While the sharp decline in Dubai’s property prices wreaked havoc on investment portfolios, the overall effect should be a boon to the city in the long term. The cause may have been the global credit crunch, but the market was overdue for a correction. As painful as they are, downturns bring economies back to their senses. And like the aftermath of any cataclysm, the first order of business is to clean house.
The downturn exposed financial misdeeds that were either masked by the boom or ignored while times were good. The phenomenon was most evident on Wall Street, where fraudsters such as Bernie Madoff were finally exposed, but our region was not unaffected. Dubai authorities had begun investigating reports of fraud, bribes and embezzlement as early as March 2008 as part of a push to tackle corruption and boost transparency and investor confidence. In some ways the global financial crisis, as devastating as it has been, aided these efforts.
Only two months after Dubai formally revealed its campaign to investigate white collar crimes, the financial crisis hit the UAE, sending property prices plummeting. What investigators discovered afterwards was astounding. Cases of fraud and misappropriation of funds accounting for more than Dh3 billion are being investigated by the authorities, as The National reports today. It would seem that the allure of easy money was too much temptation not only for some private borrowers, but also for high-powered executives, some 34 of whom are being investigated or have had their day in court since April.
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