Friday, February 6, 2009

Blue City continued: AAJH Puts their side of the story to Bahrain press

As recently posted in a comment in the Blue City bonds story last week, here's an interview with the theoretically 70% owner of Blue City : AAJ Holdings chairman and chief executive officer Ahmed Abubaker Janahi. The tale puts out AAJ's view of their experience on Blue City with respect to their legal dispute with local Omani company Cyclone, preceded by (somewhat opportunistically) trying to say the case is representative of all GCC FDI. Hey, why not say that - its free world.

Anyone with the take from Cyclone's side, feel free to send me some info. I wonder when the ruling is expected?

Gulf Daily News interview.

Lawsuit 'is testing global confidence'

MANAMA: Global investor confidence in the GCC could be at stake in a protracted legal battle over the ownership of a massive development project, says a Bahraini entrepreneur.Bahrain-based AAJ Holdings is locked in a dispute with Omani company Cyclone over ownership of the $15 billion Blue City Project in Oman.

Cyclone took the dispute to the Omani Court of Appeal, after losing a case last March in which it accused AAJ Holdings of illegally acquiring a majority stake in the project.

AAJ Holdings holds a 70 per cent stake in the project, while the remaining 30pc of the shares are held by Cyclone.

But AAJ Holdings chairman and chief executive officer Ahmed Abubaker Janahi says his company has effectively been locked out by Cyclone since the ruling by the Primary Court.

Mr Janahi said the implications of the dispute were 'huge', with global investors watching to see how the appeal court rules.

"Lots of things are at stake here," he said.

"The investors injecting their money into the region during the past period are now awaiting the verdict in this dispute, in order to get the necessary comfort that their investments are safe in this region.

"From the moral point of view, justice in the GCC is under scrutiny and is now facing a major test. We hope that the ruling of the Omani judiciary will be fair as it has always been.

"There are international implications related to the financing of the project, which are overseen by international parties that have a right to protect their interests and intervene if they feel that matters are getting out of control."

AAJ Holdings had acquired its 70pc shareholding in the project company in two stages; 58pc on May 22 2005 and 12pc on October 17, 2005.

The legal dispute started when Cyclone instituted proceedings at the Omani courts claiming that AAJ Holdings and the two companies from whom AAJ Holdings bought the shares had violated the Commercial Companies Law in Oman, which states that partners in a company shall have the pre-emptive right to acquire shares that any partner in that company intends to dispose of to third parties.

Cyclone claimed that the terms of the sale offered to it to exercise its right of first refusal were not the same as the terms under which the sale of the project company shares was actually concluded.

The Primary Court in Muscat, however, rejected the case, confirming AAJ Holdings' shareholding in the project company and the validity of the share sale and purchase process.

Mr Janahi alleged that Cyclone had since rejected all overtures to start afresh and push ahead with the project, denying him and his representatives access to the company and the project.

"Following the issuance of the verdict in our favour, we reached out to Cyclone in an attempt to start a new page and preserve the livelihood of this huge project, particularly seeing as there are international parties which contributed to the financing of this project, in addition to the fact that the project companies and partners have made international and local financial commitments," said Mr Janahi.

"Unfortunately, Cyclone rejected all our attempts. Therefore, we are now awaiting the ruling of the Court of Appeal, hoping that the Omani judiciary will once more restore justice to its rightful owners.

"We do have rights; we own 70pc of the project's shares, and no one will take this away from us.

"Cylcone is continuing to prevent us from exercising our management rights as partners and board members and have even prevented us and our representatives from physical access to the company's premises in order for us to carry out our administrative tasks."

He said he and his representatives had been kept away from the project since the beginning of the dispute.

"Consequently, we are not responsible in any manner whatsoever for the commitments made and actions taken by Cyclone during the period in which we were shut out from the project," said Mr Janahi.

"After the issuance of the Primary Court verdict, I dispatched our professional representatives to gain access to the company's premises, carry out certain tasks and review the company's records.

"Sadly, they were thrown out of the company and prevented from entering. Until this date, we are still not granted access to the company nor its records, by Cyclone, without them actually having any legal backing for such actions."

He said his legal team had lodged an objection to the appointment of a new expert by the appeal court to examine the case, but this had been rejected by the court.

"We objected to the appointment of this expert right from the beginning, based on the fact that he is not one of the experts registered in the list of accredited and approved experts often utilised by the Ministry of Justice and does not have any experience in commercial adjudication," said Mr Janahi.

"He is an academic at Sultan Qaboos University and has no previous experience as an expert to the court, as this is the first task assigned to him.

"However, the court rejected our objections, which we found surprising, as a case of such magnitude and level should definitely be handled by a prominent experienced firm or an expert who has the necessary expertise, impartiality and professionalism."

He said his company had done everything it could to solve the dispute amicably.

"We did not leave any stone unturned in our attempts to reach an amicable resolution between the two parties," said Mr Janahi.

"Our position was clear right from the beginning; to preserve the interests of the project and the reputation of the region from the investors' point of view.

"The reason behind this is simple: we own a majority interest, and any amicable resolution will ultimately be to the benefit of all parties.

"We exerted all possible efforts, approached all officials and ministers, and conveyed messages to those of interest.

"Despite the fact that we were confident that we are in a position of strength in the case filed against us by Cyclone, we knocked on all doors out of our desire to preserve the Blue City Project, a desire that some interpreted as weakness and lack of confidence in our legal position.

"Unfortunately, such efforts to communicate were in vain."

Mr Janahi said the dispute had not daunted his commitment to engaging in further development projects in the region.

"This is an experience, and experiences only make you stronger," he said. "Despite the tough economic conditions experienced all over the world, including this region, I believe the effects of the economic meltdown are less substantial in the GCC, as governments are actively involved in the regulation of investment activities and many of the regions' central banks adopt a conservative approach."

Mr Janahi said he remained confident that justice would prevail.
"I'm fully confident that the Omani judiciary will restore justice and restore my rights," he said. "The case is quite clear and does not even require the appointment of experts, and I am confident that our legal position is sound."

13 comments:

  1. noseyguy said - I repost my earlier question, "Why does Ahmed Janari want to assert 70% ownership of a camel turd? Surely it would make more sense to leave Cyclone in 100% ownership of this steamy excrement!"

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  2. foreign investors what? watching and waiting? hahahahaha :)

    funniest thing i read all day !

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  3. I am curious why there is so much negativity related to this subject has on the blog sites. Could it be that some desperate souls have a vested interest in the project failing? I notice that it takes UD 1 minute to post anything potentially negative! Has anyone contributing to the blogs actually called blue city to get some real intel? I hear they are hiring new staff, selling houses and constructing things when others in Oman are doing the opposite. Is this true?!?!?

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  4. Ding dong the king is deadFebruary 7, 2009 at 1:56 PM

    The ONLY momentum that is behind this project is rank grandiosity. Otherwise it's fact it's fucked. Easy money (oil wealth) can (and does) through up some bizarre outcomes (Dubai anyone?), but of course anyone is free to believe what they will.

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  5. eloquent comment Ding but it is just more subjective spew. On what basis do you know this? Surely this project is good for Omanis and Oman; and Oman is not Dubai. newcomer

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  6. Ding dong the king is deadFebruary 7, 2009 at 3:57 PM

    Anonymous, Well, you may see it as spew but I'm just commenting on the facts as they have unfolded. That's all we can do eh? Enough people have tabled the events so I will not bore anyone with them yet again. Good for Oman? Now, you really are begging the question! The only route profit is ever going to flow is in a cyclonic fashion. All the 'bases' are covered. Sod every other Omani. As otherwise its all pompous rhetoric and spin. Omanis need to wake up. And I need be more careful with my spelling.

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  7. Gays, Guns and Money... that's all you get on this blog!

    No real intellectual substance

    Made for IQs of 70-110 max.

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  8. Well fecking blog off then...

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  9. The adverts in the papers have promised (?) significant investment returns (or words to that effect). What can I expect to make in 5 years??
    After all, the Palm Dubai houses were originally on sale at $400k and now sell for $4 million - it sure beats the bank. (or even Mr Madoff)

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  10. Anonymous, I can think of a few reasons for the 'negativity' around Blue City, but the real good thing about it is that if you come across any positive news or defensive comments regarding this project, in the blogs or elsewhere, you at least know for sure it's comming directly from the executive managment of Blue City itself.

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  11. A few reasons? Let me make a start:

    1) Janahi
    2) Akhlaghi
    3) Miri
    4) Grossmann
    5) Al Zadjali

    ..and one as a bonus:
    6) Russell

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  12. It amazes me to read posts on the positive effects on Omanis of project like Blue City, The Wave, Sama Dubai and the likes.

    Take Blue City as an example. The project will be built on a water front land, the water is the source of lively hood of many Omani fishermen. The government is building massive fishing jetties and ports, the idea is to move all these fishermen and their boats to what can effectively called fishing ghettos around the new ports, and the land they would have used to launch their boats will have 5 star mega hotels on them, with European, Asian and American guests, served by Omani waiters, the Omani waiters are the descendants of the fishermen who owned the land in the past.

    The same goes for the massive destruction of the batinah coast. The whole plateau has been reduced to a dust bowl in an effort to transform its economy from that based on fishing and farming to an economy that is based on tourism and service. The owners of the land have been reduced to servants to the new owners.

    This is called terraforming, the science of transforming a particular land to suit the needs of particular specie. In our case it is to suit the economical needs of a well positioned, wealthy Omani individuals who have no interest in fishing and/or farming.

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  13. That's what is called the 'price of progress'.
    No doubt this positive effect on Oman and Omanis is in the first place typical sales-talk, fully exploited by those who have a vested interest in the success of the project, i.e. the developers / investors. In fact, it is very likely that these companies and individuals in reality have little or no serious interest in what is good for Oman and Omani.
    It is the task of the Omani government to ensure that the interests of Oman and the Omani are served and protected.
    Fact remains that what is progress for one, might very well be a threat to the other.

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