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Andrew Farkas provides Dubai link with NY election

An important adviser to Dubai World during the property boom who left the UAE last year has emerged as a key figure in the New York State governor's race.

An important adviser to Dubai World during the property boom who left the UAE last year has emerged as a key figure in the New York State governor's race.

Andrew Farkas is finance chairman for Andrew Cuomo, the New York State attorney general who is running for governor. He was introduced to Dubai in 2002 by Sol and the late Butch Kerzner, the South African hotel magnates behind the Atlantis on the Palm Jumeirah.

In 2005, as the relationship developed, Mr Farkas brokered property deals in New York that led to the acquisition by Istithmar, Dubai World's private equity arm, of high-profile Manhattan properties including the W Hotel Union Square, 230 Park Avenue and the Mandarin Oriental hotel in Columbus Circle.

Those transactions helped to put the emirate on the map, and Mr Farkas came to be seen as a key adviser to Dubai as it made a name for itself on the global stage.

Mr Farkas was instrumental in the first securitisation of mortgages in the Gulf through his financial company Island Capital Group (ICG). He also sold a 29 per cent stake in Island Global Yachting (IGY), a marina design and development company, to Istithmar in 2005.

Yet last year, Mr Farkas liquidated most of the investments he made with Dubai World and sold the UAE operations of IGY, which once held the rights to develop and manage all marinas owned by Nakheel, the developer owned by Dubai World.

Dubai World lost control of the W Hotel this year in a foreclosure auction. ICG co-invested more than 10 per cent of the New York property deals, but Mr Farkas has exercised "put options" that forced Dubai to buy him out of all but one investment in the wake of the financial crisis.

Dubai's investment in IGY also soured after Dubai World terminated contracts with the company to build and manage all its marinas and a US$150 million (Dh550.9m) project in the US Virgin Islands failed.

Mr Farkas is now considered to be a "controversial person" in the Emirates, according to Wael Juju, the chief executive of Knotika Holding, a company IGY once considered acquiring.

"It depends on how you look at the story," he said. "At the time he was doing deals, he had a solution for everything Now, it's difficult to judge whether the plans were bad."

George Dalton, Dubai World's general counsel, said in an interview with The Wall Street Journal this year that aside from one remaining investment together with Mr Farkas, "we have no ongoing business relationship with him, nor do we intend to have any in the future".

Mr Farkas said in a statement to The National that the only unsuccessful Island Capital deal made with Dubai was one struck with IGY, which he attributed to the downturn in the Dubai economy.

He pointed to the purchase of 230 Park Avenue in November 2005 and its resale in March 2007 as a "home run" for the two companies that led to a profit of $450m. After the downturn in the economy and Dubai's own financial problems, Island Capital and Dubai World ended their relationship, he said.

"It became clear that our respective needs and perspectives became different in respect of these forces and so we moved to co-operatively resolve the overall relationship," Island Capital said in the statement. "We continue to have close and important relationships in Dubai and we have nothing but respect and admiration for everyone with whom we did business."

In recent weeks, the relationship between Mr Farkas and Mr Cuomo and questions about their time spent in Dubai have spilled into the political campaign in New York.

Carl Paladino, Mr Cuomo's Republican opponent in the governor's race, last month accused the attorney general of taking payoffs from Mr Farkas after joining ICG in 2003 to carry out work in a securitisation project in Dubai.

Mr Cuomo declined to comment.

bhope@thenational.ae

afitch@thenational.ae

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