x Abu Dhabi, UAESaturday 20 January 2018

Task force targets corruption

Sheikh Mohammed orders Dubai prosecutors to investigate several government-backed companies after cases of fraud suspected.

Dubai has created a task force to investigate the multibillion-dirham corruption scandal in the emirate's financial institutions, and more arrests could be made, a senior police officer said yesterday. "We are the first country in the Gulf and the Middle East to have carried out these types of operations," said Major Gen Khamis Mattar al Mazina, deputy commander-in-chief of Dubai Police.

Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, ordered the Dubai Public Prosecution office to establish a specialist unit to investigate fraud in several government-backed companies, Major Gen Mazina said. He would not reveal how many police officers were assigned to the team. The investigations are being run by Dubai Public Prosecution to keep any pending arrests secret, he said.

"We only carry out the arrests after we get the orders from the Public Prosecution. They investigate." The task force has ample resources to deter, investigate and arrest company chiefs found to have a hand in financial irregularities, a spokesman for Public Prosecution said. Major Gen Mazina said money laundering, embezzlement and other forms of fraud happened in all Middle Eastern countries, but Dubai was the first to combat it because of the "vision of Sheikh Mohammed".

The Public Prosecution said the team would be disbanded when the corruption investigations were completed, but did not say how long they would take. The financial sector is also facing more scrutiny following the appointment last week of a Dutch regulator, Paul Koster, as chief executive of the Dubai Financial Services Authority. Mr Koster, who has experience fighting fraud, had been commissioner and executive board member at the Netherlands Authority for the Financial Markets since 2001.

Seven senior executives have been detained since Zack Shahin, the former chief executive of the property developer Deyaar, was jailed over allegations of "financial mishandling" in March. Abdullah Nasser Abdullah, Tamweel's deputy chief executive, was detained by Dubai Police this month after a six-month investigation into fraud in the company's property and finance sectors. No criminal charges were filed, but some of those arrested had their passports confiscated and were ordered to remain in the country until investigations were completed.

Last week, Istithmar World suspended two executives, Adel al Shirawi, the vice chairman, and Feras Kalthoum, the chief financial officer. The company said the suspensions were in connection with investigations into the men's activities while working for another company. Mr Shirawi was also suspended from the board of Istithmar. Many of the companies implicated in the inquiry have crossed shareholdings. Istithmar World, which has a private equity and alternative investments division along with departments dedicated to ventures in aviation and start-ups, is the largest shareholder in Tamweel, with a 22 per cent stake.

Dubai Islamic Bank, two former senior executives of which were arrested in the inquiry, owns a 20 per cent stake in Tamweel and is the largest shareholder in Deyaar. Tamweel said this month that it was co-operating with the inquiry. Sama Dubai, a property concern with four executives detained in the investigation, is part of Dubai Holding, a private company owned by Sheikh Mohammed. Dubai Islamic Bank last week seized the land assets of Plantation Holdings, a development company with a plot intended for a polo resort in the proposed US$40 billion (Dh147bn) Dubailand zone.

The owner of Plantation, Arthur Fitzwilliam, has also been arrested. The bank said the seizure was to recover debt in default. Plantation said the action was illegal. Deyaar has entered talks with its parent company to take over the Plantation project, the value of which has been estimated at Dh2.5bn, company officials said recently. Nakheel, the state-controlled developer of the Palm Islands, has confirmed that one present and one former employee have been questioned as part of a fraud investigation.