Dubai developer withdraws from Barangaroo project in Sydney

From the Sydney Morning Herald 2nd April '09

IT IS 15 months since the Australian boss of Dubai's biggest developer, the royal family-backed Nakheel, said it would expand its "international mandate" by buying a big stake in the leading Australian property group Mirvac.

Now Nakheel is winding back that mandate and has withdrawn from a consortium bidding to develop Barangaroo, the NSW Government's $2.6 billion project on east Darling Harbour.
Mirvac and another of Nakheel's co-bidders for Barangaroo, Leighton, are sharing its pain amid the global credit squeeze and a collapse in Dubai property prices. Leighton was to build the Donald Trump Tower in Dubai until Nakheel and the American tycoon halted the project this year.

The Herald revealed on Monday that Barangaroo - to combine Australia's biggest financial hub and a foreshore park - faced a financial hurdle as bidding consortiums warned the Government they could provide only limited funding. Nakheel's withdrawal raises further questions. Its departure was announced when the three bids for Barangaroo were submitted on Tuesday.

Mirvac Projects, Leighton Projects and Macquarie Property Development and Finance insisted yesterday that Nakheel's departure from their tender did not jeopardise the bid. A spokeswoman said it was locally driven and "we have the financial capacity, the experience and the resources to deliver the project". She could not say what percentage of funding Nakheel was to contribute.

Another bidder, Lend Lease, said it and Westpac, its main financier and bid partner, remained committed. The Herald understands Westpac's funding will be limited but David Hutton, chief executive of Lend Lease Retail and Communities, said his firm's own capital was significant. "We remain confident, despite the current financial conditions, that we can fund the bid."

The third bidder is Brookfield Multiplex. Its major projects director, Mick O'Brien, asked if there were concerns about finance, said: "We're not talking about that when we're in the process. We feel we have a good bid and we will want to discuss those issues internally, with the Government."

When Nakheel took a stake in Mirvac worth about $400 million in December 2007, the Australian chief executive of the company, Chris O'Donnell, said: "As Nakheel looks to move forward its international mandate, it makes perfect sense to look at the possibility of joint developments with a like-minded company."

Two of Mr O'Donnell's former Australian colleagues at Nakheel, Matt Joyce and Marcus Lee, have been held without charge in Dubai, on suspicion of fraud, since January 25. They are among 20 Australians now held in Dubai. The latest two are a NSW man, 57, and another man, facing separate allegations of fraud. Both approached the Australian Consulate-General on March 25.

Bidder's linked to Australian jailed in Dubai

The proposed Barangaroo site on Sydney Harbour. Graphic from NSW Planning site

From the Sydney Morning Herald, written by Rick Feneley and Carolyn Cummins
February 19, 2009

The Australian chief of Dubai's biggest property development company has refused to answer questions about two fellow Australian colleagues who have been jailed on suspicion of bribery.
Chris O'Donnell is the chief executive officer of Dubai's biggest property developer, the state-owned Nakheel, which happens to be part of a consortium bidding to build Sydney's $2.5 billion Barangaroo development. (The link to the Planning NSW planning report is here. As background, Barangaroo is a 22-hectare waterfront site at East Darling Harbour in Sydney, Australia. The Barangaroo site will become an office/apartment/hotel complex....hmmm starting to sound familiar? The site is named after the wife of Bennelong, after whom nearby Bennelong Point, site of the Opera House, was named. The demolition plan is below. )

Last month, Nakheel dumped Mr O'Donnell's Australian colleague, Matt Joyce, as the general manager of Dubai Waterfront, the world's biggest waterfront development, amid the global credit squeeze and a freefall in Dubai's property values. Soon afterwards, Joyce, 43, and a 44-year-old Australian colleague were arrested as part of a fraud and corruption investigation.
The pair deny any wrongdoing but are being held without charge, according to their lawyer, as are about 20 executives caught up in the investigation.

Joyce's wife, Angela, and their three young children are still in Dubai, anxiously awaiting his release, as are the other man's family. The Herald understands both men attended Geelong Grammar.

The Gulf News has reported the bribery claims against them involve 43 million dirhams ($18.2 million) but their Australian lawyer, Martin Amad, insists no bribe was paid. He also says no charges have been laid, despite consular advice to the Department of Foreign Affairs and Trade that the men have been charged with an ``economic offence''. Mr Amad believes meaning of the word ``charge'' has been lost in translation.

Two days after receiving an extensive list of questions from the Herald, Mr O'Donnell's Dubai office responded last night by saying it would be "inappropriate for us to comment on any of your queries".

Nakheel is the biggest stakeholder in the Australian property group Mirvac, with a 14.9 per cent. Nakheel and Mirvac are in a consortium bidding for Barangaroo with Leighton Projects and Macquarie Property Development and Finance.

Nakheel has put many of its dazzling Dubai projects on hold and sacked hundreds of staff, and the Herald asked Mr O'Donnell's office if the company was still committed to Barangaroo. It replied that "at this stage, based on current government guidance for the project, we are working with our consortium partners ... towards a comprehensive bid".

When Mirvac reported a $645.7 million loss on Wednesday, its managing director, Nick Collishaw, said: "We have spoken to Nakheel, as we do with our major shareholders, and they remain committed to investing in our group.

"The group is also committed to its joint-venture deal in Barangaroo."

The deadline for the bids is March 31. The other shortlisted bidders Lend Lease/Westpac Corporation and Brookfield Multiplex.

In Australia, Mr O'Donnell had been managing director of Investa Property Group, once Australia's largest listed owner of commercial property, and executive director of Westpac Investment Property Limited.