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Dubai’s crackdown on corruption

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Points of Essence:

  • A string of high profile cases in Dubai involving the alleged financial irregularities by the senior management of Dubai’s top financial institutions may have shocked the global financial fraternity.
  • It was not immediately known how the alleged scandals may have an impact to the overall regulatory and supervisory infrastructure in Dubai.

By Andrew White on Sunday, 24 August 2008

White-collar crime rarely captures the imagination as easily as its garden-variety counterparts.

It seems you have to bring down a bank, hide billion-dollar losses or at least plunder a pension plan in order to secure column inches alongside the murder du jour.

Part of the reason is in the telling – after all, it’s unfortunately far easier to picture a grisly death, than it is to follow how the judicious use of special purpose entities might scupper a $111bn energy giant, or how one city whiz-kid with delusions of grandeur could blindside a 144 year-old Swiss bank with an alleged $75bn in unauthorised trades.

However, the summer of 2008 will be keenly remembered for a string of high-profile investigations into alleged financial irregularities by senior executives at both Dubai Government-owned and private entities.

If the public prosecutor’s suspicions are proved accurate, then His Highness Sheikh Mohammed Bin Rashid Al Maktoum’s drive for transparency – which is to be applauded – will have claimed its first scalps.

The summer of summonses began in April, and the announcement of probes into the activities of individuals at Dubai Islamic Bank (DIB) and its affiliate Deyaar.

DIB’s former vice president for finance structure, Rifaat Othmani, was arrested as part of a fraud investigation on June 5. He and several other former members of DIB staff are being investigated, while the probe also led to the arrest of JPMorgan Chase’s senior country officer for the UAE, Omair Mooraj.

At development firm Deyaar, meanwhile, four people have been arrested as part of a police investigation into alleged embezzlement. Those hauled in include Deyaar’s former CEO, Zack Shahin, who has since maintained his innocence.

Ever since the DIB and Deyaar investigations were made public, rumours have run rife that a host of other high-profile figures were also in the firing line. It has been a summer of ‘when’, not ‘if’, and so it came as no surprise when more arrests were announced last week.

First to be named was Adel Al Shirawi, the former CEO of mortgage giant Tamweel, and now vice chairman of state-owned Istithmar World PJSC. His former head of investments Feras Kalthoum is under the microscope too.

Down the road at Dubai Government-owned developer Nakheel, general manager of sales Walid Al Jaziri and former Nakheel executive Karim Masaad have also been arrested.

We can be sure that the public prosecutor’s office is not done yet. Amid tales of tender-rigging, bribery and profit skimming, the government is steadily making its way down a list of names, and circling those unable to balance the books or account for their lavish lifestyles.

This week, sources told Arabian Business that the CEOs of at least two other Dubai development majors – between them responsible for a completed project portfolio worth over $100bn – are currently the subject of CID probes. It’s going to be an uncomfortable summer for those without a clear conscience.

Andrew White is the deputy editor of Arabian Business English.
Source: http://www.arabianbusiness.com

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Written by Suapi Shaffaii

August 25, 2008 at 3:49 am

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