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  • Writer's pictureDetained in Dubai

Another day, another expat defrauded in the UAE

  • UAE continues to woo foreign talent and investment ,then rob them of their businesses and assets, leaving them penniless, jailed or on the Interpol database. Expats beware!

American National Michael Franco has found out the hard way that it doesn’t pay to be too innovative and successful in the United Arab Emirates. The renowned security expert has joined a growing list of foreign businessmen in the UAE who have been swindled of their intellectual property and robbed of their profits by unscrupulous local partners.

Franco is the former head of the US Department of Defense Secure Communications Lab where he helped invent the secure Blackberry phone used by Barack Obama; he’s well known in the security and intelligence communities for his involvement in ethical technologies. After developing software that can identify and track human trafficking rings, in 2013 Franco was wooed by Emirati businessman Khalid Al Bunnain Al Mazrouie, who wanted to take the technology to market. Franco moved his family to Abu Dhabi to form a joint company with Al Mazrouie, and everything was going well; apparently, too well.

Within months, Baynuna Advanced Systems, LLC had accrued $20 million in sales, with another $60 million in the pipeline, and amassed a net profit of $9 million. Days before the annual profits were to be divvied up between the partners, Al Mazrouie suddenly filed a series of outlandish criminal complaints against Franco in an attempt to appropriate the full profits for himself. Allegations against Franco included everything from industrial espionage, to spying on coworkers and visitors, deleting company files, and even to seeking to have an affair with Al Mazrouie’s septuagenarian wife. All of the accusations were baseless, without evidence, and were all ultimately dismissed by the courts that heard them. However, during the 7 months of trials, Franco was banned from leaving the UAE, his income was blocked, and he was completely locked out of his own company. Al Mazrouie has subsequently filed yet another case against him to ensure that he will continue to be deprived of his share of the company’s profits. Franco said “I was shocked to hear that this is a common practice in the UAE. I operated the company on a daily basis and generated the profits. As soon as they saw $9 million in profits, they just took it. They didn’t care that we would be even more profitable the next year. They thought they could operate the company without me but now it is just dormant. They have my technology in their possession that prevents serious crime and child trafficking just sitting there doing nothing. It is a real travesty and I caution anyone thinking about investing their time or money in the UAE.”

“Unfortunately, what happened to Mr. Franco is not an isolated incident,” says Radha Stirling, founder of Detained in Dubai. “We have recently dealt with case after case of expat businesspeople who have been cheated by their local partners, usually with the active collusion of the legal system and government officials; sometimes for hundreds of millions of dollars.”

In a similar recent case, British National Mohammed Haddad was forced out of his shares in the company he built in the Emirates, losing over $600 million. Haddad’s case exposed rampant corruption in the UAE judicial system, all with apparent complicity at the highest levels of government; the end recipient of the assets stolen from Haddad was a close relative of the Ruler of Dubai.

Stirling explains, “We have been lobbying the British FCO to update their travel warnings for the UAE to alert potential investors of the risks. There is simply no security for expat business people, it is too easy for a local partner to fabricate allegations against a foreigner, and these accusations can often lead to imprisonment even when there is no evidence. In Mr. Franco’s case, he has been fortunate in that all of the 22 allegations made against him have been ultimately dismissed. However, the fact that a new case has now been recently made against him, with neither he nor his attorney even being informed what the charges are, reveals just how dangerously easy it is for locals to impugn their foreign partners, and expropriate their assets.”

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