Sunland 'misled the ASX' in Dubai case

Sunland, a Gold Coast developer behind the fraud prosecution of two Australians in Dubai, has misled the ASX three times by claiming that it and its senior executive have never been investigated in the case.

When Matt Joyce and Marcus Lee were arrested and jailed in January last year, Dubai authorities confiscated the passport of another Australian, the Sunland Group's chief operating officer in the Middle East, David Brown.

Now Sunland's own barrister has contradicted the company's repeated claims to the stock exchange, by telling the Federal Court that Sunland and Mr Brown were in fact investigated in connection with their purchase of a plot on Dubai Waterfront, a colossal development project where Mr Joyce was the managing director and Mr Lee the head of commercial operations.

Mr Brown has since become a critical witness for the prosecution against Mr Joyce and Mr Lee in Dubai. But court documents from early last year, when Mr Brown was arranging bail and fighting for the return of his passport, refer to him as "the defendant" and "the accused", and as being "under investigation".

Sunland, nevertheless, released three statements to the stock exchange - in February, March and July. The first said "there is no investigation into Sunland"; the second said no allegations had been made against the company or its executives, and that Mr Brown, while a witness, "is not the subject of investigations"; the third said Mr Brown was "never subject of the investigations nor detained".

In the Dubai fraud case - and in a separate civil action against Mr Joyce and others in Australia - Sunland alleges it was duped into paying a "consulting fee" of more than $14 million to buy the plot on Dubai Waterfront, a subsidiary of the government-owned master developer Nakheel. Sunland paid that fee to another Australian company, Prudentia, which claimed it had established a right to purchase the plot. Dubai authorities allege Prudentia had no such right, and Mr Brown's lawyers in Dubai noted that his status was changed from "defendant" to "victim".

Mr Joyce and Mr Lee, who insist they are innocent, are trapped in Dubai with their families, having spent nine months behind bars before they were released on bail to fight the fraud allegations. Their lawyers say they have been caught up in Dubai's spectacular property market collapse, in which Sunland, like many others, lost millions.

James Packer quit the Sunland board last August and sold his $28 million stake in the group in September without explanation, although at the time he was divesting a wide range of assets.

In the Federal Court in Brisbane in December, Pat O'Shea, SC, for Sunland, said "when these matters were first investigated, Sunland was also the subject of investigation, and, indeed, Mr Brown in particular was the subject of investigation". Mr Brown's emails were seized, Mr O'Shea said. He said this background "adds force" to Sunland's attempt to vindicate its reputation.

Sunland's statements to the stock exchange raise the prospect of investors suing if they believe they bought and sold shares when the market was not properly informed.

The Herald sent detailed questions to Sunland, which responded with a two-sentence statement: "Sunland stands by its previous ASX announcements that David Brown is a witness for the prosecution and has never been implicated in any wrongdoing. Sunland has and will continue to accurately inform the ASX and its investors as is required by law."

In a follow-up letter yesterday, Sunland's lawyers, DLA Phillips Fox, repeated that neither Sunland nor any of its employees were under suspicion of any wrongdoing "at the time of the initial statement to the ASX" on February 20 last year. They were "assisting the authorities, no more".

However, a Public Prosecution document in Dubai dated February 16 last year - four days before Sunland's first statement to the ASX - says Mr Brown was informed that it was "questioning him in his capacity as Defendant in the case". On March 16, another Public Prosecution document refers to his attempt to retrieve his passport, and still Mr Brown is described as the accused.

If a misleading statement to the stock exchange is deemed to be an attempt to manipulate share prices, a prosecution can lead to a maximum penalty of a $22,000 fine and/or five years' jail for an individual and a $110,000 fine for a corporation. Lesser breaches might lead to only civil remedies, and legal sources say it would be technically possible for some false statements not to be deemed as misleading or deceptive conduct - and escape any sanction.

The Australian Securities and Investments Commission said it did not confirm or deny whether investigations were under way.

Matthew Gibbs, the corporate relations manager for the ASX, said: "Allegations about a company issuing misleading or deceptive statements are potential breaches of the law rather than ASX listing rules, and are matters for the attention of ASIC. Under ASX rules, companies are obligated to keep the market properly informed of all material events. Companies are aware of the serious consequences of failing to do so. ASX treats the market announcements made by companies in good faith, but would consider investigating their veracity if additional information was provided that suggested a breach of ASX rules."

In the Federal Court, Sunland is suing Mr Joyce, who lodged his defence last Friday, Prudentia and its director Angus Reed, who has been declared a fugitive in the Dubai fraud case. Mr Reed, back in Melbourne, and Prudentia say they acted with integrity.

Sunland is not suing Marcus Lee, the second Australian accused in Dubai. Mr Lee's lawyer, John Sneddon, has stressed that it has never been alleged that he gained, or even stood to gain, from the land deal. Mr Joyce's Australian lawyer, Martin Amad, has said his client "never received a cent" of Sunland's money.

In Dubai, meanwhile, the case drags on. The court reconvened on Sunday but was put off yet again because the first prosecution witness, a financial auditor, failed to turn up for the fourth time.