Dubai government gets tough on corruption

Robert Hamilton
For Al-Shorfa.com
2008-09-02

Sheikh Mohammed bin Rashid al-Maktoum, the Ruler of Dubai, Vice President and Prime Minister of the U.A.E. (Photo by KARIM SAHIB/AFP/Getty Images)

The Dubai government has launched an anti-corruption crackdown, following a series of arrests of senior figures at both public and private real estate firms, according to an Aug. 17 report in the Arabic daily Emarat Al-Youm.

The state’s crackdown “aims to stop officials from abusing the country's economic capabilities and to implement international standards to protect and guarantee investors' rights,” a high-level source was quoted as saying.

The unnamed government official added that the crackdown would focus on individuals who “receive bribes and illegal income.” In an English translation of the interview, the U.A.E. daily Emirates Business quoted the source as saying: “The probes include several real estate and financial companies, not just one company.”

“The campaign’s findings revealed how a number of low-ranking employees of various nationalities abuse the powers given to them in sales operations to make big money, using illegal methods such as bribes and commissions,” the official added.

The drama began on Aug. 14 when it was announced that Adel Al-Shirawi, the former CEO of mortgage giant Tamweel was under investigation by Dubai’s public prosecutor for alleged financial wrongdoing.

Al-Shirawi, now vice chairman of state-owned Istithmar World PJSC, is being investigated for alleged embezzlement and mistrust while employed by the U.A.E.'s biggest mortgage provider, head of Bur Dubai police Saleh Hamed told Bloomberg in an Aug. 14 interview.

The U.A.E. national was arrested on Aug. 5 and Dubai police have referred the case to the emirate's public prosecution office. Tamweel’s former head of investments, Feras Kalthoum, is also under investigation.

On Aug. 15, it was reported by London-based magazine “MEED” that a criminal case had been brought against a senior executive at government-owned developer Nakheel, again for alleged financial irregularities. A day later, the executive was named in media reports as the company’s general manager of sales, Walid Al-Jaziri.

“As a result of our internal audit process, the company can confirm that a member of staff is being interviewed by the authorities,” Nakheel announced in a short statement. “The allegation of financial irregularities is in relation to the acceptance of sums paid to an employee by third parties.”

“We can confirm that no embezzlement has taken place within Nakheel.”

Nakheel is best known as the developer behind the iconic Palm and World man-made island projects.

A series of high-profile police investigations are already underway over alleged financial irregularities by senior executives at Dubai Islamic Bank (DIB) — the U.A.E.’s biggest Islamic bank by market value— and its affiliate Deyaar, a development firm.

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

At Deyaar, four people have been arrested as part of a police investigation into alleged embezzlement. Those arrested include Deyaar’s former CEO, Zack Shahin.

The broadening investigation has unnerved Nakheel employees and other state-owned companies. A senior Dubai official, quoted in a Aug. 15 Financial Times article said, “I've never seen an investigation reach so far and so high.”

Marwan Bin Ghalaita, chief executive of the Dubai Real Estate Regulatory Agency told Reuters in an Aug. 15 report that the investigations into Nakheel and Tamweel are a sign that transparency in the real estate sector is improving.

“I think this is a good thing for the market,” he told radio station Dubai Eye, adding that Dubai companies need to educate their employees about business values and ethics, as some may come from countries where business bribes are common and are seen as a form of commission.

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