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Posts Tagged ‘Banking Probe

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.

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Written by Suapi Shaffaii

August 25, 2008 at 3:49 am

Tamweel’s former CEO Adel Al Shirawi faces investigation for fraud

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UPDATES: 22 August 2008

Point of Essence:

  • Tamweel denies it being implicated under the current probe against its ex-CEO, Adel Al Shirawi.
  • This statement was issued amid concerns that the probe may be linked to the company which has seen its share prices plummeted ever since the investigation started. The company clarified that the probe was related to the personal wrongdoings of the former CEO.

Tamweel says it’s not under investigation

Thursday, 21 August 2008 12:07

Dubai-based Islamic mortgage lender Tamweel is not under investigation by the public prosecution as part of a corruption probe in which two former senior executives have been detain, the company said on Thursday.

Tamweel said that “to the best of the company’s knowledge” the investigation was limited to former chief executive Adel Al Shirawi and former head of investments Feras Kalthoum and will not hit profits.

“…there is no investigation into the activities of the company itself.” Tamweel said in a statement.
“Tamweel therefore reassures its shareholders and sukuk holders that this investigation has no negative impact on the profitability and operations of the company.”

The statement follows comments made by chief financial officer Gaurav Agarwal earlier in the week in which he said Tamweel has no plans to change its 2008 profit growth target and that the possibility that an investigation could lead to cash losses was “remote”.

Since the beginning of the month Tamweel’s share price has dropped 22.63 percent to Wednesday’s close.

The investigation into Al Shirawi and Kalthoum was first made public last week by Tamweel’s biggest shareholder Istithmar World, part of a broad corruption crackdown by the Dubai government.

State-owned developer Nakheel has also confirmed one of its staff is being questioned by police and analysts say there is more to come.

Investigations are also underway into former employees of Deyaar Development, including its former CEO, and Dubai Islamic Bank.


Points of Essence:

  • Tamweel’s ex-CEO, Adel Al Shirawi, is currently probed for embezzlement and mistrust by the Dubai investigating authority.
  • While this will cause a dent to the reputation of the companies associated with the CEO, it does affect the well being of the overall Islamic finance industry.

Al Shirawi stepped down as head of Tamweel in January and is currently vice chairman of Istithmar World.

Dubai: Tamweel PJSC’s former chief executive officer Adel Al Shirawi is under investigation by the Dubai public prosecution’s office for alleged financial wrongdoing, a Dubai police official said.

Al Shirawi is being investigated for alleged embezzlement and mistrust while employed by the UAE’s biggest mortgage provider, Saleh Hamed, head of Bur Dubai police, said in a telephone interview on Thursday.

The Dubai police have referred the case to the emirate’s public prosecution office, he said.

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Written by Suapi Shaffaii

August 21, 2008 at 3:30 am

Posted in Financial Crime

Tagged with , ,

Dubai bank probe sparks calls for compliance

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Points of Essence:

  • Dubai Islamic Bank and its affiliate Deyaar are under probe for embezzlement
  • This led to calls for better compliance and transparency in banks in the region

Mon Jun 23, 2008 5:40am EDT

By Jason Benham

DUBAI, June 23 (Reuters) – A police investigation into irregularities at Dubai Islamic Bank DISB.DU and a probe into the bank’s affiliate Deyaar DEYR.DU, have led to calls for better compliance and transparency in banks in the region.

Police in Dubai, a regional trade hub and financial centre, have detained seven people, two of whom were former employees of Dubai Islamic Bank, as part of an embezzlement investigation, according to police and public prosecution records.

The high-profile case has triggered an avalanche of local media coverage in the booming oil-exporting states of the Gulf and threatens to mar the image of the nascent Islamic finance sector, which follows the dictates of Sharia law.

“All these latest issues suggest that there should potentially be better compliance. We need better communication and visibility when these situations arise,” Raj Madha, director of equity research at Cairo-based EFG-Hermes, told Reuters.

Islamic finance has grown rapidly in the past few years due to high demand for investments and financial services that comply with Islamic law — which includes a ban on the receipt of interest.

“There should be better supervision over these things,” said Mohammed Yasin, managing director at Shuaa Securities.

Authorities in the United Arab Emirates have responded with several high-profile detentions that have captured the attention of the local media.

The two detainees who used to work for Dubai Islamic Bank are Rifat Usmani, former vice-president, and Omair Mooraj, managing director and head of Islamic banking in the region at JP Morgan Chase, formerly the managing director at a subsidiary of Dubai Islamic.

Lawyers for both Usmani and Mooraj denied any wrongdoing on behalf of their clients when contacted by Reuters.


Dubai has become the defacto financial centre for the Gulf and strives to build a reputation for clear regulations, transparency and low taxes.

“There is a new drive in the UAE which I have seen over the last three to four years, that no one is above the law,” said Essam Al Tamimi, founder and senior partner of Al Tamimi & Company, one of the largest law firms in the Middle East.

“The authorities have the power to investigate whoever breaks the law, whether they be local, British, whoever they are.”

DIB stock has fallen more than 13 percent in the past three months compared to an average 9 percent increase by rival banks in the UAE, according to Reuters data.

The clouds gathering over the Gulf’s third-largest Islamic-compliant bank risks affecting the Islamic finance sector on the whole.

Islamic finance is enjoying rapid growth due to Muslim interest and because some non-Muslim investors view it as ethical investing because of its ban on companies involved in pornography, for example, or alcohol.

“It may have some negative spillover into the Islamic banking brand in general,” Madha said, adding it is “far from clear what is going on”.

“If this is a case of usury, then customers might well ask what the difference is between Islamic and conventional banks,” he said.

Other investors say the impact could spread beyond the Islamic sector and into the quickly growing financial sector in the Gulf overall.

“Being Islamic or non-Islamic has nothing to do with embezzlement. What really matters is that it is a big financial institution which has a lot of presence in Dubai,” said Yasin.

Dubai Islamic assured its shareholders in a statement that the investigation would have no impact on the financial position of the bank. (Editing by Thomas Atkins)


Written by Suapi Shaffaii

June 24, 2008 at 3:43 am