General News
March 9, 2009 - Dubai Islamic Bank, Dubai UAE
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Dubai $500.0 million fraud at Dubai Islamic Bank: Where Are The Locals? Seven suspects have reportedly been singled out by the authorities, but all of them are foreigners. Dubai Islamic Bank has foreclosed on a real estate project and set aside cash to help cover losses after court papers indicated the bank was the victim of a half-billion dollar fraud. |
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Dubai 'Fraud': Where Are The Locals?Dubai's anti-corruption probe seemed in full swing Tuesday, after seven expatriate businessmen were reportedly accused by prosecutors of taking part in a $500.0 million fraud at Dubai Islamic Bank. The suspects included three Britons, two Pakistanis, one Turk and one American, according to the Associated Press, raising concerns that local Emirates might not be held as fully accountable as the expat brigade. "Some might say that it's evidence of the anti-corruption drive, but again, where are the Emiraatis?" wondered Christopher Davidson, a British academic who has authored several books on Dubai and the United Arab Emirates. "There have to be the local sponsors, the line managers, the people whose desk at which the buck stopped." The alleged fraud involved a company called CCH, which according to reports was linked to some of the named suspects and may have forged documents to fraudulently obtain funds from Dubai Islamic Bank. The bank issued a statement on Tuesday claiming its exposure to CCH was around $330.0 million and that it was chasing down assets "in a range of countries." The former chief executive of Dubai Islamic Bank, Saad Abdul Razak, was reportedly taken into custody last year for questioning, as part of the authorities' probe of the real-estate sector, but his name does not seem to have made the final list. Press reports claim that a handful of local Emiraati executives have also been interrogated, including Sami al-Hashemi, ex-CEO of real-estate developer Mizin, and Abdul Salam al-Marri, head of the Lagoons development on Dubai Creek. Although Dubai's defenders cite the example of a former cabinet minister, named in press reports as Khalifa Mohammad Bakhit al-Falasi, who was sentenced to two years in jail in February for an unrelated case of fraud and embezzlement, the truth is that very few local Emiraatis have been charged or punished as a result of such investigations. Expatriate businessmen have also accused the Dubai authorities of torture and detention without charge, including Zack Shahin, ex-CEO of Dubai Islamic Bank's real-estate subsidiary Deyaar Properties, and Shahram Abdullah Zadeh, former manager of developer Al-Fajer Properties. (See "Desert Storm In Dubai.") Zack Shahin is still behind bars and still has not been charged, according to one of his American lawyers, James Pitts, who told Forbes that there were around 40 other foreign businessmen in a similar situation in Dubai. When asked whether Shahin might have provided names to the authorities in exchange for a lighter potential sentence, or exemption from the charge sheet, Pitts replied: "I am certainly not aware of any such arrangement." Related Story - March 10, 2009 Dubai bank sets aside cash amid fraud probe Dubai Islamic Bank said Tuesday it has foreclosed on a real estate project and set aside cash to help cover losses after court papers indicated the bank was the victim of a half-billion dollar fraud. Documents filed with the Dubai public prosecutor's office and reviewed by The Associated Press name seven businessmen allegedly involved with the crime, which is said to have cost the bank $501 million. The suspects include three Britons, two Pakistanis, one Turk and one American. The amount of the alleged fraud is far larger than in two other cases that have been referred to court since the booming Gulf city-state launched an anti-corruption investigation last year. The prosecution's notification lays out a variety of charges against the suspects, which include fraud, forging documents and bribery. Officials at Dubai Public Prosecution could not be reached for comment. In a statement, Dubai Islamic Bank said it had exposure of about $330 million to a company named CCH linked to some of the suspects in the court papers. Besides the $135 million in impairment provisions it has set aside to help make up for its losses, the bank said it has foreclosed on a 20 million square-foot development known as The Plantation on the outskirts of Dubai. It said it is continuing to pursue other assets abroad "through the appropriate legal channels," and expects to be able to cover its losses even with the economic slump. "We are pleased to close this chapter and focus our complete attention on meeting the needs of our clients, shareholders and other stakeholders," Chief Executive Abdulla al-Hamli said. Allegations of wrongdoing tied to Dubai Islamic go back nearly a year with the arrest of Zack Shahin, an American citizen and former CEO of Deyaar Development Co., which began as a subsidiary of the bank. He is not among those named in the recent filing, and remains in custody. Shahin's case has put unwelcome pressure on Dubai. Lawyers in the U.S. have suggested Shahin has been mistreated during his detention. Dubai authorities have said they are affording him all his rights and are following the country's laws.
A Web site SaveZackShahin.com set up to call for Shahin's release was blocked by Internet censors in Dubai on Tuesday. Read - PDF - Allegations & Story Posted on site Another Deyaar official was arrested in April. His arrest was followed by those of several other executives linked to Dubai's once red-hot real estate and finance sectors. In August, Dubai's public prosecutor vowed to take "strict and prompt action" against corruption and bribery in the city-state, whether in the public or private sectors. Many of Dubai's most prominent companies are owned outright or partially by the emirate's government or its ruler. Charges have already been brought in two separate corruption cases that were referred to court last month. Original Story - International Herald Tribune |
