Corruption high in Dubai state firms: police chief

Corruption at Dubai's state-linked companies is unusually high, the Gulf Arab emirate's police chief said on Thursday, but tough new penalties introduced this week could help curb fraud.

Dubai, which shocked global markets in November with a request to delay $26 billion in debts linked to flagship firm Dubai World DBWLD.UL, has ramped up an anti-corruption drive in recent weeks.

The emirate has seen a series of high-profile fraud cases since 2008 involving top executives at government-related firms like property developers Nakheel and Dubai Properties, as well as Dubai Islamic Bank DISB.DU

"Something is unusual. We have never had such a high number of people involved in corruption," Dhahi Khalfan Tamim, who also heads the Dubai government's budget committee, told Reuters.

A law issued on Tuesday has the power to impose prison terms of up to 20 years on offenders as the emirate tightens financial rules in the wake of its debt crisis.

Tamim said the law "comes at the right timing (because) for the first time there is a problem of a significant size."

Under the law -- which allows for offenders to be set free upon repayment of any stolen funds, or settlement agreements -- authorities can reclaim stolen public or private funds.

Tamim said police had drawn "a list of more than 60 people mainly from government-linked companies" who are under investigation, adding no-one on the list was from a government department.

"The chaos is all coming from the (government-linked) companies," he added.

"We never had this conduct in our government practices. But at government-linked companies, some thought there was a large scope for a lack of discipline."

The law is among a raft of measures introduced by Dubai, one of seven emirates in the United Arab Emirates, in the wake of its debt bombshell on November 25.

Earlier this month, Dubai issued a law requiring government departments to transfer their revenues to the treasury in a bid to regulate government departments' public spending and control government revenues.END