When business relationships sour, the disputes can be bitter. But for one U.S. citizen, a venture gone bad in the gas-rich Persian Gulf emirate of Qatar has deteriorated from unpleasantness to nightmare.
For the past year and a half Nasser Beydoun, 46, of Dearborn, Mich., has been prevented from leaving Qatar, denied an exit visa until a civil court and prosecutors sort out accusations by former associates.
Beydoun’s former employer, Wataniya Restaurants, claims he mismanaged the company, improperly increased his own salary, signed contracts without authorization and stole money from the company. Beydoun acknowledges he expanded the company too quickly, but insists he has done nothing wrong and blames Wataniya’s struggles on the convulsions of the world economy in 2008 and 2009.
Multiple Qatari judicial entities have been examining various elements of the dispute. A year ago, Beydoun won a $170,000 judgment against Wataniya for back wages and expenses in a Qatari Labor Court. He says a prosecutor in early 2010 declined to act on criminal accusations of financial chicanery made by former Wataniya associates. (Like a number of points in Beydoun’s account, this claim can’t be independently verified, as prosecutors could not be reached for comment.)
Meanwhile, Wataniya filed its own civil suit against Beydoun in December 2009. The court appointed an expert in February to examine the merits of the case; the next hearing is scheduled for December 12, Beydoun says.
Of course, it’s the travel ban that is most upsetting to Beydoun. Originally requested by the plaintiffs and ordered by the civil court in 2009, the ban was rescinded in January of this year, according to Beydoun, only to be re-imposed a week later by Qatar’s Prosecutor General, following new criminal allegations by Beydoun’s former associates. Beydoun says he has been meeting with prosecutors and, he claims, showing them documentation and supporting evidence to rebut company claims that he misappropriated money.
For nine months Beydoun hasn’t seen his wife and three young children, all of whom were allowed to return to the U.S. He lives in a rented apartment in Doha, using Skype and telephone to stay in touch with friends and family. He was denied a work permit for 10 months after leaving Wataniya. Now he has a permit but can’t find a job, making it difficult to support himself or his family other than business consulting by phone.
“Some people would have gotten depressed from what has happened. Me, it only makes stronger,” he says. Indeed, he has been working with a consultant to attract media coverage, leading to articles in the Detroit Free Press and other publications in recent months.
Beydoun’s campaign has sparked inquiries from the U.S. government. A State Department official says “embassy officials have been in contact with judicial authorities in Qatar.” And both U.S. Senators from Michigan, Carl Levin and Debbie Stabenow, as well as four Michigan representatives, have written to the Qatari ambassador to the U.S., Ali Bin Fahad Al-Hajri, asking that Beydoun be permitted to leave. Al-Hajri wrote back to the representatives, asserting “I have been assured that the legal process in his case complies in all respects with the laws of the State of Qatar. Mr. Beydoun’s legal rights have been and will continue to be honored.”
Cost of doing business?
Indeed, Qatar’s authorities appear to be acting legally. In the Persian Gulf and many other parts of the world—unlike the United States—“someone who is alleged to owe a debt, including a defendant in civil litigation, may not leave the country until the claim is satisfied. In some cases the person may be taken into custody,” says Mark MacDougall, a partner with Akin Gump Strauss Hauer & Feld who focuses on white-collar and international cases.
Effectively, such rules grant significant powers to a visiting businessperson’s adversaries since all it takes is their allegation to trigger the potentially dire consequence of being forced to remain in the country—at least, until the allegation is disproven.
That said, MacDougall adds that government prosecutors in Persian Gulf nations aren’t so different from prosecutors in any nation. They often have the authority to prevent suspects from leaving during a criminal investigation. “Detaining a suspect turns on whether the individual may flee before charges are instituted or the investigation is complete,” MacDougall says.
Beydoun isn’t the first or only foreign business person to become a long-term, unwilling guest in Qatar. David Proctor, a British banker, was held for 14 months after his employers at Al-Khaliji Bank, removed him as CEO. Euromoney, a financial newsletter that followed the case, speculated that Proctor may have been caught in a power struggle among owners of the bank.
Such experiences are a reminder that doing business in other countries has its perils. Vikramaditya Khanna, a professor of law at the University of Michigan, says “I tell people to examine the risks they take” by learning the law in foreign countries.
The claims against Beydoun, whether true or not, clearly stem from a business disaster. The story began in the spring of 2007 when he accepted a job, at $20,000 a month, as Wataniya’s chief executive officer, charged with opening restaurants throughout the Middle East. Beydoun, who immigrated with his family from Lebanon to the U.S. as a child, graduated from the University of San Diego and has worked in several businesses. A former executive director of the American Arab Chamber of Commerce for the Detroit area, he also helped to organize U.S.-Arab economic forums in Detroit and Houston.
Capitalized with 100 million Qatari rials, about $27 million, the company—Wataniya means “national”—“wanted to be one of the biggest food and hospitality companies in the region,” Beydoun says. “Our timing couldn’t have been worse.” From April of 2007 to November 2009 Beydoun opened 30 restaurants, including Rainforest Cafes in Egypt and Dubai.
Beydoun acknowledges that, under his leadership, the company expanded too quickly in light of the weakening global economy. As the worldwide recession deepened, he says, “capital dried up, and we faced revenue shortfalls at restaurants.’’ The company lost about $6.5 million of its original capital, he says, and Wataniya eventually closed many of its restaurants after his departure. Today only five of its 30 establishments are still open.
Beydoun claims he warned Wataniya, a private company owned by 86 Qatari investors, about the company’s deteriorating finances and the recession-battered business climate. But he says he was ignored. Sayed Jadallah, an attorney in Qatar representing Wataniya, did not return numerous calls.
Wataniya stopped paying Beydoun in May of 2009, he says. He resigned in October of the same year and worked for the company until the following month, he says. On December 10, 2009, after sending three letters to Wataniya requesting his back salary, end-of-service benefits and reimbursement for expenses, Beydoun filed a complaint with Qatar’s Labor Department. Six days later Wataniya responded with the civil action against Beydoun, alleging mismanagement and asking the court to award it a $13.7 million judgment against him.
As he waits for an audit committee to present its findings to the Prosecutor General, Beydoun has faith he will be exonerated and that Qatar will have to release him. But even if he prevails, he will have paid a harsh penalty.