Dubai’s DSI launches court case against PwC

Government of Dubai

• Contracting company registered lawsuit over $1.49bn hole in accounts
• Expert appointed by DSI alleges PwC ‘violated’ accounting standards
• Company plans to settle debts by writing 90% of them off 

Dubai construction contractor Drake & Scull International has registered a lawsuit against global consultancy giants PwC in Dubai Courts over a AED5.5 billion ($1.49 billion) black hole in the company’s accounts.

The case revolves around the six-year period between 2011 and 2017 when PwC were auditors for DSI and were also in charge of preparing a consultative report for restructuring the company and bringing in new investors.

DSI appointed new auditors in 2018 until 2022. According to a filing from DSI on Dubai Financial Market (DFM), the auditors issued a report showing accumulated losses that did not appear in previous financial statements. The report also cited exaggeration of the company’s project portfolio.

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It went on to allege that another consultant accounting expert appointed by DSI through Dubai Courts prepared a report which showed that PwC had “violated the approved accounting standards”. 

AGBI has contacted PwC for comment.

DSI’s accumulated losses as of the end of December 2022 increased to AED5.098 billion, from AED4.874 billion the previous year.

Revenues for 2022 hit AED81 million, down from AED150 million in 2021.

Last month the company set out a plan to settle its debts by writing 90 percent of them off and converting the remaining 10 percent to a mandatory convertible sukuk.

In a statement to DFM the troubled contractor revealed it had obtained 67 percent of its debt value’s votes, which exceeds the required threshold under bankruptcy law, for the move.

DSI said it has submitted the plan to a competent court, with a final judgment by Dubai’s Cassation Court adjourned until June 27.

The latest case comes after a judgment passed in Dubai Courts in March ordering KPMG Lower Gulf to pay $231 million to an investor group that claimed it lost money as a result of the audit work the firm did on a fund operated by Abraaj Group.