The owner of a Dubai-based gold and jewellery retailer was sentenced to three years in prison for writing two cheques totaling Dh34 million ($9.26 million) that bounced, local media reported.

 

Gulf News said the defendant was Indian-born M M Ramachandran, owner of Atlas Jewellery, who was arrested in August in cases related to suspected bounced cheques.

 

Dubai has in recent years joined the likes of London, New York and Hong Kong as a major gold trading centre thanks to its proximity to the world's largest gold consumer, India, and an aggressive drive to become a regional commodities hub.

 

This is the second scandal involving Dubai jewellery businesses since the city's rise to prominence as a gold trading centre. In March 2010, Dubai sanctioned three brothers for unauthorised withdrawals from their company of 1.94 kg of gold and cash worth about Dh365 million.

 

Dubai court officials were not available for comment but the public prosecutor's office announced a three-year prison term handed down on Thursday to a defendant with Ramachandran's initials for "providing a check in bad faith".

 

Banking and trade sources said the gold retailer had defaulted on loans worth about Dh500 million and banks were considering options including legal action to retrieve their money.

 

The sources said some 15 mostly local banks had granted loans to Atlas Jewellery, which has more than 50 branches across the Gulf and India. After his arrest, the company asked banks for time to put together a repayment plan.

 

Atlas Jewellery was founded by Ramachandran in Kuwait in 1981 and moved to Dubai after its trading was suspended by the first Gulf War. It has interests in real estate, healthcare and owns and manages two hospitals in Oman's capital, Muscat.

 

A spokesman for Atlas did not return calls made by Reuters. - Reuters