Dubai, United Arab Emirates Feb 7, 2022 (Issuewire.com) - The DFSA has released its final decision on the findings of the Financial Management Tribunal (FMT) on the firm's Senior Executive Officer (SEO), Gilles Rollet. The findings of the FMT places all compliance breaches, fines, and penalties solely on Gilles Rollet, a decision for anyone familiar with the content of the FMT hearings that is in stark contrast to the evidence and witness testimony presented.
Speaking on the matter Rollet said, “Any company in the financial services sector has to balance the demands of their clients who seek flexibility and income generation with the governance requirements of the respective regulator. By operating within compliance boundaries, while also creating facilities that meet the client’s needs, new product or service offerings can operate safely. This is a position that we felt we had reached at La Tresorerie with our procedures. No objections were raised to what we perceived as clearly documented procedures by any of our consultants or the regulators. We are certainly disappointed by the decision of the DFSA.”
A deeper inspection of the testimonies in the witness interviews from the transcripts from the tribunal hearings paints a picture of an under-resourced regulator that failed to interview key witnesses. DFSA’s selected witnesses crumbled under cross-examination by Gilles Rollet’s counsel but were later upheld in the draft resolution as being truthful and honest despite obvious deceptions. Individuals favourable to the Dubai Financial Services Authority (DFSA) were permitted to selectively recall events, to correct themselves under cross-examinations, whereas Rollet is not granted similar dues.
On the findings of the DFSA and FMT, Mr. Rollet offered the following summary, “No clients of La Tresorerie lost any money. No accusations of fraud or wrong-doing took place. Ultimately, the manner of the DFSA inquiry with their selective choice of witness testimony, failure to consider the role of compliance officers whose opinion we depended upon, and scope of their proceedings, does not meet fair standards.”
The arguments of the DFSA in their complaint to the tribunal largely hinges on the definition of cash in relation to how La Tresorerie handled client payments. The term cash, in its proper definition, refers to ‘money and notes’. Yet, in compliance documents produced in consultation with the DFSA, in retrospect, the DFSA debates the term arguing that the cash withdrawal services did not refer to physical cash.
Dubai through the DIFC has sought to establish itself as the foremost jurisdiction for the domicile of financial institutions in the Middle East and to compete internationally, with its favourable tax laws, and a legal system based on British Common Law. The DFSA in their statements, made by Fiona Paddon their Senior Legal Advisor, said that the regulator does not have the resources to interview all witnesses. Furthermore, she added that they don’t pursue cases based on the degree of culpability but rather the perceived ease of conviction.
Mr Rollet, as a Senior Executive Officer, relied on the decisions of his advisors and compliance officers. These individuals stated retroactively in their testimony that they had concerns about the firm’s cash withdrawal procedures, but never escalated these issues or concerns to La Tresorerie’s Board or the DFSA.
In her testimony, Fiona Paddon stated that she would expect a compliance officer such as Ms. Morgan to report any misgivings or concerns she held. Despite these compliance failures and breaches of her fiduciary duty to both the DFSA and La Tresorerie, Ms Morgan remains a DFSA licensed and authorised compliance officer.
Selectivity in the enforcement of the law, including disproportionate penalties can be interpreted as an act of headlining; it is not the balanced disposition of a mature financial regulator. The handling of this case should make any company operating in the DIFC nervous. The regulator admits that it doesn’t have the resources to investigate properly, and is opportunistic, and at worst the selection and permission of witnesses shows an interest in prosecution, not proper governance.
The transcripts clearly show numerous opportunities for La Tresorerie’s compliance officer to raise any perceived issues with the DFSA, and for PriceWaterhouseCoopers to perform the same. and for the DFSA itself to qualify positions on the services La Tresorerie offered to its clients. Given that these provisions were not objected to and all cash transactions were approved by compliance, Mr. Rollet had no reason to believe himself in breach of regulation.
This is the second hearing on identical charges against La Tresorerie for which the firm was already fined. This additional hearing reiterates the exact same claims against Gilles Rollet individually with no consideration to the failure of the fiduciary responsibilities of the compliance officers within the firm that was as per their DFSA license and employment, duty-bound to report any concerns, but failed to do so.
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