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Thursday, 9 April 2009

Former Dubai finance minister to face bank corruption trial (Update 1)

Dubai's public prosecution has charged a former minister of state for finance with embezzlement and "damaging state interests".

Mohammed bin Kharbash is to be sent to trial after an investigation into events at Deyaar, the real estate unit of Dubai Islamic Bank. Essam al-Humaidan, the office of the attorneygeneral, said in a statement Mr bin Kharbash, the former chairman of Deyaar, had allegedly helped Zach Shahin, the developer's former chief executive, to seize company money. Mr Shahin, a US national detained by Dubai's authorities last year, will also face charges of alleged bribe-taking.

The Financial Times in November revealed that the former minister was being investigated for alleged financial wrongdoing at the publicly listed Deyaar.

Dubai bank Emirates NBD in $1 bln bond swap

Bank Emirates NBD will exchange $1 billion medium term bonds for shorter term bonds in an effort to boost its regulatory capital ratios, the bank said on Thursday.

The bank will exchange bonds issued in 2006 that mature in 2016 and which are trading below face value for shorter term bonds that mature in 2012 in a move to strengthen its balance sheet.

'From this transaction, we can improve our Tier 1 Capital position while investors are in higher value security,' said chief executive Rick Pudner in a statement.

Barclays announces sale of iShares for $4.4bn

Here’s the statement, fresh off the RNS. It’s much less than that £5bn initially punted, but more than some estimates.

Barclays announces sale of iShares for US$4.4 billion (£3.0 billion)

The Board of Directors of Barclays PLC today announces agreement for the sale of its iShares business (”iShares”) to Blue Sparkle LP (”Bidco”), a new limited partnership established by CVC Capital Partners Group SICAV-FIS S.A. (”CVC”), for a total consideration of approximately US$4.4 billion (£3.0 billion).

The transaction will:

- Allow Barclays to crystallise significant value through the realisation of an expected net gain on sale of US$2.2 billion (£1.5 billion), taking into consideration goodwill of US$1.4 billion (£1.0 billion), from a business grown largely organically over the last five years;

Justice key to stable economy

Most of the cases handled by the DIFC Courts are contractual disputes involving employment, financial or property issues. And cases in the region's only English-language, common law court are resolved quickly – which is not always the case in other courts. Registrar Mark Beer says 90 per cent of the 56 cases lodged in the Small Claims Tribunal were tidied up in less than two weeks. The tribunal, which deals with disputes concerning less than $100,000 (Dh367,000), does not allow in lawyers, charges a minimal fee and promises swift justice. "There's no point having a contract if you cannot enforce it or it takes years to enforce," Beer told Emirates Business, adding that an efficient civil and commercial justice system guaranteed a stronger economy.

Insufficient liquidity could hamper GCC banks' recovery

Shaken by the global financial distress and faced with a bleak 2009, banks in the Gulf states have insufficient liquidity to spark recovery, according to regional banks.

Since they rely heavily on lending in the absence of other major investment tools and growing risks in world markets, a sharp slowdown in their deposit build-up is expected to smother their performance in 2009 after nearly seven years of high earnings because of the oil boom.

Official figures showed there was a decline in the assets of most banks in the six-nation Gulf Co-operation Council (GCC) this year, while deposits with these banks have either slowed down or dropped for the first time in many months.

Tufton delays launch of ship fund as it seeks more capital

Plans by Tufton Oceanic Middle East, a private fund manager in Dubai, to launch a distressed ship asset fund have been delayed as the company seeks more time to raise capital for the fund, said a senior company official.

The company revealed at the beginning of the year that it was creating a distressed fund with anticipation of an increase in distressed sale of ships as many shipping companies fail to break even.

Earlier plans were to launch the fund in the first quarter of 2009 and the company targeted a tune of $500 million (Dh1.83bn) from investors, which would be used to buy vessels in distressed sales. The launch of the fund might now be delayed to the end of the year.

UK seeks help of Gulf SWFs to boost its economy: Mandelson

The United Kingdom yesterday said it is actively seeking investment from Gulf sovereign wealth funds (SWFs) to help boost the country's economy despite reservations in some quarters.

Lord Peter Mandelson, Britain's Secretary of State for Trade, said during a visit to Abu Dhabi that his delegation had met SWF representatives and government officials and had received a good response during talks on investment and other areas of co-operation.

"We need liquidity in the system," he said. "We need funds to flow and we need credit to be available. We are putting that right in Britain and you are doing so here in the Emirates. We have a lot to learn from each other and to do together."

Dolphin Energy may agree to refinance $3.45bn loan

Abu Dhabi-based Dolphin Energy is close to agreeing a refinancing for a $3.45 billion (Dh12.6bn) loan that matures in July, banking sources close to the deal said.

The new loan, for which Royal Bank of Scotland is advising, will include a $1.6bn commercial tranche and a $500 million Islamic facility, while there will also be a bond issue worth around $500m, the sources added.

The 10-year loan facility will carry a margin of 275 basis points (bps) over Libor for the first three years, 300 bps to year six and then 350 bps thereafter, one of the sources added.

Only 32% Mena-based SWFs invest in region-focussed hedge funds: report

Although nearly half of all sovereign wealth funds (SWFs) are based in the Middle East and North Africa region, only 32 per cent of them invest in Mena-focussed hedge funds, new data has revealed.

Almost all of the SWFs known to be investing in hedge funds pursue a global investment strategy.

North America, as a mature and large hedge-fund market, is also a popular destination for investments in this asset class, with most of the larger SWFs, including the large Mena funds, targeting hedge funds there, a report by Preqin said. This includes Abu Dhabi Investment Authority and Kuwait Investment Authority.

Dewa's $2bn export credit facility in Q2

Dewa is launching an export credit facility worth around $2 billion (Dh7.34bn) in the second quarter of this year to finance its ongoing expansion plans.

Dewa Managing Director and CEO Saeed Mohammed Al Tayer said the facility is very competitively priced and has a tenor of up to 13 years.

"We have already started it. The result is positive and we already have some agreements with credit export agencies. You may see it in June or July," Al Tayer told Emirates Business. Dewa said it has plenty of liquidity and would not be pressured to pay any debt until 2013, said Nasser Akil Abbas, Director of Treasury at Dewa.

Update: Checking-in on MGM Mirage, CityCenter, and Dubai World (1 day delay due to connection problems.)

Just ten days ago, our colleague Brian Baxter gave us the run down on the lawsuit the state-owned investment firm Dubai World filed against MGM Mirage over the casino heavyweight's alleged mismanagement of their joint $8.6 billion CityCenter project in Las Vegas.

The project, planned as the new jewel of the Las Vegas Strip, was on the verge of bankruptcy, as Dubai World refused to help MGM Mirage make a $200 million payment to lenders and the casino business continued its general recession-related struggles. (MGM Mirage eventually made that payment on its own.)

As Baxter told us, Morrison & Foerster is repping billionaire Kirk Kerkorian (the founder of MGM Mirage) in the Dubai World lawsuit (with a likely assist from Kerkorian's usual counsel at Glaser, Weil, Fink, Jacobs & Shapiro), while Quinn Emanuel Urquhart Oliver & Hedges is repping Dubai World in the case.

The man who built Emirates into a global brand signs off

As the head of Emirates Airline’s marketing department for the past two decades, Mike Simon has seen his share of awards and plaudits, but possibly the highest praise he has received recently came from a London cab driver.

Mr Simon told the driver he was going to Arsenal, the home stadium of the Arsenal Football Club, which Emirates Airline won the naming rights to in 2004.

The cabbie replied, “Oh, the Emirates?” and went on to say, after learning that Mr Simon worked for the airline: “Oh well, I was in Dubai last week playing golf. I flew your airline. Not bad.”

RAK Petroleum buys stake in Canada firm

RAK Petroleum has bought the Omani assets of Canada’s Heritage Oil for US$28 million (Dh102.8m), boosting its stake in an offshore field that supplies gas to Ras al Khaimah.

The transaction adds a 10 per cent interest in the Omani side of the West Bukha offshore oil and gasfield to RAK Petroleum’s existing holding, raising it to 50 per cent. The field is located in the Strait of Hormuz, straddling the maritime border between Iran and Oman’s Musandam territory.

“This acquisition increases our exposure to West Bukha’s upside potential and also underscores our commitment to investing in the upstream sector in the Sultanate of Oman,” said Abdulaziz al Ghurair, the chairman of RAK Petroleum.

Define Properties executive detained

A principal shareholder of Define Properties has been detained by Dubai authorities on provisional charges of fraud, prosecutors said today.

The arrest of the executive comes in the middle of negotiations with Alternative Capital Invest Real Estate (ACI), a Germany-based property developer operating in Dubai, to take over some of Define’s assets.

The major shareholder was arrested in mid-March after complaints were filed by an investor in Define Properties, said Tarek Daoud, the administration director of the company. He said the amount being sought by the investor was close to Dh30 million (US$8.1m).

Ghobash to investigate BBC labour camp claims

The Ministry of Labour is to investigate claims made by a BBC documentary that labourers on some construction projects in Dubai are living in “inhumane conditions”.

The BBC Panorama documentary, “Slumdogs and Millionaires”, which was broadcast on Monday, showed an undercover reporter with groups of workers employed by First Group’s subcontractor United Engineering Construction and by Arabtec.

In one camp, where 7,500 labourers were said to be living in 1,248 rooms with poor ventilation, the documentary team reported “raw sewage flowing through the camp” and a lack of clean water.

Dubai Attorney General refers suspects in Deyaar case to courts

Dubai Attorney General Essam Al Humaidan has issued an order referring the suspects in the Deyaar case to the Dubai Criminal Court.

The accused who were referred to the court included Mohammed Khalfan Kharbash (UAE), Zack Shaheen (US) and the absconding John Dakonha (Indian).

The Public Prosecution has charged the suspect Mohammed Khalfan Kharbash with taking possession of public funds, causing harm to interests of the state and assisting the second suspect to seize funds belong to Deyaar Company. Zack Shaheen was accused of complicity in these crimes in addition to recieving bribes.

Dubai building boom in mass mothballing

A MASSIVE $US166 billion ($230 billion) worth of projects planned for Dubai have turned to sand as money dries up, forcing developers to shelve projects.

The mass mothballing will cut into the earnings, by 20 per cent in the worst case, of Australian companies such as Leighton Holdings, Sunland, the now-private Brookfield Multiplex, and to a lesser extent Grocon and the relative Dubai newcomer Bovis Lend Lease.

And across the Gulf region, the total value of projects postponed and likely to be cancelled has risen to $US335 billion, according to the Middle East Economic Digest.

Las Vegas trophy project becomes symbol of trouble

It was conceived as the centerpiece of a thriving Las Vegas -- one of the world's most expensive building projects that would bring back glamour to the Strip and cap an unprecedented three-year economic boom.

Instead the $9 billion development named CityCenter -- touted as the city's most ambitious endeavor -- has come to symbolize a global retail and leisure slump and the city's struggles to come to grips with crushing unemployment and dwindling casino revenue.

Partners MGM Mirage (MGM.N) -- struggling to bankroll the project's ballooning cost -- and Dubai World [DBWLD.UL] had pondered placing the development under bankruptcy, thrusting its future into question, sources say. [ID:nN03270902]

Former minister faces charges in Dubai

Dubai's public prosecuors has charged a former minister of state for finance with embezzlement and "damaging state interests".

Mohammed bin Kharbash is to be sent to trial after an investigation into events at Deyaar, the real estate unit of Dubai Islamic Bank.

Essam al-Humaidan, the office of the attorneygeneral, said in a statement Mr bin Kharbash, the former chairman of Deyaar, had allegedly helped Zach Shahin, the developer's former chief executive, to seize company money. Mr Shahin, a US national detained by Dubai's authorities last year, will also face charges of alleged bribe-taking.

Private equity link to the Pipe line

The Middle East private equity industry has boomed and ballooned in recent years, but there have been no “barbarians at the gate”-type acquisitions of listed companies.

While the credit crunch means US-style hostile leveraged buy-outs of publicly listed companies are still far off the agenda, private equity executives say depressed valuations of regional stocks present an enticing opportunity.

It takes time for equity market valuations to filter down to the privately held sector – dominated by family groups, which are loath to sell at depressed prices – but public stocks are readily and cheaply available.

Don’t rule out Dubai comeback

Traffic is thinner, housing prices are in freefall, and hotels are more affordable. Schools that once furiously turned students away are suddenly welcoming, and snobbish sports clubs are unexpectedly friendly.

This is the new Dubai – a city that, for the fortunate ones who are holding on to their jobs, now feels a lot more pleasant.

The gossip among expatriates – and they form the vast majority of the population – is about how the global financial crisis has arrested the city-state’s wild ride and driven some of their friends away.

UK seeks reassurance from UAE on payments to contractors

Britain's business secretary has raised concerns about the failure of developers in the United Arab Emirates to pay British contractors and has sought reassurances from local rulers that commitments will be honoured.

The UAE, particularly Dubai, has been hit hard by the global financial crisis and some contractors and consultants have complained they have not been paid for up to six months. -Government-linked developers dominate the UAE's property sector and cash-strapped Dubai-affiliated companies are thought to owe billions of dollars.

Lord Mandelson, UK business secretary, told the Financial Times he had raised the issue with Sheikh Mohammed bin Rashid Al Maktoum, Dubai's ruler, and Sheikh Mohammed bin Zayed Al Nahyan, crown prince of Abu Dhabi, the UAE's capital, "stressing the need to give reassurance and confirmation that contractors will be paid".

Dubai’s regulator sharpens its teeth

Dubai’s financial regulator is overhauling its approach at the emirate’s financial centre as its chief executive seeks to stamp out any vestiges of “light-touch” regulation.

Paul Koster, chief executive of the Dubai Financial Services Authority (DFSA), says he is raising by about 20 per cent the number of visits his compliance teams make to registered members of the Dubai International Financial Centre, the emirate’s financial free zone.

“The light touch approach is over,” Mr Koster tells the Financial Times in an interview. “That does not mean that we are now moving to over-regulation. We are actually trying to be as flexible as possible, but as a regulator you need to be absolutely attuned to what is going on in the market. ”