It seems that, while we were all busy, Egypt has taken over Iraq. I'll have to check for satellite reports of queues of decrepid black and white Cairo taxis heading to Baghdad.
Thursday, 30 July 2009
It seems that, while we were all busy, Egypt has taken over Iraq. I'll have to check for satellite reports of queues of decrepid black and white Cairo taxis heading to Baghdad.
A Dubai-based lawyer who appeared in UK broadcaster Channel 4’s investigation into Damac Properties has spoken out over the developer’s controversial decision to sell off-plan units on a site occupied by the UN. On Monday night, Channel 4 News aired a special report on the Dubai property market featuring disgruntled Damac investors. One investor said he was not informed that the UN (United Nations) were tenants on the land which Damac intend to develop.
Dubai-based lawyer Ludmila Yamalova, a partner at Al Sayyah Advocates, who featured in the eight minute television report, told Arabian Business: “As far as the Lotus project was concerned, they had launched and sold a project on a plot of land on which there is an existing building occupied by tenants, so I find it highly questionable that they had all the necessary approvals and licenses in place as required by law in order to launch the project.”
This comes less than two weeks after Arabian Business exclusively revealed the Damac UN controversy. Retired UK lawyer Jeff Kershaw is preparing legal action against the developer, and has accused the company of ‘recklessly’ selling off-plan property on a site, which it knew the UN had a tenancy agreement on. Channel 4 obtained documents showing that Damac had been selling off-plan units on the Lotus plot when it was not in possession of the land. The broadcaster alleged that the developer had been selling off-plan property on 21 of its developments before it had possession of the land - a practice outlawed by the Dubai government last August.
It is understood Damac will receive the title deed to the Lotus plot when it has paid the last installment to master developer Dubai Properties.
Earlier in the month Damac told Arabian Business that it owned the land at the Lotus site.
A spokesman for Damac said on Wednesday: "Damac Properties has adhered to all regulatory regulations in regard to The Lotus. The land for the Lotus Development was purchased by Damac Properties, from Dubai Properties, at public auction. "The land and all of the units sold are pre-registered with the Dubai Real Estate Regulatory Authority (RERA). As per the industry standards, DAMAC has been issued the pre-registration certificate by the Dubai Lands Department that turns into title deed at the appropriate time.
"The Real Estate Regulatory Authority’s (RERA) Article 4 of Law 13 states: “No master developer or sub-developer shall commence a project or sell its units off plan before taking possession of the land on which the project is to be built and obtaining the necessary approvals from the competent authorities in the emirate.”
Wednesday, 29 July 2009
According to the NHS website in the UK, the typical symptoms of swine flu are:
- sudden fever (a high body temperature of 38°C/100.4°F or above), and
- sudden cough
Other symptoms may include:
- aching muscles,
- limb or joint pain,
- diarrhoea or stomach upset,
- sore throat,
- runny nose,
- sneezing, and
- loss of appetite.
The father of a South African diving instructor who was jailed in the UAE for having sex outside marriage has spoken out about his daughter’s ordeal.
“They took your dream and turned it into a nightmare,” wrote Frederick Hillier on the social networking site Facebook about his 22 year-old daughter Roxanne.
She was arrested on May 16 at the Khor Fakkan diving centre in Sharjah where she worked. She was asleep in an upstairs room while her Emirati boss, only identified as MH, was downstairs checking diving equipment.
They were convicted of having sex and being alone in a commercial building after hours.
The pair denied the charges. MH was released in June after his sentence was reduced on appeal. Roxanne served more than two-thirds of a three month sentence.
On Monday she left the UAE to return home to her family at which point her father felt he could safely air his views about his daughter’s treatment.
“Roxy, now that you are finally in the air and out of the UAE I can rest,” Hillier wrote.“All of this saying thank you to your captors and minding your Ps and Qs is over. I am disgusted with the legal system in the UAE.
“They took your dream and turned it into a nightmare. They humiliated you and took away your dignity. They put you in prison for something that you did not do. They have tried to ruin your future.
”He continued: “My darling Roxanne, try to put this behind you and move on with your life. You have absolutely nothing to be ashamed of. Keep your head up and look the world square in the eye. You have a bright future ahead of you and a loving family and friends behind you.”
Tuesday, 28 July 2009
Sorry, yes, crazy talk, what was I thinking....I'd better go and have a cup of tea and a lie down...
The UAE Ministry of Health has strongly denied it will demand expatriates in the UAE on holiday abroad to produce a medical certificate proving they are not infected with swine flu before returning to the country.An unnamed source within the National Supervisory Committee for Combating Swine Flu had been quoted in a media report on Tuesday as saying that from August any person with swine flu symptoms without the certificate would be refused entry to the UAE .But a senior health official has since quashed suggestions the government planned to take this action.
"The news about this issue is completely untrue," said Dr Ali bin Shuker, director of the Ministry of Health and Chairman of the Technical Health Committee for Combating Swine Flu, speaking later on Tuesday, in a report by WAM news agency.He also denied suggestions, in the same report by UAE daily Gulf News, that shopping malls would be provided with thermal scanners to detect people with the virus. "The idea was not even included on the agenda of the two committees," he said.The National Supervisory Committee for Combating Swine Flu was committed to standards set by the World Health Organisation (WHO) to fight the virus, he said.He said the authorities were striving to implement a public awareness plan about the virus in cooperation with other government stakeholders including ministries of education and higher education and the General Authority for Islamic Affairs and Endowment."The National Supervisory Committee for Combating Swine Flu is handling issues regarding this disease with transparency and clarity out of its keenness for the safety of the public," he said.The committee kept the public informed about the latest developments on swine flu through weekly updates every Monday or interviews officials gave to TV, radio and other media outlets, he added.The two committees are government organisations set up to fight the spread of the virus.The Ministry of Health said on Monday that 11 patients with swine flu had been discharged from hospital after fully recovering from the virus.Thirty five more swine flu patients were still receiving treatment in hospital, with their condition described as stable, it said.
If you're doing a visa run to Hatta or Wajajah and you're in Omani territory for maybe 30 minutes tops (depending on whether you have a coffee or not), do you have to get a doctor's certificate from the nearest town in Oman to say you're swine flu free? What tests is the doctor required to run? Will the certificate have to be in Arabic? How can a doctor who's never met a patient previously sign off on a certificate, when that patient is possibly be infected with H1N1 but not yet showing symptoms? We're off to Tanzania to do a safari so do we have to obtain a certificate from a doctor somewhere in Tanzania? I'm sure the few doctors that are in Tanzania have far better things to do.
Source: Gulf News
Expatriates who are working in the UAE and are on vacation abroad will have to produce a medical certificate that proves they are not infected with H1N1 virus before returning to the country.
The move will be implemented from August.
A source from the National Committee for Combating Swine Flu also said that instructions have been issued to all airports, sea ports and land border points to quarantine any person suspected of having H1N1 symptoms upon entering the country.
"Without this certificate, any person with swine flu symptoms will be prohibited from entering the country. Accordingly, any company or establishment will have the right to cancel sponsorship, if the worker conceals an infection intentionally," the source said.
The source told Gulf News that the committee followed some infected cases with the H1N1 virus during the last few weeks and found that strict measures for containing the virus have to be taken.
The source also said that quarantining people infected with the virus, and not allowing them to be in touch with others in public locations such as markets, malls, cinemas and worship areas is vital in curbing the spread of the virus.
One of the important decisions taken by the committee is to provide malls with thermal scanners to detect those with high fever, before quarantining them. Strict instructions have also been issued to airlines to advise people coming to the UAE to contact the authorities if they have high fever.
This will help the committee to follow up their case and curb the virus from spreading. Airlines are also instructed to print brochures to increase awareness among passengers and to urge them to declare their health status.
The committee held a meeting on Sunday with officials at the Ministry of Health and the Ministry of Education to set up a plan for the new school year.
Sunday, 26 July 2009
Source: Sydney Morning Herald 27 July 09
FOR more than 150 years, Geelong Grammar has provided its privileged graduates with the keys to success in an Anglo-dominated Australia. But for the Old Grammarian classmates and property industry figures Angus Reed and Matt Joyce, some training in doing business in more exotic places like the United Arab Emirates might have been more useful.
The Herald can reveal that Mr Reed, a Melbourne-based developer, has emerged as the mystery man at the heart of a Dubai property deal gone bad; a transaction that has left Mr Joyce and and another Australian executive, Marcus Lee, languishing in prison for six months and facing trial for fraud.
Mr Reed and an Australian lawyer, Anthony Brearley, are believed to have left Dubai before a police investigation, thus avoiding jail. Well-placed sources last night confirmed that Mr Reed and Mr Brearley have been declared "fugitives" in Dubai and will be tried in their absence.
The Herald also understands that the James Packer-backed developer Sunland Corporation has Mr Reed and Mr Joyce in its sights as it prepares civil action to recoup millions it says it lost on the deal.
Like thousands of their colleagues, Mr Reed and Mr Joyce ventured to Dubai a few years ago in search of riches. The dream turned sour last year for Mr Joyce in particular, when the emirate's "miracle" property boom proved to be a very fragile bubble.
Until his arrest in January, Mr Joyce had been managing director and Mr Lee a senior executive of Dubai Waterfront, a subsidiary of the state-owned Nakheel Corporation. It is the world's biggest waterfront development.
Important to the charges against Mr Joyce and Mr Reed are payments allegedly made by Mr Reed's Australian company, Prudentia Investments, to a bank account in Jersey held by Mr Joyce. Both men are expected to insist that any such payments were unconnected with the Dubai property deal in question.
A source close to Mr Reed says he is deeply upset by his mate's predicament but has not returned to Dubai for fear of being arrested.
At the core of the row is the sale in 2007 of a parcel of development land by Dubai Waterfront to Sunland. Prudentia is believed to have partnered Sunland in the purchase of the waterfront site. But Prudentia sold its share of the project to Sunland as the boom continued through 2007. Now Sunland has put development of the site on hold and says it is the victim of fraud.
It has made a formal complaint to Queensland police and the Australian Competition and Consumer Commission. The Herald understands the company names Mr Reed, Mr Joyce and Mr Lee.
One source close to one of the families said the saga had led to tension between the two old school friends, a suggestion rejected by a spokesman for Mr Joyce.
Mr Joyce and Mr Lee insist they are innocent. Australian business sources have complained that the two became scapegoats amid the property collapse in Dubai, where "commissions" or kickbacks have been commonplace.
The Dubai prosecutors and Sunland, which has billions at stake in Dubai, see things differently. Sunland has stated publicly that it will seek "civil remedies in respect of the alleged fraud".
It has repeatedly stated that it is co-operating fully with the Dubai authorities in its investigation of Mr Joyce and Mr Lee but has denied being behind the police action against them.
Any civil action will be taken in Australia, not Dubai. But in what is shaping up as a bitter stoush, with big-name lawyers such as Robert Richter (QC, William Crockett Chambers in Melbourne and barrister for underworld gunman Mick Gatto) likely to be throwing the punches, the case is set to open a rare window into the opaque world of business and government in a country dominated by its ruler, Sheikh Mohammed bin Rashid al-Maktoum.
Mr Reed is well-known in property circles, including as an adviser to the Nauru Government in the 1990s, when it lost a fortune on the Melbourne property market.
Those who know the two men say Mr Joyce is quiet and cautious while Mr Reed is more entrepreneurial and daring. It is counter-intuitive, they say, that Mr Reed is now a free man at home in Toorak while Mr Joyce sweats it out in a Dubai jail.
After a thorough vetting by Mr Reed's lawyers, Prudentia issued a brief written statement. The lawyers would not allow Mr Reed to be quoted. Instead, a company "spokesman" said: "Some years ago, the Prudentia group, through its Singapore-based subsidiary, was involved in a transaction which we understand is the subject of the investigation by the Dubai authorities.
"The Prudentia group has at all times acted properly and with integrity and is concerned and surprised that there would be any allegations of wrongdoing against representatives of any of the parties involved in the transaction."
Mr Joyce's Melbourne lawyer, Martin Amad, restated his client's innocence and questioned Sunland's motives. He said the land sale was a "legitimate business transaction that occurred prior to the global economic downturn. Sunland has subsequently incurred a huge loss on the project and has written down the value of the land substantially."
He added: "Shareholders of Sunland would hope that Sunland exercised due diligence prior to purchasing the land. After all, they would have their shareholders believe they are an experienced and sophisticated property developer."
He said that, contrary to previous reports, there had never been an allegation of Sunland paying consultancy fees to Dubai Waterfront.
Mr Joyce's wife and three children and Mr Lee's wife are still in Dubai, awaiting the outcome of the fraud trial.
Sunland did not wish to add to a written statement made to the Stock Exchange last week.
In a separate matter in Sydney last week, Prudentia refused to comment about its plans for the Waratah Park Earth Sanctuary, where Skippy the Bush Kangaroo was filmed in the 1960s, after the RSPCA put down two emaciated kangaroos at the closed park. State authorities say Prudentia has failed to obtain a licence to care for more than 100 native animals in the park since it took over the site in Duffys Forest, on the northern beaches, in 2006. Residents fear the company has let the site run down because it wants to build houses there.
- facial and biometric data on passports;
- palm and side of palm prints for the Emirates ID card (with a fee to pay);
- thumb prints for UAE e-gate cards (with a fee to pay);
- retina scans at airports and some land borders (oh, that's free);
- a blood sample every three years as part of the visa renewal process.
In the article below, Mr Al Minhali says that the fingerprints will be checked "...to make sure they have no criminal record." I wonder which databases the fingerprints are checked against? Only the UAE? Or is there an open international database the UAE authorities have access to?
Article source: ArabianBusiness.com
In a report by Gulf News, Nasser Al Awadi Al Minhali, acting director general of the Federal Naturalisation and Residency Department, said applicants will be required to give their fingerprints to make sure they have no criminal record.
"Starting next month, applicants for residence visa will be fingerprinted under a tighter biometric system to provide more secure identification and prevent fraud," he told the paper.
"Those found to be with criminal records will be denied visa and handed over to the police for further legal action," he said.
"The move will eventually cover all residents in the country, including workers sponsored by their employers, investors, domestic workers and parents of residents," Al Minhali said. Residents living in the country will be fingerprinted when they apply for renewal of their visa. It is not yet known how much this will cost, but Al Minhali said the fee would be nominal.
A fingerprint database will be set up in Naturalisation and Residency departments across the UAE to ensure only those with "good conduct" or "lack of a criminal record" will be granted residence visa, the paper said.
Wednesday, 22 July 2009
Another resident, Jeril Jaison Varghese, says he was in front of the Multiplex in Mega Mall to watch a movie when a CID officer asked him for his identification.
"I was taken to the Sharjah Police office inside the mall by a security guy from the mall. My silver bracelet was confiscated by the CID," he said.
When Varghese asked why his bracelet was being taken away, he says, police said men are not allowed to wear bracelets or any fashion accessories in Sharjah malls even if it is silver and not gold.
"When did this rule come into being? There was no public notification and no posters in the mall notifying people of this rule," Varghese said. Another resident said on Saturday CID confiscated his friend's silver bracelet while they were in a mall.
"Is there a rule in Sharjah that authorises the CID to confiscate fashion accessories other than gold from residents and their children from malls?" asked Aji Alexander.
A Mexican mother who recently shifted to the UAE and is now living in Sharjah said her 14-year-old son was scared when he was stopped by police who shouted at him for wearing diamond earrings.
"Police were rude... We have no clue that such things are not allowed here," the mother said. "I am not allowing my son to go to Al Qasba again. My son is a very decent and polite boy," she said.
"If people are not offending the laws of the country and are not acting like women by wearing such accessories so why are police taking such action?" she asked.
Mohammad from Sudan said his 18-year old nephew who came from Abu Dhabi to visit his grandmother in Sharjah was taken last week to the headquarters for wearing a silver necklace.
"The boy was afraid. He was standing in front of his grandmother's house when police took him to the CID. After three hours he contacted us," said Mohammad. Residents said Sharjah authorities should inform people who wish to come here that men must not wear fashion accessories.
"Tourist companies should inform the public. Information booklets should be handed to people at the country's entry points. They should advertise that in all malls and entertainment areas such as Al Qasba which we believe are safe places for our children to spend time," said a resident.
"We are aware of the decency law in Sharjah, but wearing silver bracelets, necklaces, or even earrings in a decent way is not against the law," said a resident.
A senior CID official told Gulf News that police are implementing an eight-year-old decency law.
"Men are not allowed to wear such accessories. Everybody is aware of that," he said. "We are informing people through the media and people should be aware of that," he said.
Islam forbids men from wearing gold and silk.
Source: Gulf News 21 July 21 09
The photo shows The Atrium, a, now cancelled, project in Dubai that seems to be at the centre of the story.
"The upmarket Dubai Waterfront site at the centre of the allegations had been earmarked for a $1.6 billion tower which Sunland was developing in partnership with a company linked to golfer Adam Scott.
The project, which was abandoned in March, was to have marked the first stand-alone development for Sunland in Dubai without the backing of the ruling Sharjah royal family."
Tuesday, 21 July 2009
Sunland, in which Mr Packer is a key shareholder and non-executive director, has laid the complaints against Matthew Joyce and Marcus Lee, executives from the colossal Dubai Waterfront project. The two have been charged with fraud after being jailed for six months on suspicion of bribery.
The pair insist they are innocent and Australian business sources have complained they became scapegoats amid the bursting of the property bubble in Dubai, where "commissions" or kickbacks are commonplace.
But now Sunland, which has billions at stake in Dubai, has made a formal complaint about Joyce and Lee to Queensland Police and the Australian Competition and Consumer Commission.
In a media release yesterday, the day after the fraud charges were revealed, the company said: "Sunland understands that the charges relate, at least in part, to the purchase by one of its subsidiaries of a site from the Dubai Government-owned master developer Nakheel (Dubai Waterfront LLC), at Dubai Waterfront in October 2007."
It is understood that Sunland paid commissions to Dubai Waterfront, where Joyce was managing director and steering the world's biggest waterfront development.
Sunland's managing director Sahba Abedian said the company had been assisting Dubai authorities with their investigations since December 2008 and would continue to provide help when required. The company said it did not instigate the investigation into the executives.
Mr Abedian said: "Sunland has also taken steps to report the actions of certain individuals to the Australian authorities and we are investigating civil remedies in respect of the alleged fraud."
The statement did not name Joyce or Lee, but the company has confirmed that its complaint and action were against the executives, not Dubai Waterfront or Nakheel.
It is believed that any civil action will be launched in Australia, not Dubai.
Mr Abedian confirmed that Dubai authorities had returned the passport of David Brown, the Sunland's chief operating officer in the Emirates, now that the they had completed their investigation. He said Mr Brown was a witness and not a subject of investigation.
Joyce's lawyer, Matin Amad, said he was shocked by Sunland's action.
"No complaint about Joyce or Lee has been brought to my attention," he said yesterday afternoon. "I can't imagine any circumstances under which a complaint could be justified. The alleged offence occurred in Dubai, not in Australia. It sounds like they have an ulterior motive in doing this."
Mr Amad said the case against Joyce and Lee is weak. Joyce's wife and three children and Lee's wife are in Dubai, awaiting the outcome of their fraud trial.
Sunland said it only released the information now as it had not wanted to interfere with the Dubai investigation.
Source: The Age, Melbourne 22 July 2009
Monday, 20 July 2009
Two Australian businessmen have been formally charged with fraud, almost six months since they were thrown into a Dubai prison.
Marcus Lee, from Sydney, and Matt Joyce, from Melbourne, were arrested in January on suspicion of bribery while working on a development project for the United Arab Emirates government-owned Nakheel property group.
Mr Joyce's lawyer Martin Amad today told ABC Radio formal charges had been laid, although the exact details of the allegations were still not known.
"We've just received the charges yesterday and we haven't had a chance to have it translated," he said.
The charges are related to fraud.
The men were each held in solitary confinement for seven weeks, had been moved between three prisons and were struggling to deal with their detainments, Mr Amad said.
Although he had yet to read the prosecutor's brief, he suspected the case against the pair was weak.
"A particular set of circumstances may lead to charges in Dubai, but may not be sufficient in Australia and I think that's probably the case here."
The federal government has confirmed 91 Australians have been arrested in the UAE - most in Dubai - since January 2008.
Mr Amad said the figure was unlikely to recede, given foreigners were increasingly being made scapegoats for soured business deals.
"More and more people are now starting to understand the risks in doing business overseas," he said.
"With the impact of the global financial crisis, I think more and more people will be charged on similar allegations and I think Australians and the Australian Government need to be aware that this is a distinct possibility."
Mr Amad said in a statement later that the wives of Mr Joyce and Mr Lee, and Mr Joyce's three children, were all in Dubai awaiting the outcome of the legal proceedings.
"The experience, and concern about the eventual outcome of the case, has taken its toll on the two men and their families," he said.
The pair were now being held in Al Awar Central prison, where they were allowed non-contact visits once a week, Mr Amad said.
The defence was looking forward to presenting its evidence and believed the case against the pair should be dismissed, he said.
Sunday, 19 July 2009
A respected business family claims it has fallen victim to a spectacular swindle.
Of the merchant families that dominate Saudi capitalism, few are as respected as the Gosaibis, a "blue-chip" clan which could borrow on the strength of its name alone. It was, therefore, a shock when in May parts of the family conglomerate, Ahmad Hamad Algosaibi & Brothers Company (AHAB), defaulted, prompting lawsuits in various countries. But on July 15th the shock turned to astonishment. In documents filed in New York's state Supreme Court and seen by The Economist, AHAB claims that it has been the victim of a "massive fraud" orchestrated for years by Maan al-Sanea, a Saudi billionaire who is married to a daughter of one of AHABs founders. The company says Mr Sanea "misappropriated" around $10 billion in the alleged swindle.
Mr Sanea has his own business, the Saad Group, a vast investment company once reckoned to hold over $30 billion of assets worldwide, including the second biggest stake in HSBC. He also used to work for the Gosaibis and, besides having married into their family, he freely admits he has "long had personal relations with the partners of AHAB". But he insists that the business ties between his Saad group and AHAB are now on an "arm's length commercial basis."However, AHAB claims that Mr Sanea was until very recently a "senior executive" of its financial-services arm, the Money Exchange, which chiefly handles remittances by workers inside and outside Saudi Arabia. It says Mr Sanea made use of this position to borrow from banks "using forged or falsified documents". He then "diverted the funds received to his own use."
AHAB has made these allegations in response to a lawsuit filed against it in New York by Mashreqbank, a lender based in the United Arab Emirates which was one of the first banks to admit openly to having an exposure to AHAB. Mashreqbank is going to court over a foreign-exchange deal on which it claims AHAB defaulted. It wired $150m to an AHAB account on April 28th and says it was due to receive 564.3m Saudi riyals a week later in return. But AHAB failed to pay. In its court document of July 15th AHAB responds that it knew nothing about this currency deal until the New York court sought to attach its assets over Mashreqbank's claim.
Having looked into the matter further, AHAB now says the transaction was one of many organised by Mr Sanea with "a variety of financial institutions in the United States, the Middle East, and elsewhere", while keeping them off the books to conceal them from AHAB's partners and directors. It says that Mashreqbank alone entered into 52 such deals, totalling $4.7 billion, between January 1st 2008 and May 1st 2009.
AHAB claims that having these huge amounts of cash constantly sloshing around in the Money Exchange's accounts allowed Mr Sanea to siphon off some of it by, among other things, writing fraudulent cheques, and transferring cash to people, companies and accounts that he "controlled directly or indirectly". It says Mr Sanea told AHAB employees not to record the transactions in the company's books and in July 2006, it alleges, he sent a memo to senior employees of the Money Exchange telling them to withhold any messages intended for the board of directors and "to deliver those communications to him instead". AHAB says Mr Sanea's manoeuvres allowed him "to continue looting AHAB and to conceal the massive scope of his thievery from AHAB and its Board".
AHAB does not accuse Mashreqbank or the other banks that engaged in the currency deals of knowingly participating in the fraud it alleges. However it does claim that in the $150m transaction at the centre of the court case, Mashreqbank stood to enjoy a "grossly inflated profit margin". And it argues that the transaction "had no legitimate commercial purpose which would have been obvious to both parties in the transaction." It says almost all the other transactions involving Mashreqbank likewise gave it a substantial profit. Mashreqbank's spokesman said on Friday that it felt unable to comment on the matter until it had consulted its lawyers.
A spokesman for Mr Sanea's Saad group, asked to comment on AHAB's accusations, said, "We have not seen or been served with this claim, although it appears from press reports to be a repetition of claims previously presented extensively to the press and elsewhere and which are baseless. If we are served with such a claim, we will respond to it vigorously through specialist counsel, confident in both the true facts and the judicial process." Last week when The Economist put similar allegations to Mr Sanea's lawyers, they described them as "scurrilous and utterly untrue".
Although their scale is spectacular, the nature of the allegations will not come as a complete surprise to some bankers in the Middle East. The Gosaibis had previously said that they had found evidence of "substantial financial irregularities" in their financial-services arm. And in a confidential creditors' meeting in Bahrain on June 24th the group disclosed the scale of the problem, according to sources familiar with the matter. They say it left creditors in little doubt about whom it suspected as the author of its misfortunes.
But to make this complaint in black and white, in a New York court document, is an extraordinary twist. Family businesses in the Gulf traditionally settle their disagreements behind closed doors, judging that "the preservation of the family reputation is of paramount importance," as a banker in the region puts it.
In this case, more is at stake. The Algosaibi group owes more than $9 billion to more than 120 banks all over the world. The uncertainty over its finances is making some of them wonder if it is worth lending to Saudi Arabia at all. The group's creditors had hoped that the Saudi monarchy would step in to broker a truce between Mr Sanea and his aggrieved in-laws. Instead, an internecine family feud in a normally secretive kingdom will now be pursued in the open through the American courts. Like Ahab's harpoon in "Moby Dick", the allegations that AHAB has fired off may drag Saudi Arabia's financial reputation into the vortex.
Saudi Arabia has been rocked by a lawsuit charging one of the country's wealthiest businessmen, Maan al-Sanea, with stealing 10 billion dollars from his wife's family over four years.
Newspapers on Saturday splashed reports that the prominent Algosaibi business group had filed a lawsuit in a New York court accusing billionaire Sanea of skimming transfers from a workers remittance unit over four years.
In the biggest scandal to erupt publicly in the Gulf in the wake of the global financial meltdown, Sanea was accused of using inflated spreads on short-term foreign exchange transactions from the unit to swindle Ahmed Hamad Algosaibi Brothers Co, or AHAB, according to documents filed in New York's state supreme court.
By constantly rolling over the transactions, Sanea was able to hide them and amass a fortune before the arrangement apparently collapsed earlier this year, according to the charges.
"AHAB presently estimates that al-Sanea misappropriated approximately 10 billion dollars as a result of his frauds," the group charged.
The charges broke open a dispute between the two groups and numerous regional and international banks that had simmered behind the scenes for two months.
Mashreq Bank, one of the United Arab Emirates' largest, is cited as a "relevant person" in the case.
The charges were filed on July 15 in a "third party complaint" against Sanea and his Bahrain-based Awal bank in response to Mashreq's suit early July against AHAB for 150 million dollars allegedly owed in a foreign exchange deal.
At the center of the scandal are AHAB and Sanea's Saad group, closely-linked diversified businesses based in the eastern Saudi industrial city of Al-Khobar.
Sanea, who is married to the daughter of one of AHAB's founders, was head of the AHAB unit from where the suspect deals originated, the Money Exchange, which normally processes foreign workers' remittances.
According to AHAB's suit, since 2005 Sanea arranged billions of dollars in foreign exchange deals carrying "extortionate rates" with other banks through the unit.
Mashreq, it said, was one of the main partners in the deals, which were hidden from AHAB's management.
"For four years, literally billions of dollars sluiced back and forth between Mashreq and AHAB, all highly unusual transactions on non-commercial terms," the allegations say.
"These transactions could not have served any legitimate commercial purpose."
Mashreq was not contactable on Saturday, which was a holiday in the United Arab Emirates.
Wednesday, 15 July 2009
Developers chasing purchasers to complete the sale of a property. A story that's only too familiar in recent times in Dubai but now its happening in Spain.
Britons who have had second thoughts about buying holiday homes in Spain are being pursued in the Spanish courts by the developers - despite a clause in their contract allowing them to back out of the deal, law firm DWF has warned.
The firm is acting for a number of British buyers who have been threatened with legal action. It says hard-pressed Spanish developers who have been left with a stock of unsold properties on their hands are now trying to take court action to override the terms of their contracts and force buyers to complete the sale.
Antonio Guillen, a Spanish lawyer with DWF in Manchester, explains: “During the property boom, Spanish developers were so confident of selling their homes that they included a clause in the contract allowing purchasers to pull out provided they forfeited their deposit. In fact, having a sale fall through was good news for developers - the property would usually be sold to the next person in the queue and they received an extra lump sum.
“Given the current economic climate, the weak pound and the oversupply of properties in certain areas of Spain, some British buyers who had invested in a property off-plan have had second thoughts and resigned themselves to losing their deposit. However, now the property market has collapsed, developers have changed their strategy. Some are trying to use a clause in Spanish law to allow them to override the terms of their contracts and force purchasers to complete.”
The developers claim that section 1124 of the Spanish Civil Code gives them the right to choose between enforcing the obligations under a contract or allowing it to be terminated – in this case, letting buyers back out and pay the penalty. According to Antonio Guillen, it is difficult to predict the tone the Spanish courts will take until the first judgments start to come through.
However he stresses the individual circumstances of each case need to be considered - such as whether there has been any breach of contract from the developer, for example late completion, and whether the purchaser is a private individual or an investor - someone buying more than three properties.
He says: “The developers’ approach contradicts the contracts they signed only a few years ago and is against the principles of contractual obligations. Some are even threatening purchasers with legal action in the UK, but omitting to say that they cannot do this until a final judgment has been obtained in Spain. At the current pace of Spanish justice and allowing for an appeal, this could take two to four years, by which time the developer could have gone into administration. It would also be very costly for them to pursue cases outside of Spain.
“We do not want to imply that all threats from developers should be considered a bluff and that completion should be rejected at all cost. Each case is different. In some cases there will be insufficient legal grounds to fight the case and it may be better to complete and in others, to dispute any claims. Anyone in this situation should consult a qualified Spanish lawyer who can advise on the best course of action.”
The battery-sapping "performance patch" that Etisalat sent to its BlackBerry subscribers over the last few days was designed to give the UAE operator the ability to read its customers emails and text messages, a Qatar-based software expert told CommsMEA yesterday.
Last week, Etisalat told its 100,000 BlackBerry subscribers that a "performance enhancement patch" would be sent to them to "provide the best BlackBerry service and ultimate experience". But users who downloaded the software complained of dramatically reduced battery life and slower than usual performance of their devices.
Nigel Gourlay, a Doha-based Sun-certified Java programmer who has been developing open source software for 15 years, analysed the patch after it was posted on BlackBerry’s community support forum and he said that once installed, it potentially gives Etisalat the power to view all emails and text messages sent from the BlackBerry.
“I don’t think it’s been designed for a large scale deployment,” he said. “They have released it as an upgrade across all UAE BlackBerry handsets, all of which have tried to phone home to this one registration server at the same time, and that has effectively brought the server to its knees. When the BlackBerry cannot register itself, it tries again and this causes the battery drain.”
Gourlay pointed out that by default the system is turned off and when it installs the only message that is sent is an initial registration message, and that later on, Etisalat could turn on the systems “one by one”.
Once installed, one of the possible commands that can be sent to the device is "start", which would then cause any subsequent message to be forwarded to an Etisalat website.
Gourlay said the patch was stamped with “SS8.com”, the name of a US-based software developer that describes itself as an electronic surveillance solutions company that develops products that “allow intelligence agencies to recognise, monitor, investigate and prevent criminal activity”.
It appears as though the use of such software is widespread among telecom operators, and according to SS8’s website, its products are used by “some of the largest service providers in the world”.
On Sunday Etisalat issued a two paragraph statement apologising for “a phased software upgrade…that led to extra consumption of the handset battery”. It described the patch as a “routine upgrade process”, but said it had stopped issuing it as a precautionary measure.
At the time of writing the operator had not responded to requests sent yesterday (Monday) for further details about the precise purpose of the patch or Etisalat’s relationship with “lawful interception solutions” firm SS8.
SS8 established its presence in the UAE in February this year when it acquired OCI Mobile, a technology provider that specialised in providing surveillance solutions to government organisations.
According to SS8’s website, the founder of OCI Mobile, Derek Roga, developed technology for smartphone interception and in 2005 he was tasked with introducing the firm’s BlackBerry solution to the Middle East. Roga was also the founder of Dubai-based EMS Mobile, which became RIM’s strategic channel partner for the Middle East region and Etisalat’s partner when the operator launched the BlackBerry in May 2006.
Roga did not respond to messages left at his office in the UAE, and no one from SS8’s US office replied to any messages from CommsMEA at the time of writing.
“The interesting thing is that no one would have known about it if they’d set up the registration server correctly,” Gourlay added. “The whole thing wouldn’t have been reported apart from the battery drain. I think that this whole system has been designed for law enforcement agencies to be deployed on a few dozen suspects’ BlackBerry devices.”
RIM was also unavailable for comment.
The country’s top rally driver has appealed to motorists to keep a cool head when confronted by aggressive driving.
Sheikh Khalid Al Qassimi, who is ranked 12th in the FIR World Rally Championship and is also the public face of the Health Authority-Abu Dhabi’s Drive Safe, Save Lives campaign, said drivers who reacted to bad driving risked causing accidents.
“If the guy’s going really crazy and wants to pass the speed limit, if the roads are open and there are no cars in your path, it would be best to pull out of the way and just let him go,” Sheikh Khalid said.
“When responding to an aggressive driver who tries to threaten you and comes very close to you, the most important thing is not to respond but to let him go. “You want to avoid the same behaviour because you may yourself cause an accident.”
Sheikh Khalid made the comments after examining a video showing bad driving recorded by The National.
In it, an alarmingly high number of traffic laws are shown being broken during a three-hour commute, starting from the capital and on to the main motorway to Dubai, including rampant speeding and overtaking on both the left and right hard shoulders. The footage also supports the findings of a World Health Organisation report, released last month, that found UAE roads to be some of the world’s deadliest.
It shows scores of motorists blatantly disregarding the safety of others. In trying to overtake slower-moving traffic, for example, many flashed blindingly bright high beams and tailgated vehicles at uncomfortably close ranges.
At one point, a white Toyota Land Cruiser is filmed trying to intimidate the camera crew’s four-by-four, following it with flashing high beams and, after five minutes of bullying the vehicle, attempting to run it off the road.
Much as the victim of such road rage would want to respond, Sheikh Khalid said it was best to let aggressors pass by for the authorities – or worse, a traffic accident – to deal with their behaviour.
“You might want to react, but if you hit your brakes hard, that may well cause an accident, too,” he said. “Whenever you follow the law, you’re in the right; and you’ll not only save yourself from an accident, you’ll save others from such an outcome.”
Part of this required ensuring your own safety and that of fellow passengers, first and foremost by always remembering to buckle up. “The most important thing is for everyone to wear their safety belts,” he said. “This is a fairly new concept in this country, when compared to Europe. It may be annoying when you first wear one, but I promise you’ll get used to it.”
Sheikh Khalid also had advice for would-be traffic offenders, particularly people who use the hard shoulder for overtaking.
“Whenever you overtake a car in the emergency lane, that’s really dangerous because there might be a car parked there. There might be an accident, someone who had a flat tyre. That’s why they call it an emergency lane.”
Tuesday, 14 July 2009
The executive director of cargo operations at Dubai Customs unequivocally denied on Monday media reports that the dhow wharf in the Dubai Creek would close due to security concerns.
Mohammad Matar Al Marri said the reports, which said all Dubai Creek activities would move to the base of the Palm Deira seven kilometres away, were inaccurate.
"There are studies to see the feasibility of expanding the creek's operations (to Palm Deira) but that programme is not confirmed," he said.
One customs officer, who did not want to be named because he is not authorised to speak to the media, said there has been informal discussion for years about moving the dhow trade but there has been no concrete action.
The Dubai Creek remains a centre of significant trade between East Africa, the Indian Subcontinent and the Gulf. The wooden dhows at the Dubai Creek port recall an era when business in the emirate relied heavily on pearl and gold traders.
Today, the often brightly-painted boats are both a tourist attraction and a centre of commerce. On Saturday, tourists wearing white sneakers and cameras strapped around their necks walked around the wharf, piled high with plastic-wrapped tyres, boxes of gum that sells for Dh1 a box and cartons of soap sat on the wooden dock before shipment.
Citing an official at the Dubai Airport Free Zone, the weekend reports said security concerns prompted the imminent closure.
Much of the port's trade is with Iran, an approximately 10-hour boat ride through the Arabian Gulf.
UAE officials have stopped several shipments containing banned substances bound for Iran in the recent years.
Much of the port's trade involves shipments with Iran and East Africa, two places of particular concern for both security and smuggling reasons. While five to seven per cent of all shipments at Dubai's land, sea and air ports are inspected, every vessel bound for the Creek Port is fully offloaded first and inspected in Shindagha.
Al Marri acknowledged the security concerns associated with having an international shipping centre in the heart of historic Dubai. In an earlier interview with Khaleej Times, he expressed concern that people engaged in regional conflict would use Dubai's rapid shipping times to transit materials. Those materials could pose a threat to Dubai.
"We are in the middle of a war zone. This area has been in political unrest for the last 50-60 years" he said. "Not everyone will use that proper infrastructure developed for positive issues," he said.
In July, Dubai Customs trained its employees in detecting weapons of mass destruction and nuclear, biological and radiological components of such weapons.
Monday, 13 July 2009
The Burj Dubai, the tallest tower in the world, will be completed in December, three months later than scheduled, according to two contractors involved with the project.
The contractors said work still needed to be completed outside and inside the building and the new deadline was December.
A person close to Emaar Properties, the company developing the Burj Dubai, dismissed previous reports that there would be a “soft opening” on Sept 9 to coincide with the launching of the first phase of Dubai Metro. The date was never confirmed by the company, the person said. Emaar would not confirm the December opening, but said the building was scheduled to open this year.
“More details on the official launch will be provided in due course,” Emaar said.
Mohammed Alabbar, the chairman, said last June the project would be ready by September this year. Emaar has been tight-lipped over the final height of the Burj, which is thought to have topped out earlier this year at 818 metres. Some reports have suggested the building could reach 888 metres.
Burj Dubai is part of the Dh73.4 billion (US$19.98bn) Downtown Burj Dubai development.
Emaar, the largest developer in the UAE, is also expected to be chosen to manage the development of what could be the next tallest tower in the world, the 1km Kingdom Tower in Saudi Arabia.
The skyscraper is part of the Dh98.06bn Kingdom City project in Jeddah.
Emaar said last month it was in final contract negotiations to manage the entire project.
Sunday, 12 July 2009
Today, the first song Out of the Pod was "Dance Music" by the Mountain Goats. What? While "Dance Music" turns out to be an interesting song with thoughtful words, where on earth did it come from? It must be a song that's tagged along when I swapped Libraries with someone. And who are the Mountain Goats, I’ve never heard of them. According to Wikipedia the Mountain Goats are a band from North Carolina with an ever changing lineup who’ve, amongst other things, released a concept record about organ harvesting colonies on the moon (you’d think it’d be a challenge to write lyrics on that subject but there you go.....)
You know how it is, you swap iTunes libraries with a friend and in return for your carefully organised lists you receive a mixed bag of music that your friend likes or possibly doesn’t like anymore but couldn’t be bothered removing. Still, some of the music on a swapped library will prove to be a glorious revelation (eg Alabama 3), some of it will be suitable only for use as background music on boring car trips (eg that Johnson guy whose songs all sound the same) and no doubt there’ll also be some music that’s either challenging or unfathomable depending on who's listening to it. Then at the bottom of the pile is the sort of music that would be guaranteed a place in the soundtrack of any film titled "Streetlife in Hell" (eg that aural dross from Titanic by Celine Dion). It works both ways of course, I know people who've received my library and have immediately deleted anything with a mizmar in it, all wrestling theme songs and incredibly Alabama 3. Each to their own.
Thursday, 9 July 2009
Nakheel, a property developer owned by Dubai World, has made about 400 more staff redundant as the company continues an overhaul brought on by the downturn in the property sector.
The redundancies were staggered over the past two weeks and are on top of the 500 jobs that were cut last December, a source close to the company said.
"We were given a redundancy package of six months' pay" one former staff member who was laid off last week said.
The economic downturn has battered nearly every Dubai developer, with property prices and sales falling sharply. Developers, who were mostly reliant on off-plan sales to finance the construction of their projects, have struggled to collect payments, leading to rising defaults, while payments to suppliers have been delayed.
Nakheel yesterday confirmed the redundancies as the company continues to readjust its current business objectives to match supply and demand in the most effective way, but declined to say how many jobs have been cut.
Nakheel recently merged a number of its business units, which are now undergoing resource restructuring to ensure efficiency and optimisation of skill and talent, the company said.
The source said the bulk of the cutbacks affected the company’s asset management and design (NAMAD) division, a unit that was formed only in February after the the design group and universe master planning divisions were merged. The source said Imdaad, a facilities management (FM) firm also owned by Dubai World, would now manage most of the infrastructure and facilities across Nakheel's projects.
But Nakheel denied this, saying: NAMAD's facilities management team is functioning as usual. Imdaad has been providing FM services to Nakheel as a service provider in various communities following the usual practices of engaging a service provider.
The redundancies come after at least five years of expansion, during which Nakheel took on staff for large salaries in order to resource its ambitious projects, which include the Palm island trilogy, The World and Waterfront.
It was a time when all Dubai developers scrambled to attract staff, with poaching being the norm and salaries being high.
A junior level staff member, for example, could earn about Dh80,000 (US$21,780) a month with a company such as Nakheel, according to Simon Hobart, the managing director of the recruitment firm Millennium Solutions.
Everyone was earning big money in the first six to eight months of last year, with the problems associated with that now being enormous, Mr Hobart said. Nakheel was paying people too much, it all went a bit mad. Some of these guys were only 24 or 25 years old. Today, they’d get a third of what they were on.
While there is no official figure on how many jobs have been lost in the property sector since the downturn hit, estimates suggest thousands have been made redundant across associated sectors, including construction.
Thousands of redundancies have also been made in the financial sector. The job cuts could have a longer-term impact on the property market because of a dwindling local population. However, developers owned by the Dubai Government are working to streamline operations and, through integration and mergers, reduce further risks.
Dubai World said last month the property activities of its subsidiaries, Leisurecorp, Dubai Maritime City and Dubai Multi Commodities Centre, would now be managed by Nakheel, also owned by Dubai World. Emaar Properties is also in advanced merger talks with Dubai Properties, Sama Dubai and Tatweer, companies owned by Dubai Holding.
Glitzy Dubai, long considered the new Monte Carlo or the Las Vegas of the Middle East, has suffered one of the worst crash landings of this global recession. Dubai might be considered a bellwether of the global credit crunch. Until recently touted as a beacon of progress in an otherwise unstable region, the tiny emirate’s seemingly innovative economic and political model is now unravelling, with no end in sight to the uninterrupted stream of bad news. Construction has ground to a shuddering halt, unemployment is rising, sovereign debt is exposed, lawsuits are being prepared, and the population is decreasing, as those who moved to Dubai in search of a better life have either lost their jobs or are cutting their losses and leaving.
To make matters worse, as the city empties itself out, traffic thins, and cars and credit cards are abandoned at the airport, the embattled authorities have embroiled themselves in fresh controversies by introducing protectionist policies for their citizens and a new media law that forbids criticism of the economy, and earning Dubai an anti-Semitic branding in the sports world by denying a visa to an Israeli athlete. With investor confidence in tatters and debt repayments looming, its humiliated rulers have had little choice but to turn to their wealthier neighbors. But although help has finally arrived, it is by no means the lifeline that the emirate really needs, and Dubai’s future hangs in the balance.
The Dubai Model
The story of the Dubai business model really begins in the mid-1990s. With oil exports having peaked at about 400,000 barrels a day, the four sons of the late Sheikh Rashid bin Said al-Maktum were committed to building a diverse, multisector economy to reduce their dependency on hydrocarbons and exposure to the vagaries of the international oil markets. If such diversification did not take place, it was understood that the emirate would eventually lose its economic autonomy and, by extension, its political autonomy within the seven-member United Arab Emirates (UAE). Dubai’s new post-oil economy capitalized on its long history of trade, merchant immigration and re-export activity, and its relative openness compared to its Arab peninsular neighbors. With its low taxes and strong regional contacts, Dubai hoped to reprise its role as the region’s premier entrepôt and go global with its brand of economic liberalization.
Crown Prince Sheikh Muhammad bin Rashid al-Maktum took charge of the situation. Supported by Maktum, his eldest brother and Dubai’s nominal ruler, he forged ahead with the emirate’s “free zone” policies. In the late 1990s, Muhammad’s strategy involved expanding the original Jebel Ali industrial zone where foreign companies could enjoy 100 percent ownership, and establishing several new free zones. Jebel Ali soon mushroomed to over 2,000 companies, many of which were European and North American. By 2001, a plethora of high-profile multinationals and other foreign companies, including Microsoft, Dell, Reuters and the BBC, were locating themselves in Muhammad’s new Dubai Internet City and Dubai Media City. Dubai effectively became the Middle Eastern headquarters of these big global economic players. Since then, many other free zones have opened, including entire “villages” for branch campuses of foreign universities and health clinics, and even a Dubai International Financial Centre that operates under English common law and attempts to bridge the time zones of European and Asian stock exchanges.
Dubai was also committed to building up a luxury international tourist industry. The Jumeirah International Group, established in 1997, was responsible for building a number of iconic resorts, including the Jumeirah Beach Hotel and the Burj al-Arab—the world’s only seven-star hotel. So strong was the emphasis on high end tourism that in the late 1990s, it was estimated that ten percent of GDP was spent on developing this sector. By 2008, with hundreds of hotels, including several dozen with five stars, the emirate was hosting over six million tourists a year. Backed by a successful airline, two annual shopping festivals, and a host of international sporting and music events, the number of tourists was predicted to climb to ten million or more by 2012.
To attract investment from wealthy individuals, a real estate sector was introduced in the late 1990s. Although somewhat controversial, given that it was against UAE law for foreigners to own property, Sheikh Muhammad bypassed this complication by initially allowing foreigners to buy renewable 99-year leases. Real estate accelerated when the Nakheel property company constructed two separate “Palm Islands” off the coast of Jumeirah and Jebel Ali featuring villas, apartments and, in cooperation with the Trump Organization and the Taj Group, several five-star hotels. These giant patches of reclaimed land expanded Dubai’s waterfront from about 70 to over 500 kilometers, given that each “palm” has several fronds and a number of additional exclusive mini-islands in the shape of Arabic lettering to represent one of Muhammad’s most well-known poems. In 2004, when both palms sold out, Muhammad instructed Nakheel to launch a third palm island and another archipelago further out at sea.
Following the death of his elder brother and his formal installation as ruler of Dubai in early 2006, Sheikh Muhammad decreed that foreigners could own real estate in “some parts of Dubai, as designated by the ruler,” and would be entitled to residency visas from the Dubai government, thus altering the previous rule restricting residency visas to those with proof of employment. To further alleviate investors’ risk-averse concerns, a law was passed establishing a Lands Department that would provide a centralized registry capable of issuing deeds. Demand for Dubai’s real estate projects soared, and additional developments were launched. In some cases, demand was so high that prospective customers were advised to arrive at sales centers on the morning of the launch in order to line up for lottery-like tickets that would entitle them to make a purchase. Emaar Properties, which became a 67 percent publicly owned company following its flotation on the Dubai stock exchange, pressed ahead with its magnificent Burj Dubai: a mixed residential, commercial and hotel complex boasting some 165 or more storeys and a dynamic design to be the world’s tallest structure.
By the summer of 2008, Dubai, on paper at least, had succeeded in diversifying its economy. With the non-oil sectors accounting for more than 95 percent of the emirate’s GDP, the hydrocarbon industry was pushed further into the background. An estimated $3 billion in annual foreign direct investment flows underscored Dubai’s reputation as the most vibrant economy in the region, and UN reports ranked the emirate as the seventeenth most attractive economy in the world for foreign investment. The free zones were booming, the hotels were full, and the city’s population had reached two million. Mega real estate projects were being announced on a weekly basis and the three biggest developers were estimated to have produced in excess of 30,000 new homes. By conservative estimates, investors were enjoying annual returns of over 20 percent on their deposits for houses or apartments, while some were “flipping” on their deposits within months for handsome profits.
Enter the Credit Crunch
In September 2008, with the credit crunch entering its second year, Dubai appeared to have been spared the toxicity spreading throughout economies in the West. New York Magazine claimed that Wall Street bankers were decamping by the dozens to Dubai which, if anything, was growing faster than before. Delegates in Kuwait’s parliament complained that even without oil Dubai’s economy was doing better than theirs. Sheikh Muhammad was hailed as a visionary ruler across the Arab world, and in some cases far beyond. From Dubai’s side the message was equally loud and clear: Dubai was circumventing the global economic tsunami. In early October at Cityscape 2008, the emirate’s premier real estate convention, plans for a one kilometer-tall tower were announced, even as the Burj Dubai stood unfinished. Jumeirah Gardens and Waterfront City, projects that would lead to a new residential area the size of Manhattan Island, were being promoted aggressively. In November, as perhaps the ultimate Bonfire of the Vanities, a $15 million party was staged at the brand new Atlantis Hotel. With hours of firework displays and guest appearances from A-list Hollywood celebrities, the launching of the $800-a-night resort on the outer edge of the Jumeirah Palm Island was a clear signal that Dubai was bucking the trend, and doing so with considerable panache.
Behind the glamor, however, the rot had begun to set in. Foreign investors’ interest in real estate was declining markedly and hotel occupancy rates began to falter as tourists turned to cheaper destinations. Most seriously, Dubai’s banks and mortgage lenders were struggling to find credit on the international market. Loans dried up, speculators began to disappear, and the first major wave of resale properties began to hit the classifieds as nervous expatriates sought to cut their losses and run. The confidence bubble was pricked and the Dubai stock markets went into free fall, with share prices for erstwhile government-backed blue-chips such as Emaar Properties shedding over 80 percent of their value by December. The two biggest mortgage lenders, Tamweel and Amlak, had to be merged under a new federal authority.
A strenuous chorus of defense and denial began, led by the authorities and joined by stakeholders in the Dubai model, including expatriates who had put their entire life savings into real estate. Academics, think tank professionals, bloggers and domestic newspaper editors—none of whom had identified shortcomings in the Dubai model, let alone predicted the crash—contributed to a stream of articles and opinion editorials claiming that the emirate’s economic fundamentals were perfectly sound, and some went so far as to state that Dubai was the safest place to anchor in the global crisis.
The Bubble Bursts
By the end of 2008, the doomsday indicators had increased: Hundreds of cranes stood motionless over incomplete projects, employee firings were rising, fewer lights were shining from the windows of tower blocks at night, and—refreshingly for some—Dubai’s infamous traffic jams were easing up. Legions of laborers were sitting idle in their camps, and a string of high profile suspensions and cancellations were tersely announced, including the short-lived Jumeirah Gardens and Dubailand, the emirate’s much vaunted Disneyland-sized theme park. Sensing that the international spotlight was beaming in, the government came clean and declared that it had accumulated a giant debt of $80 billion or more, most of which was due for reservicing over the next few years. To allay fears, officials stated that Dubai’s sovereign wealth, estimated at some $85 billion, would be enough to cover this.
But such claims were greeted with skepticism because the international media was reporting that much of the sovereign wealth was either inaccessible or had been eroded significantly by recessions in recipient economies. The major ratings agencies, including Moody’s, downgraded Dubai’s banks, and by February 2009 the emirate’s credit default swaps had rocketed to Icelandic levels. Expatriates, investors and tourists continued to vote with their feet as thousands of exit visas were being processed each day. Hotels engaged in a price war, slashing room rates by over 70 percent. Newspapers, bulletin boards and blogs groaned under the weight of hastily produced property advertisements, some of which threw in all furniture and fittings. For those laborers whose employers were no longer in business, hundreds were being rounded up each evening and bussed to the airport.
This economic collapse was taking place against an increasingly unpleasant backdrop of corruption, authoritarianism and protectionism. With investors seeking their money back, pyramid schemes that had been unchecked over the years were being exposed. Foreign investigative journalists reported on expatriate real estate developers who were being held without charge, and even companies backed by senior members of the ruling family were coming under scrutiny. Column space in domestic newspapers began to be handed over to the Dubai chief of police who, oddly perhaps, briefly became the government’s primary spokesperson for economic matters. He has blamed the crisis on greed (rather than a lack of regulatory infrastructure or sound economic planning) and has refuted foreign journalists’ accounts of the crisis. Other government spokespeople have claimed that negative reporting is evidence of an international conspiracy to undermine Dubai’s success.
New legislation was introduced at the federal level, seemingly at Dubai’s behest, that formalizes the protection of UAE nationals in their jobs. This, together with the circulation of a draft media law that would prohibit criticism of the economy (under which journalists could be fined up to $270,000), has sent out a fresh wave of signals that Dubai’s liberalization was distinctly fair weather. With the economic downturn, the political system is unable to adjust to the new realities. Perhaps the clearest example of the emirate’s liberal retrenchment was its denial of an entry visa to an Israeli tennis player who had been scheduled to compete in Dubai’s international tournament. The Women’s Tennis Association fined the Dubai organizers, which led to the withdrawal of the event’s major sponsor, the Wall Street Journal, and prompted the main US tennis television channel to boycott the event.
By the end of February, Dubai was effectively bankrupt as it struggled to service even the first of 2009’s major debt renewals. The Dubai stock exchange, which had earlier taken out loans to buy the Norwegian stock exchange, OMX, needed to refinance $3.8 billion of debt. A last-minute deal was reported in the domestic press as proof that Dubai could keep going, but it soon became apparent that only $2.5 billion of credit had been acquired on the international market, and that other Dubai entities had had to step in to make up for the shortfall. Rumors resurfaced that the emirate would have no option but to seek assistance from oil-rich Abu Dhabi, no matter how unpalatable such a move might be. Up to this point, Abu Dhabi had remained aloof from Dubai’s problems, having only injected $19 billion of liquidity into federal entities in November 2008, and in February having only guaranteed banks in Abu Dhabi, rather than across the whole of the UAE.
The Big Bailout
On February 25, a brief notice was posted by a Dubai government department that the UAE Central Bank, of which Abu Dhabi is the major stakeholder, had bought into a $10 billion five-year bond for Dubai. With interest rates set at four percent, this was a lifeline for Dubai, as the emirate had little chance of acquiring such credit elsewhere. Although not technically a bailout, Abu Dhabi had devised an unsubtle means of channelling aid to its beleaguered neighbor and thereby avoiding, or at least delaying, a complete meltdown of the Dubai economy. In many ways, Abu Dhabi can now dictate terms to Dubai, and will almost certainly seek to centralize the federation and rein in Dubai’s autonomy. But given the political culture of the Gulf states, this is likely to be as discreet as possible and will allow the Dubai ruling family to save at least some face. Nonetheless, just seven weeks after the bond was issued, the ruler of Abu Dhabi made a personal visit to Sheikh Muhammad’s palace and took an “inspection tour” of Dubai’s projects.
Abu Dhabi’s primary concern is unlikely to be the Dubai business model, but rather Dubai’s close relationship with its major trading partner, Iran. With Iran-Dubai trade having reached $14 billion in 2008, the emirate was understandably reluctant to align itself with Abu Dhabi and the United States in their efforts to isolate the Iranian economy. With the announced closure in early March of Dubai’s creekside jetties, most of which service dhows laden with goods destined for Iran, this may be Abu Dhabi’s first step of many in severing this worrisome link.
As yet, it is unclear how the Dubai model’s epitaph will read. The emirate’s debt continues to grow and Abu Dhabi’s influence can only continue to increase. Even if it weathers the global recession, the Dubai that emerges at the end of the storm will be a shadow of its former, fiercely autonomous self. Some may argue that Dubai has been in debt before, and has bounced back before. But in the past its debt has always been used to finance useful physical infrastructure, such as ports, airports, dry docks and bridges, most of which ultimately enhanced its traditional role as an attractive regional entrepôt. In contrast, the debts of the new economy have been used to build up sectors that have aimed to bring money to Dubai and keep it there, rather than allowing Dubai to serve as an interlocutor. This has allowed a distinctly unsustainable “moonbase economy” to form on the edge of a desert. Exacerbating the situation, the massive, unchecked influx of expatriates during the boom years has created an enormous demographic imbalance. Their departure will leave deep holes in the economy: unlike a recession in a developed country where redundancies will leave workers on the sidelines, in Dubai they have to leave
within a month as their residency visas expire. Their contributions to the domestic economy promptly cease, and the vicious circle continues.
With the benefit of hindsight, the Dubai model planners and visionaries must now realize that real estate, luxury tourism and a construction industry should never have been allowed to become central pillars of the economy. All were reliant on an uninterrupted stream of foreign direct investment and a perpetually favorable international credit climate. Little was done to slow the rampant speculation, and regulations were either insufficient or were introduced too late. No effort was made to build a knowledge economy as higher education remained little more than an economic sector, and no moratorium was placed on real estate projects, leading to a massive glut. Without longer-term visas or a road map towards citizenship status for real estate investors, Dubai also did little to engender loyalty. Perhaps the most incredible aspect of the Dubai crash was how quickly it happened: within weeks of the credit crunch hitting the Gulf, the emirate’s economy began to freeze up, and within months the coffers were empty. With no obvious “Plan B” and barely any contingency funding, the “Dubai vision” was never more than a giant gamble, most of it with other people’s money.
Dubai Holding, owned by the ruler of Dubai, and Emaar said last month the builder of the world's tallest tower would merge with Dubai Properties, Sama Dubai and leisure developer Tatweer.
"While the merger might result in the creation of a stronger operational/financial entity with better access to funding and ultimately greater control over supply, there is no visibility regarding the strategy of the combined entity," EFG-Hermes said in a report.
The deal, which has an unknown valuation, could lead to a substantial dilution for Emaar shareholders, with Dubai Holding firms unlikely to bring liquidity to the new entity, the bank said.
It added the government ownership level in Emaar could rise to as much as 89 percent from 32 percent.
Emaar's shares have fallen nearly 25 percent since the merger was announced, and were off 6.95 percent at AED2.41 at 0849 GMT on Wednesday. Dubai's index was down 3.5 percent.Ratings firm Moody's Investors Service said late last month it placed Emaar on review for downgrade, and downgraded Dubai Holding to A3 from A2.
The increased exposure of the combined entity to Dubai's fragile real estate sector was also a concern, EFG-Hermes said.
Property prices in the emirate's once-booming real estate sector have fallen 45 percent from peaks in 2008 and are likely to fall as much as 60 percent overall, it added.
Dubai house prices will fall another 20 percent this year as the emirate continues to suffer a sharp economic downturn, a Reuters poll showed last month. (Reuters)
Wednesday, 8 July 2009
Alternative Capital Invest (ACI), the investment company behind the project, insists it has “solid assets” and the towers will go ahead, according to its managing director, Robin Lohmann.
Mr Lohmann said the money to repay investors was not available because the projects could not be sold as planned due to the market slowdown.
He offered the investors the choice of waiting until ACI’s assets could be liquidated, or the chance to take property assets owned by another company, Falcon International Investment Group, based in Dubai.
But some investors fear that if they accept the Falcon option, they may end up with additional risk and costs.
“Since I do not know the value of Falcon’s properties nor what exactly the liabilities and commitments are according to Dubai law, I am extremely sceptical,” said Hartmut Goddecke, the lawyer for several German investors. “We don’t know what exactly we are buying here.”
According to Martin Kraeter, a German business facilitator based in Dubai, the ownership of Falcon’s assets is unclear, although it has links to ACI.
Falcon only speaks about reservation contracts of different properties but reservation contract is not a purchasing contract,” Mr Kraeter said. “We may end up with shifting Falcon’s risk into investors’ responsibility.”
But Mr Lohmann said: “With this package, we just wanted to show people that we have the ACI assets which are the Boris Becker Tower, the Schumacher Tower and all the rest, and that in addition to that we also offer a security package through Falcon of fully paid assets worth about €100m, which is almost the double of what was due in March.”
In Dubai, property buyers who have invested off-plan in apartments in ACI’s buildings are also upset at delays in construction. Mr Lohmann said there had been complaints from the buyers but also delays in their payments to the developer.
Tuesday, 7 July 2009
Expatriates applying for residency visa in future will be tested in their knowledge of local culture. The resolve follows the Federal National Council calling for immigrants to have better awareness of UAE values and traditions.
Ahmed Shabeeb Al Dhahiri, First Deputy Speaker of the Federal National Council, told Khaleej Times a committee would be established by October to develop strategies to improve understanding of the country among expatriates.
The Council asked the Ministry of Culture, Youth and Community Development to take steps to familiarise residents and immigrants with the country’s national identity, culture, social values, religion and local traditions.
“Too many people don’t know anything about our culture — there are many nationalities — and every resident needs to know something about this country,” Al Dhahiri said.
The committee will comprise members from the Ministry of Culture, Youth and Community Development, Ministry of Interior and the Ministry of Foreign Affairs.
Al Dhahiri said the committee will draw up a series of easy questions that will comprise a test that expatriates must pass in order to get their residency visa.
He said questions could include the following: “What is the country’s official religion?” and “What is the country’s flag?’
The committee will also establish a guide to the country’s traditions that will be issued to local embassies and consulates and also to their domestic counterparts.
Al Dhahiri said foreign community associations can also educate their members on the customs, traditions and culture of the UAE, enabling them to better deal with UAE citizens.
The support of the media would also be sought to raise cultural awareness levels among expatriates.
Wrestlers who have grappled with their opponents for the past three decades at Deira Fish Market have been banned from holding any more contests.
Municipality officials ordered the amateur wrestlers not to hold any more matches at their traditional venue, despite years of friendly competition at the site.
The sport, which is popular with South Asians living across the UAE, often attracted crowds of 2,000 spectators on Friday afternoons. Dubai Municipality said the activity has finally been stopped as the area is considered a local market and not a gym or sports venue.
“The activity was detected during a tour by our inspectors. There are no fines for this kind of offence, but the activity must not continue there,” said Obaid Ibrahim Mohammed, head of the Markets Section at Dubai Municipality.
News of the ban was greeted with great disappointment by wrestlers and spectators in the emirate.
“We were shocked when municipality officials asked us to stop wrestling. It was the only thing which we used to enjoy for free in Dubai after a week of hard work,” said Pakistani wrestler Yousuf Khan. He said that 1,000 to 2,000 people used to gather to watch the matches every week.
“There used to be loud cheers during the matces. Some people used to even give money to the winners as a thanks for entertaining them. It is an amazing sport and we will miss it dearly,” he said.
“We used to eagerly wait for Fridays to come around so we could take part in the wrestling. Now we have nothing to do except sit in the room and watch movies. The sport promotes a healthy and active life,” he added.
Fellow Pakistani Ali Khan, who has been coming to watch the bouts since moving to Dubai nine months ago, said: “Me and my friends love this sport because men can wrestle hard and then shake hands afterwards and still be friends.”
The wrestling is a traditional sport played in India and Pakistan with one man attempting to overpower the other with their bare hands to prove who is the strongest.
Hall says he is uncertain what his next step will be and will take some time out to consider his options.
He says the decision to leave the Swans, who he captained to a premiership in 2005, was hard, but the best move for all involved.
"The decision I have made is not just about me. It is about this football club, my team-mates, my family, my partner and my close friends." Hall said.
"Ultimately they have suffered grief over some of my wrongdoings and I have to take them into consideration.
"I think the easiest thing to do is to tell myself I am playing good football and don't want to desert my teammates, but the issue is a lot bigger than that.
"So over the last few days I have stepped back and tried to look at it as an outsider and control what I can control, which has led me to this decision.
"I am forever indebted to this footy club. I have no doubt I wouldn't even be playing the game if it wasn't for the club and despite what has happened, I still think I am walking away from the club a better person than when I walked in."
"... The next step for me is unclear, but in time, I will work through it."
Hall has previously speculated about either trying to continue his AFL career with another club or possibly take up professional boxing.
Hall's decision came after a series of on-field misdemeanours prompted senior club figures, including coach Paul Roos and co-captain Brett Kirk, to question his desire to continue playing.
The latest was a punch to the face of Adelaide defender Ben Rutten, in Hall's last game in round 13, for which he was handed a two-game suspension.
Last year Hall served a seven-match ban for striking West Coast utility Brent Staker and also underwent anger management counselling during a club-imposed ban.
The week he returned from that suspension Hall received a one-game suspension for attempting to strike Collingwood opponent Shane Wakelin.
The Swans also handed him a one-week club suspension for the Wakelin incident.
Hall co-captained the Swans to their historic 2005 premiership but he had to win a tribunal case to play in the grand final.
The Rutten incident was the 15th charge of Hall's career, which has so far featured 24 games lost through suspension.
Last year was the seventh-straight season he topped Sydney's goalkicking.
The Adelaide game, which will now be his final in Swans colours, was celebrating his 250th senior game as an AFL player.
That includes 88 matches with St Kilda from 1995 to 2001 before he joined the Swans in 2002.
Roos said the occasion should be used to celebrate the contribution Hall made to the club.
"It is definitely a sad day for the Sydney Swans Football Club; one of our greatest ever players has decided to retire, but I also think it must be a time of celebration, to reflect on what has been an outstanding career," Roos said.
"As his coach for the last six years I will remember Hally as one of the genuine superstars of the game. His ability to be a match winner enabled him to take us to the level of the 2005 premiership.
"His consistent performance over those six years has allowed him to be not only a premiership captain, but a club best and fairest, an All-Australian, a life member and a multiple leading goalkicker at this footy club."
Roos said the Swans also knew Hall as a "likeable and easygoing character" off the field, which most people did not get to see.