Khaleej Times had on November 11, 2003 reported that Damac Investment, the financial arm of Damac Real Estate and Catering was making efforts to cut out the losses it sustained as a result of IT or the so-called dotcom or electronic portals since the beginning of 2001.

The report said that Damac losses were not minor and that as a result, the company adopted a new course to create other investment brackets in different sectors, including real estate to make good the damages.

Given below is a second report that KT carried on February 9, 2004 that was also brought into the purview of the case. (We could not carry this on Thursday because of lack of space) Investors demand return of funds from Damac.

Company promised refunds in one year

“Dozens of investors of Damac Investment Company have demanded that their contributions paid to the company's portfolio in the US Stock Exchange be refunded to them. This plea came in the wake of the fall of the stock market, which consequently caused grave financial difficulties to a large number of companies in the Middle East region, mainly the Kingdom of Saudi Arabia and Egypt. Investors explained that their funds, or the remainder of their funds, were invested by Damac in the UAE real estate market, particularly in Dubai, in an attempt to earn swift profits to compensate the losses suffered. However, this attempt would not achieve the desired goal for the reason that the local market is flooded with investments, they say.

Meanwhile, the amount of funds invested by Damac is relatively small. "Shareholders are still waiting for Damac to refund their moneys at the earliest. Therefore, they are of the opinion that funds should be pumped in real property projects where the total profits should not exceed 10 per cent of the sums invested," said one of the investors. Damac has invested about Dh15 m. in the construction of two towers to be offered within the local market in an endeavour to compete with giant share holding companies, according to sources at Damac. Damac has expanded its operations in the catering business and added a series of fast-food restaurants in the hope of making up the losses incurred in the stocks as a step to compensate the shareholders; especially that Damac had earlier promised shareholders of profits above 20 per cent, according to the sources. They pointed out that the company also promised the shareholders to have their capital contributions refunded in less than a year once the flats and villas offered in the market are sold out.