investors and where that money went or how the same was utilized. Nevertheless, this appointment was challenged on different fronts to the effect which would jeopardize the objective of this audit by Khoie only approving the same if such audit effort will be directed and shared through him or his personnel.

Dr. Khater Massaad, CEO, RAKIA, stated: “Our sole intention is to protect the rights of La Hoya Bay’s investors and to act in the best interest of the sustainable development of Al Marjan Island, Ras Al Khaimah and its community. We believe that La Hoya Bay is a beautiful project which will add value to the Emirate’s living atmosphere. Once we have a clear status-quo of where we stand, we will be in the position to define the right strategy. The investors need and deserve full transparency and a clear understanding of the facts and of what can be done. For this purpose, officials from RAKIA and Rakeen will visit London (wherein the majority of the investors are based) to visit and discuss this matter with a group of La Hoya Bay investors”.

One of Rakeen’s first act as custodian of La Hoya Bay is the opening of an escrow account for the further payments to be received. In close partnership and coordination with the investors, RAKIA and Rakeen are confident that La Hoya Bay can be turned into the success story it promises to be. They have further submitted to the Court a full action plan of the different scenarios which might be adopted to continue developing the project.

Wahid Attalla, Board Member, Rakeen, added: “For more than one year now since the detention of Khoie Properties’ Chairman and CEO, Mr. Frank Khoie, we have been in constant contact with the concerned investors as well as with suppliers and other parties complaining about outstanding payments from Khoie Properties. Our main interest has been to reassure La Hoya Bay’s investors that they are not alone in this situation and that we will be finding a way to help them. After the initial feeling of being betrayed by Khoie Properties when they learned about Mr. Khoie’s bounced cheque sentence to 3 years of jail with other cases still under way, they have gained trust again and feel that with strong partners like RAKIA and Rakeen a way out can be found. The matter has been handled by the Courts and acted upon in strict compliance with their findings after thorough evaluation of the facts. I think it is time that Mr. Khoie should acknowledge this fact and respect the decisions of our honourable legal authorities. For the sake of his customers, who trusted him with their welfare, Mr. Khoie should furthermore admit to his mistakes and start acting responsibly by finally cooperating and allowing RAKIA and Rakeen to work towards a bright future of La Hoya Bay on Al Marjan Island.”

As per the recent accusations made by Mr Frank Khoie from his cell in RAK prison, making continuous misrepresentations and harassment statements against Dr Khater Massaad, CEO of RAKIA, and against Mr. Wahid Attalla, Board Member of Rakeen, who have been extending their efforts to help Mr. Frank Khoie and Khoie Properties to execute the Project and fulfil their obligations towards the investors, a possible legal action will be taken against Mr. Frank Khoie by the aforementioned executives, if he continues his false allegations and groundless media war.

RAKIA and Rakeen are now joining efforts with several investors’ representatives to arrange for a meeting in the beginning of February to hear directly from the investors and agree on the way to move forward in materializing the La Hoya Project.


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