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  • RSS Dubai United Arab Emirates Property Real Estate Debt Fraud Developer Investor Court News

    • Criminal Complaint filed against Al Fajer Properties Sheikh Maktoum
      Criminal Complaint filed in Germany against Sheikh Maktoum Hasher Maktoum Juma Al Maktoum CEO of Dubai Developer Al Fajer Properties The Dubai Sheikh who mislead and extort a German Couple  Germany – Dubai 2011 A German elderly couple , today 80 + 50 years old who have been Dubai Tourists since a decade, bought in 2005 an apartment at Nakheel´s Dubai Residen […]
    • UAE: Human Rights Blogger, Sorbonne Lecturer Charged With ‘Humiliating' Officials
      source Human Rights Watch www.hrw.org (Beirut) - The United Arab Emirates attorney general should immediately drop all charges against five pro-democracy activists to halt their trial, Human Rights Watch said today. The charges of "humiliating" top officials relate solely to the defendants' peaceful use of speech to criticize the UAE governmen […]
    • Nakheel Dubai Sunland Case
      June 5, 2011After 21 hearings, Chris O'Donnell, the Australian chief executive of Dubai's major developer, Nakheel, came to the defence of his former colleagues Matthew Joyce and Marcus Lee. Mr Joyce and Mr Lee are accused of profiting from the sale of land that had been earmarked for a colossal high-rise development, which was to include the futur […]
    • Dubai Nakheel CEO decided to leave the company
      Dubai June 7, 2011 Nakheel said on Wednesday that its CEO Chris O'Donnell had left the company "after completing his contract terms". O'Donnell, an Australian who joined the developer in 2006, said he had decided to leave Nakheel following five years spent with the company, the statement added. O'Donnell has overseen a traumatic time […]
    • Owner of Dubai Developer Damac Hussain Sajwani files case against Egypt corruption ruling
      Dubai property developer Damac said on Tuesday it had filed an international arbitration case against Egypt over a land dispute and the conviction of its chairman and owner, Hussain Sajwani.A Cairo court last week sentenced Sajwani in his absence to jail and ordered him to pay a $40.5 million fine in connection with his 2006 purchase of land at Egypt's […]
    • Dubai Palm Jumeriah - Investors plan to take legal action
      Investors in Dubai Palm Jumeirah’s Golden Mile complex will this week serve the developer behind the project with a legal ultimatum to hand over their units or issue them with a refund.Up to ten investors in the luxury complex plan to issue Souq Residences with legal notice in a bid to force a resolution to a dispute that has been ongoing for more than a yea […]
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      Zahlen, Reaktionen, AnalysenDie Bundestagswahl ist vorbei, die Zahlen liegen auf dem Tisch. Der Bundestag wird sich verändern. Die Republik wird sich verändern. Analysen und Reaktionen zur Wahl im ZDF spezial. Hier im Livestream.24/7 ZDF Livestream ZDFspezialInteraktiv WahltoolVideo Schulz schließt Große Koalition ausVideo Merkel: Sind stärkste Kraft
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Archive for December, 2009

Sheikh Mohammed issued tough penalties for fraud – bringing confidence back to Dubai

Posted by 7starsdubai on December 30, 2009


original source sheikhmohammed.com

The law is effective immidiately and will be published in the official gazette.

more:  www.sheikhmohammed.com
read also: KhaleejTimesOnline   “Anti-fraud Law Made Tougher”
read also Gulf News
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Posted in Crime, Dubai, Dubai law, Fraud Dubai, Sheikh Mohammed bin Rashid Al Maktoum | Tagged: , , | Comments Off on Sheikh Mohammed issued tough penalties for fraud – bringing confidence back to Dubai

Terror suspect airline bomber studied in Dubai

Posted by 7starsdubai on December 27, 2009


original source CNN

Tee man charged with attempting to destroy a U.S. airliner on Friday is
the son of prominent Nigerian banker and had been a college student in
Britain before moving to Dubai, according to family and official
sources.
read more

further reports:

Washington Post

New York Times

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Dubai World is expected to make a formal request for debt standstill

Posted by 7starsdubai on December 20, 2009


source Kippreport

Dubai World, a government-owned conglomerate, is expected to make a formal request for a debt standstill on $26 billion at a creditor’s meeting on Monday, reports Reuters. Bankers tell the news agency it could take over a month for the request to be approved.

“You can’t bet on it, because anything could happen; it could be anything from a complete write-off to 100 percent recovery,” a senior banker said.

The meeting is schedule for 12.30pm on Monday at the conglomerate’s headquarters.

“We’re going to pitch up, hear what they say, give our views, wait for the formal extension request and work on a restructuring,” a Dubai-based banker close to the talks said.

Read also from Reuters ” Scenarios – Creditors likley to agree Dubai World standstill “

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Dubai Fraud Trial – Lawyer asked the court to subpoena Hussein Sajwani, the owner of Damac Properties

Posted by 7starsdubai on December 18, 2009


originaL source The National
DUBAI // Defence lawyers in the Sama Dubai fraud trial tried to use the fallout from the recent restructuring of Dubai World to make their case to the Appeals Court yesterday that their client should not be tried as a public official.

AM, 42, an Emirati and former senior executive at Sama Dubai, was acquitted of charges of breach of duty in July.

Last month the public prosecution asked that he be retried, saying his acquittal came because he had been tried as a private employee.

The prosecutor, Abdel Rahman al Memari, told the court that since Sama Dubai was owned by Dubai Holdings – owned by Sheikh Mohammed bin Rashid, the Ruler of Dubai and Vice President of the UAE – AM should instead have been tried as a public official.

In that case, Mr al Memari said, AM would have been legally required to declare commissions he received, including five apartments valued at Dh2.7 million (US$735,000), and Dh200,000 in cash.

If accepted, that claim would have significant repercussions for a number of the fraud cases currently working their way through the Dubai courts, as many of the defendants could similarly be considered to be public officials.

However, in court, the defence pointed out that since Dubai World’s restructuring was announced last month, officials had stressed the arm’s-length relationship between the Government and some of the emirate’s biggest companies.

For the defence, Ali al Shamsi reminded the three Appeals Court judges of government statements saying it would not guarantee the debts of a conglomerate owned by Sheikh Mohammed.

“The recent press statements issued by government officials about the company owned by the Ruler of Dubai are a clear indication that these companies are not government-owned entities,” said Mr al Shamsi.

He referred to a television interview given by Abdel Rahman al Saleh, the director general of the Dubai Department of Finance, in which Mr al Saleh said: “Creditors need to take part of the responsibility for their decision to lend to the companies. They think Dubai World is part of the Government, which is not correct.”

Mr al Shamsi told the court that Dubai Holdings, like Dubai World, was not owned by the Dubai Government.

Its subsidiaries were registered as limited liability companies, he said, meaning that AM could not be charged as a public official.

Meanwhile, Saeed al Ghailani, who is representing a Syrian Damac property development manager, AH, 32, in the same trial, asked the court to subpoena Hussein Sajwani, the owner and chief executive of Damac Properties, to be cross-examined.

AH is accused of being complicit in the alleged bribes of the Sama Dubai employees as well as accepting Dh650,000.

Mr al Ghailani said his client acted according to the instructions of the owner of the company, Mr Sajwani.

The trial was adjourned until January.

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Who is carrying the risk – Dubai’s unfinished construction projects is in the hundreds of billions of dollars

Posted by 7starsdubai on December 18, 2009


extract of original TheDailyMarverick

Some say the sum for Dubai’s unfinished construction projects is 400 billions of dollars , so who is carrying the risk?

Multiple reports state that Abu Dhabi will “pick and choose” how to assist Dubai.

As capital of the United Arab Emirates and home to the central bank that feeds the cluster of seven emirates, everybody is exposed to everyone else. Abu Dhabi pumps 90% of UAE oil, so that’s a big hedge. But just as Dubai World has subsidiary upon subsidiary, and extends its tentacles into state enterprises, parastatals, and listed firms, it’s hard to track where the fault lines lie in the patchwork that is UAE finances, and beyond into the markets of the Middle East proper.

Abu Dhabi’s own cost of insuring its debt against default has soared, from just less than $100,000 per $10 million, to more than $177,000. And while this number fluctuates with the desert winds, there’s no guarantee that Abu Dhabi will keep forking out money to save its emirate cousin. For now, though, the prospect of rising costs on its own borrowings appears to have galvanised Abu Dhabi into providing more cash to Dubai. Stock markets swelled after Abu Dhabi’s payment of $10 billion to its neighbour, with Abu Dhabi’s stock market clambering 7.9%, while Dubai’s benchmark index rallied 10%, the biggest single-day gain in more than a year. But this remains far below its level before Dubai World announced it wanted a hold on debt.

Reuters quotes Abu Dhabi people who say most of the über-emirate’s credit flow was too big, government-backed entities in Dubai, which helped collateralise Abu Dhabi’s own late entry into the wedding-cake architectural stakes.

“During those years, the property market was still in its infancy in Abu Dhabi, so like other banks here, we, too, diverted our credit to Dubai,” one Abu Dhabi bank executive said. “We have to face the stress that will be caused to our balance sheet and profit and loss account due to this exposure to Dubai World and associated companies because it is a default. Yes, we will have to take more provisions.”

No one yet knows where the debt really resides.

Western banks appear to have some $12 billion of exposure to Dubai’s unfinished building frenzy.

There’s a sprinkling of Islamic sukuk bonds, such as the one that funded Nakheel’s $4.1 billion of due debt.

But the market wants to know if Abu Dhabi’s latest $10 billion was a gift, or a loan, or came from the proceeds of a veiled asset sale.

Abu Dhabi recently launched a push to improve transparency and raise money overseas, to help fund its own 20-year development programme. And so far, the emirate has raised about $8 billion this year on international credit markets.

But last week, ratings agency Moody’s placed the credit ratings of several big Abu Dhabi companies on review for a possible downgrade, citing uncertainty over government support. And in the meantime, rival agency Fitch downgraded Dubai Bank, and also Tamweel – the largest provider of UAE real estate financing. It also downgraded Bahrain’s TAIB Bank.

Another motivation for Abu Dhabi helping out Dubai World is the company’s Dubai port operations, which it needs to market as a dependable global transport hub.

Dubai has got off lightly to date. But if the property market doesn’t return soon, hundreds of billions of dollars worth of skyscrapers and palm-shaped islands will remain unfinished hulks amid the dunes and warm waters off Dubai’s coastline.

more.

Read more: Barrons, Reuters, Guardian, The Wall Street Journal

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Dubai – Abu Dhabi Last Minute Agreement

Posted by 7starsdubai on December 15, 2009


source Zawya

For more than two weeks there was little word from Abu Dhabi, even as fears over Dubai’s debt travails wiped billions of dollars off regional stock markets and bankers warned about the contagion effect.

Yet many investors had bet on the United Arab Emirates’ oil-rich capital being Dubai’s lender of last resort. Abu Dhabi’s silence exacerbated the uncertainty as the clock ticked down on the deadline for Nakheel, Dubai’s troubled real estate developer, to repay its $3.52bn Islamic bond.

It also placed the relationship between the UAE’s most important and competitive city states under the spotlight.

Yesterday’s news that Abu Dhabi is lending $10bn (€6.8bn, £6.2bn) to help dig Dubai out of its immediate hole will help soothe nerves. But the nature of what many bankers interpret as a last-minute agreement will do little to assuage concerns.

In the end, many observers believe Abu Dhabi felt it had little choice but to act as it witnessed the dramatic fall-out from the decision by Dubai World
     
‘s parent, to ask for its debt repayments to be delayed.

Now the question on many minds is: what price will Dubai pay for Abu Dhabi’s support? At the very least, experts believe that Abu Dhabi will have oversight on how the $10bn is spent – and the funding is conditional on Dubai World succeeding in negotiating a standstill with its creditors. Some predict wider consequences.

“We believe Abu Dhabi has and will attach political conditions to its financial rescue, including possibly seeking strategic equity stakes in Dubai assets and reining in Dubai’s independence in foreign policy,” says John Sfakianakis, chief economist at BSF-Crédit Agricole Group.

When the UAE central bank subscribed to the first $10bn of a $20bn bond programme issued by Dubai earlier this year, it was seen as thinly veiled intervention from Abu Dhabi. Two Abu Dhabi-controlled banks last month subscribed to a further $5bn. But the capital was apparently kept in the dark about Dubai World’s request for a credit standstill on November 25.

Talks between the two governments and central bank officials began in “earnest” two weeks ago, observers say.

“Lot of loose ends were tied up in the last 48 hours, but the basis of what we have been talking about – the structure and the pieces and the elements – we have been working on for the past two weeks,” says a source close to the Dubai government.

Another source, however, says a senior official with Dubai World was still preparing creditors for the worst on Sunday.

Abu Dhabi has always insisted that it would not allow another member of the UAE to fail. But officials have also made clear there would be no blank cheque and Dubai would have to rein in the excesses that fuelled its problems.

The source close to the Dubai government says: “What I can tell you will happen in the future is: future decisions will be closely co-ordinated with the two governments.”

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Outlook in concrete- Dubai World `s obligations and Debts

Posted by 7starsdubai on December 14, 2009


original source Blogs The National by Wayne Arnold

In response to queries, I’m revisiting an earlier post: “Reports of my debt have been greatly exaggerated,” in which I posted estimates of Dubai World’s real debts after its revelation that it had $59 billion in consolidated liabilities. This terrifying number sparked some to wonder if the treadworn estimates of Dubai Inc.’s $80 billion in debts might actually be higher or that Dubai World’s debts may somehow account for half of the total.

The grand total for Dubai World and its units appears to be $36.49bn, of which $26bn is subject to restructuring.

Strictly speaking, no one knows for sure. Dubai and its subsidiary companies do not publish official debt tallies or debt repayment schedules. But thanks to the diligent work of analysts at EFG-Hermes, Deutsche Bank and Standard & Poor’s, just to name a few, here’s what we know, or at least think we know:

Dubai World has
$59.3bn in consolidated liabilities,
according to its own statements, which includes all debt and non-debt obligations at the conglomerate, its 12 subsidiaries and the 78 other units they own or control.

Of this, the group owes an estimated
$10.52bn in bonds and
$13.3bn in loans, for a total of
$23.82bn, according to Deutsche Bank.

But clearly this leaves out significant portions of the Group’s overall debts, because Dubai World has announced that the restructuring will affect $26bn in debt, $20bn at Dubai World and Limitless, and $6bn at Nakheel.

Deutsche bank has been able to track down only a portion of these.
Dubai World, it estimates, owes
$5.5bn in outstanding loans
EFG-Hermes has put the loan figure at $6.7bn.

Nakheel owes
$5.23bn in bonds and
$1.85bn in loans for a total of debt of
$7.08bn.

Limitless owes
$1.2bn in loans

That only adds up to $13.78bn, leaving $12.22bn in debt unaccounted for.

If we assume that the total debts at Dubai World, Nakheel and Limitless are $26bn and add Deutsche Bank’s estimates for the other Dubai World units, we come up with a total group debt of $36.49bn.

Here’s a schedule of maturies for the Dubai World group debts we know about:
Dec. 14: Nakheel’s $3.52bn sukuk is due, though Dubai World has said it plans to ask creditors for a six-month extension.
March 31, 2010: Limitless due to repay $1.2bn loan
May 13: Nakheel due to pay Dh3.6bn in bonds
[May14: if it wins an extension on its 12/14/09 bonds, Nakheel would have its $3.52bn sukuk to repay this day.]
June 23: Dubai World due to pay $2.1bn loan
Nov. 1: Nakheel due to pay Dh367.35mn loan
Jan. 11, 2011: Nakheel due to pay $1.2bn loan
Jan. 16, 2011: Nakheel due to pay $750mn bond
Feb. 23, 2011: DP World due to pay $6.3bn loan
Feb. 23, 2011: DP World due to pay $200mn loan
March 22, 2011: Ports Customs and Free Zones due to repay $6.8bn loan (unclear whether this is still a Dubai World liability)
April 12, 2011: DP World due to pay $400mn loan
April 12, 2011: DP World due to pay $6.8bn loan
June 20, 2011: Dubai World due to repay $450mn loan
June 24, 2011: Dubai World due to repay $1.95bn loan
July 10, 2011: Ports Customs and Free Zones due to repay $1.003bn loan
Aug. 10, 2011: Dubai Drydocks due to pay $1.7bn loan
Sept. 29, 2011: Ports & Free Zone World due to pay $150.027mn loan
Sept. 29, 2011: Ports & Free Zone World due to pay $853mn loan
Sept. 30, 2011: Dubai Drydocks due to repay $2.2bn loan
Oct. 21, 2011: Dubai Drydocks due to repay $1.7bn loan

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D-day for Nakheel Dubai – December 28 is the final cut off point

Posted by 7starsdubai on December 13, 2009


original published by Reuters

DUBAI (Reuters) – Heavy rain pounded Dubai on Sunday adding to the gloom of the emirate’s debt woes a day before the deadline of the $3.52 billion bond by state-owned developer Nakheel, with no word on how it will be handled.

Dubai’s stock market did soar for a second consecutive session on Sunday as traders reacted to a surge in Nakheel’s bond price last week on mounting speculation it will repay.

The Islamic bonds, or sukuk, had been trading around 110 cents to the dollar before the government shocked investors on November 25 with a request for a six-month standstill on the debt of state-linked Dubai World.

The announcement sent the sukuk down to mid-40 lows, but closed on Friday at about 54 cents to the dollar.

Fund managers and bankers regard Monday’s outcome as the litmus test for Dubai World’s planned $26 billion restructuring and Dubai as a whole for resolving its debt burden.

But the odds of Nakheel, the developer of palm-shaped islands, repaying are low.

“It’s very hopeful people (speculating),” says a Dubai-based fund manager. “It seems very strange that if Dubai World intended to pay they would have gone through the last two weeks of pain.”

A sudden u-turn and repayment would placate disappointed and confused investors in the immediate term. Dubai’s handling of the situation has tarnished its reputation.

Dubai’s finance chief on Thursday tried to reassure investors saying its actions were more important than its public image. But, Dubai World has few options.

“The key thing is the lack of clarity,” said Nish Popat, ING’s head of fixed income in the Middle East. “What’s needed more than anything else is some sort of information to understand what the plans are going forward and how they are progressing.”

Reflecting rising repayment hopes, five-year credit default swaps for Dubai fell more than 30 basis points on Friday to 533 basis points, according to CDS monitor CMA DataVision, compared with a peak of almost 700 bps at the end of November.

The level is still high given the CDS was quoted at about 300 bps before the November 25 announcement.

“The CDS spreads are better, and news of a hedge fund buying into Nakheel – this is all positive … even if you buy Nakheel at 50, and they pay out 70, you’re still making good money,” said a banker from a Dubai government-controlled lender.

If Nakheel does not pay on Monday, it would technically be in default, but it would still give its restructuring team a two-week grace period to reach an agreement with creditors.

December 28 is the final cut off point. After that a cross default clause in its original prospectus will be triggered that covers Nakheel and its guarantor Dubai World, adding to the overall debt burden.

Regional markets have been struggling for weeks under the issue.

“Prices are so distorted right now,” said Haissam Arabi chief executive at Gulfmena Alternative Investments. “Tomorrow is a big day, until we get some clarity (about Dubai’s debt) there will be no real trend. The main catalyst we are waiting for is Nakheel news.”

STRIKING A DEAL

Analysts have speculated Nakheel could repay its bond at 70 cents to a dollar and issue new debt for the remainder.

“Such an outcome would be beneficial for both parties involved,” EFG Hermes analyst Fahd Iqbal

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Emirates Airlines debt touches 9,9 Billion US Dollar

Posted by 7starsdubai on December 13, 2009


original source Zawya from GulfNews
Friday, Dec 11, 2009

Dubai Emirates airline’s gross debt stood at $9.9 billion (Dh36.3 billion) while its net debt as of yesterday rose to $8.2 billion (Dh30 billion) as it raised a further $1.13 billion (Dh4.1 billion) to finance six Airbus A380s, out of 53 ordered.

“At present we have 141 aircraft in our fleet and another 151 on order. Gross debt is $9.9 billion and net debt is $8.2 billion. Our debt is paid over a long term,” President Tim Clark told Gulf News yesterday.

Emirates, the largest Arab carrier, yesterday said it has raised $1.13 billion (Dh4.1 billion) for Airbus A380 deliveries, in what is perceived to be a very difficult credit condition where loans are hard to come by.

Schedule

“Reflecting the airline’s robust delivery schedule, Emirates will receive the first of these aircraft early next week, with a second arriving in late December and the remaining four A380s due for handover in 2010,” the airline said in an e-mailed statement.

These six aircraft will form part of the 53 Airbus A380 aircraft that Emirates currently has on firm order. Prices of A380s start from $275 million, depending on specifications and deal size.

The carrier’s current order book is worth $58 billion in book value. The company has a cash flow of $3 billion — enough to fund future acquisitions, Maurice Flanagan, Emirates Group Vice-Chairman, told Gulf News recently, as the airline expects more than 20 per cent growth in profits in the current financial year ending March 2010.

The financing for these six aircraft was arranged and funded under two separate finance agreements. The first agreement, covering three A380s, has been undertaken with Citibank, backed by a guarantee from the European Export Credit Agencies.

A second financing agreement has been arranged through Doric Asset Finance and covers the remaining three A380 aircraft.

Clark said: “Emirates remains in a secure financial position despite the global financial crisis. We have never encountered difficulties in obtaining finance for our aircraft acquisition programme, with both international and regional banks comfortable with our financial stability.

“As one of the world’s most profitable airlines, Emirates has always honoured its financial commitments and we continue to progress with our rigorous fleet and network expansion plans.”

Emirates will deploy the A380s on the Seoul route from December 14. Emirates will also receive its seventh A380 this month, scheduled to service the Dubai-Paris route three times a week from Dec-ember 29, becoming daily from January 17, 2010.

Although global credit conditions remain tight, the global aviation industry remains on growth mode.

The International Air Transport Association reported scheduled traffic results for October 2009 showing improving conditions.

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Abu Dhabi – Sheikh Issa Al Nahyan put on trial

Posted by 7starsdubai on December 11, 2009


original source Zawya – original reported bySimeon Kerr Financial Times

Friday, Dec 11, 2009Abu Dhabi authorities have put on trial Sheikh Issa bin Zayed al-Nahyan, a member of the ruling family caught on tape apparently torturing an Afghan business associate, the Financial Times can reveal.

Sheikh Issa, one of 19 sons of Sheikh Zayed, the founding father of the United Arab Emirates and Abu Dhabi’s late ruler, is charged with causing harm and endangering life.

This unprecedented trial, held away from the public eye, will be seen as a barometer for the rule of law in Abu Dhabi, where the lines between the government and ruling families are blurred.

A former aide, Bassam Nabulsi, leaked a video this year that appeared to show Sheikh Issa brutally torturing an Afghan commodities trader, Mohammed Shah Poor, in 2004.

read the full article Zawya

Update 13 December 2009
Afghan Torture Video man filed a criminal lawsuit claims 100.000 Dhs damages, accusing the former business partner of deformation ( emotional and moral damages he claims to have after the video`s broadcast on television.
read more Gulf News December 13. 2009

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Emaar Dubai – no economic sense in merging with Dubai Holding

Posted by 7starsdubai on December 11, 2009


original source Financial Times

Dubai Holding, the conglomerate owned by the emirate’s ruler, received a blow yesterday when Emaar Properties blocked a proposed merger with its real estate arms. Emaar’s decision appeared to be a bid to protect itself from the continuing fallout of Dubai’s debt problems.

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Dubai`s finance chief blamed the media for spreading “blind panic”

Posted by 7starsdubai on December 11, 2009


original source maktoob

DUBAI – Dubai’s finance chief blamed the media on Thursday for spreading “blind panic” about the emirate’s financial problems as it struggles to deal with more than $80 billion of government and corporate debt.

In a speech to the Dubai School of Government, Abdulrahman Al Saleh, director of Dubai’s Department of Finance, said the emirate’s debt problems were a “hiccup-damaging for Dubai’s credibility and lacking broader significance of exaggerated media campaigns.”

Al Saleh accused the international press of creating “blind panic” about Dubai’s economic troubles after it asked bankers to freeze $26 billion worth of debt owed by one of its largest government owned companies, Dubai World.

Dubai’s benchmark stock index has fallen about 30% since the government shocked investors by seeking a standstill on Dubai World’s debt late last month.

Read also: They still dont get it ….guardian uk

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Dubai Schulden Albtraum-Szenario – Dubai World – Nakheel – Dewa

Posted by 7starsdubai on December 10, 2009


original source Handelsblatt Germany

“Viele Kreditverträge haben eine Klausel über reziproken Verzug: Wenn ein Gläubiger in einem Fall zahlungsunfähig wird, kann er bei all seinen anderen Kredit-Verpflichtungen ebenfalls in die Zahlungsunfähigkeit abrutschen”, sagte Jawad Ali von der Anwaltskanzlei King & Spalding. Im Klartext: Sollte Nakheel seine Außenstände nicht begleichen, muss die Mutter Dubai World einkalkulieren, dass alle Gläubiger plötzlich ihre Ansprüche geltend machen.

Die Details hingen von der Formulierung des jeweiligen Vertrags ab. “Das ist ein Albtraum-Szenario, das Dubai World mit dem Schulden-Moratorium verhindern möchte”, so Ali.

read the full article Auf Dubai rollt nächste Schuldenlawine zu (bei Handelsblatt.com am 10.12.2009 veröffentlicht)

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Debt problems for Dubai may swell

Posted by 7starsdubai on December 8, 2009


original source Bloomberg

Dec. 8 (Bloomberg) — Debt restructuring by Dubai state-run companies may almost double to $46.7 billion as more of the emirate’s businesses could need help making payments, Morgan Stanley said.

Dubai Holding LLC, Dubai Holding Commercial Operations Group LLC, Borse Dubai Ltd. and Dubai Sukuk Center Ltd. may join Dubai World in restructuring debt, Morgan Stanley analysts Mohamed W. Jaber and Paolo Batori wrote in a report. Government- controlled Dubai World said last week that it’s in talks to renegotiate $26 billion of loans.

It’s likely that other state companies will “announce debt restructuring plans over the near term,” Jaber and Batori wrote. “We believe that a haircut on the external debt at risk in the area of 40-50 percent is necessary to have a notable long-term favorable impact on public debt dynamics.”

Islamic bonds issued by Nakheel PJSC, Dubai World’s property unit, that mature Dec. 14 fell to 51.5 cents on the dollar from 53 cents yesterday, heading for the lowest closing price on record, according to Citigroup Inc. prices.

read more….

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Dubai Index slumps again

Posted by 7starsdubai on December 8, 2009


original source Bloomberg
Dec. 8 , 2009 — Dubai shares tumbled, erasing almost all of this year’s gains, on investor concern that Dubai World is struggling to restructure debt.

Emaar Properties PJSC, the United Arab Emirates’ biggest real-estate developer, slumped 9.8 percent and Emirates NBD PJSC retreated to the lowest since Sept. 3. The DFM General Index plunged 6.1 percent to 1,638.05. The measure, which closed at the lowest since July 13, has tumbled 22 percent since Dubai said on Nov. 25 that it was seeking a “standstill” agreement on Dubai World’s debt.

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Shahram Abdullah Zadeh vs Al Fajer Properties – A Dubai Deal called into Questions

Posted by 7starsdubai on December 5, 2009


original published Wall Street Journal

http://online.wsj.com/article/SB123457503562586691.html

jbc-towersDUBAI — Amid the movers and shakers of this glittering city, Shahram Abdullah Zadeh cut a wide swathe. He cruised around town in a white Bentley and dined with royalty as his company ( Al Fajer Properties)  developed one of the emirate’s premier office complexes, the Jumeirah Business Centre Towers located at the Jumeirah Lake Towers district in Dubai.

But in February 2008, a phone call from Dubai’s state security effectively ended it all.

Hauled in and locked up for 60 days, Mr. Zadeh says he was interrogated about his role in Dubai’s freewheeling real-estate sector and his business relationship with the brother-in-law of Dubai’s ruler, Sheikh Mohammed bin Rashid Al Maktoum. When released, Mr. Zadeh says he had been frozen out of the real-estate company he had helped start.

Mr. Zadeh’s experience, compiled though court and company documents, offers a rare window into the murky business world that helped transform this city from an empty coastline into a metropolis. It also may offer a cautionary tale for investors lured to the city, which bills itself as the modern face of a new Middle East. Dubai is one of seven semi-autonomous emirates that make up the United Arab Emirates.

The U.S. government and human-rights groups have long criticized the judicial system in the U.A.E for a lack of independence and oversight. In the good times, investors didn’t fret much about these shortcomings. Now, some of the same deals that helped build Dubai are coming undone — in particular, a tradition of off-the-book business partnerships between Emirati citizens and elite expatriates like Mr. Zadeh, who was born in Iran.

Shahram Abdullah  Zadeh claims his detention came after a business dispute with his partner at Al Fajer Properties, Sheikh Hasher bin Juma’a Al Maktoum and his son, Sheikh Maktoum bin Hasher Maktoum al Maktoum. Both men are members of the extended family of Dubai’s ruler, Sheikh Mohammed bin Rashid Al Maktoum.

Mr. Zadeh alleges the two men took control of the firm while he was in custody, according to a lawsuit he filed with Dubai’s public prosecution office last year.

Mr. Zadeh has not been charged with a crime.

But for the past year, authorities have held onto his passport, making it impossible for him to travel or find work.

“I used to believe in the miracle of Dubai. But now I see it all as a mirage,” said Mr. Zadeh, 37. Sheikh Hasher denies any wrongdoing. He says he was not responsible for Mr. Zadeh’s jailing and that he removed him from the company because Dubai authorities said he had offered bribes, an allegation Mr. Zadeh denies.

Some of Mr. Zadeh’s claims are impossible to verify independently. His only copy of the real-estate partnership agreement is missing, and official company documents show the Sheikh Hasher as sole owner. Dubai’s security services, the public prosecutors’ office and the Dubai ruler’s court all either declined to comment or didn’t respond to repeated requests for comment.

Last fall, the Emirates’ Human Rights Association, a government body, wrote to authorities asking for an explanation about why Mr. Zadeh’s passport was being held. The group did not receive any response, according to his lawyers.

Shahram Abdullah Zadeh grew up in Dubai, attending school with the children of some of the city’s top families. He managed his family’s hotel and retail holdings and decided to go into business himself in 2000. Real-estate development was off limits to foreigners, even longtime residents like himself. So, he turned to a common practice — a silent partnership with a U.A.E. citizen.

Typically, such partnerships involve an Emirati acquiring a business license and then granting his foreign partner management control. The foreigner either pays an annual fee to the Emirati or the two share profits. The terms are set forth in a parallel set of documents, separate from those submitted to the government. Such contracts are so common that courts here have upheld them in disputes, according to commercial lawyers here.

In 2004, an old friend of Mr.  Shahram Zadeh’s father brokered an introduction with Sheikh Hasher Maktoum bin Juma al Maktoum. The Sheikh owns Al Fajer Enterprises, a conglomerate that includes a construction and contracting arm.

In affidavits filed with Dubai’s prosecution office, Mr. Zadeh contends that he and Sheikh Hasher Maktoum bin Juma Al Maktoum verbally agreed to a partnership, signing a contract on Feb. 1, 2006.

The partnership, Mr. Zadeh says, established the two men as co-owners of Al Fajer Properties. The men would split profits equally and would invest equal amounts of capital. The contract named Mr. Zadeh as chief executive.

shahram-zadehShahram Abdullah Zadeh  provided $335,000 in start-up capital, and he invested another approximately $30 million in the company, according to bank documents reviewed by The Wall Street Journal.

Mr. Zadeh’s affidavits contend Sheikh HasherMaktoum bin Juma Al Maktoum didn’t contribute any capital. Sheikh Hasher denies the equity partnership ever existed.

Business took off quickly.

One of Al Fajer’s biggest projects was a planned $750-million development of five office towers,the Jumeirah Business Centre Towers,  set just inland from Dubai’s man-made, palm-tree-shaped island. Shahram Zadeh bought three of the five plots for the 40-story towers with his own money, according to financial documents. With investors lined up for units, he then awarded $215 million worth of contracts to the construction arm of Sheikh Hasher’s Al Fajer Enterprises, according to company documents.

But by late 2007, the contractors were behind schedule, according to company documents and former employees. Al Fajer Properties was facing fines for the delays, and buyers were starting to complain.

Sheikh Maktoum Hasher bin Juma al Maktoum wanted payments to continue to his companies, but Mr. Zadeh claims he said no.

The sheikh complained in a series of text messages that unless  Shahram Abdullah Zadeh released more cash, the Sheikhs contracting companies would go bankrupt.

On Feb. 21, 2008,  Shahram Abdullah Zadeh claims, he received an unusual phone call from Dubai State Security, asking him to come in that evening for a talk. When he arrived, , he claims that police blindfolded him, put him into a sport-utility vehicle and drove him to a detention center.

In the eight weeks he was jailed, Shahram Abdullah  Zadeh says he was never accused of a specific crime or shown an arrest warrant. Instead, he says, he was repeatedly interrogated about his personal life and Al Fajer’s operations, and gave his interrogators the combination to the company’s safe after they asked for it. “They told me that if I did not cooperate that they would ruin me,”  Shahram Abdullah  Zadeh said.

Mr. Zadeh contends the only copy of his partnership agreement with Sheikh Hasher Maktoum bin Juma Al Maktoum was in the safe. Former employees of Al Fajer say the company safe was emptied while Mr. Zadeh was jailed.

On March 6, Sheikh Hasher’s son, Sheikh Maktoum bin Hasher Al Maktoum, was named the new chief executive of Al Fajer Properties. Sheikh Hasher hired international accountants to audit Al Fajer Properties  books, according to former employees. He then presented the findings to employees and select clients, accusing Shahram Abdullah  Zadeh of embezzling funds. Phone calls and emails sent to lawyers and accountants of Al Fajer Properties were not returned.

Sheikh Hasher says Mr. Zadeh stole money from him, but the Sheikh did not provide evidence, or the audit, to back his claim. Mr. Zadeh denies it.

Prosecutors refused to investigate the case, citing an order from Dubai’s attorney general, an official appointed by the ruler.

In November 2008 , Shahram Abdullah  Zadeh tried one last option. He approached the ruler’s diwan, or court administration, and asked for mediation from Sheikh Mohammed bin Rashid Al Maktoum himself.

So far, there has been no reply.

read more about ….

read also from The Independent Dubai Property Scandal claim emerges amid media blackout – Al Fajer Properties

read also  Criminal  complaint filed in Germany against Sheikh Maktoum Hasher Al Maktoum Al Fajer Properties

Posted in Al Fajer Properties, Dubai Fraud, Jailed in Dubai, Jumeirah Business Centre, Prison Dubai, Shahram Abdullah Zadeh, Shahram Zadeh, Sheikh Hasher Maktoum Al Maktoum, Sheikh Maktoum Hasher Al Maktoum, Torture Dubai, Torture UAE | Tagged: , , , , , | 4 Comments »

Dubai Holding seen at risk

Posted by 7starsdubai on December 4, 2009


original source Zawya / Financial TimesThursday, Dec 03, 2009
Thursday, Dec 03, 2009

Thursday, Dec 03, 2009

With Dubai World cut adrift from implicit government support, there are concerns about potential defaults by other state-related entities. The name mentioned most by bankers and investors in the region is that of Dubai Holding, the personal investment vehicle of the ruler, Sheikh Mohammed bin Rashid al-Maktoum.

“Dubai’s actions have introduced the risk that restructuring of other corporates could follow,” Barclays Capital said in a report this week. “We would focus on those with weak fundamentals and upcoming maturities and we view Dubai Holding as being most at risk.”

Dubai Holding’s Commercial Operations Group’s debt was yesterday downgraded to below investment grade by Standard & Poor’s, the ratings agency, along with four other government related companies. The cost of insuring $10m (€6.7m, £6m) for five years against default ballooned to $1.1435m a year on Tuesday, making it the riskiest Dubai corporate bond according to the market.

A Dubai Holding spokesman yesterday said: “I am very doubtful that we will face any problems paying the debt. Dubai Holding is confident that it is on track with all payments.”

Formed in 2004, its investment arms led the emirate’s international buying spree to recycle funds generated by developing swaths of Dubai desert. The group leveraged profits to build debts of $10bn, with maturities in 2010 of $2bn, according to Barclays Capital.

Bankers say because of its connection to the ruler the conglomerate enjoys stronger political standing than Dubai World

It appears to have a stronger financial position. Analysts say it has a greater ability to service its debts thanks to a number of cash-generating businesses. It is believed to have received cash injections from the government in recent months. The company has never confirmed this.

Still, bankers say its investment arms, Dubai International Capital and Dubai Group could face more financial problems than its commercial wing, which spans hospitality, business parks and real estate. “Dubai Holding is not going to acknowledge problems right now. But there is a contagion effect in every Dubai entity , this is just the beginning,” a senior banker said.

Dubai International Capital is believed to be looking to sell assets but has enough money ringfenced by the holding company to keep afloat its buy-out businesses in Europe and the Middle East, according to those familiar with the company. These people say its public equities portfolio, which includes stakes in EADS, Sony and ICICI Bank in India, may be sold. DIC is also winding down its emerging markets private equity unit, Middle East venture capital portfolio and interests in other private equity funds.

Dubai HoldingDubai ‘s commercial arm includes profitable businesses, such as flagship hotels company Jumeirah Group. The group has slimmed down faster than the troubled Dubai World conglomerate. DICand Dubai Group, for example, have merged their back-office operations and Dubai Holdings’ developers have merged and been folded into Dubai ‘s leading developer, Emaar Properties, much to the alarm of minority shareholders who fear dilution and say they are being forced to bail out other companies.

The restructuring already under way at Dubai Holding is so deep that analysts are raising the possibility that, like Dubai World
, it could be broken up and its best businesses – notably Jumeirah – moved into other parts of Dubai Inc., such as Investment Corporation of Dubai , which is emerging as the emirate’s “good bank” of assets.

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Sheikh Mohammed al-Maktoum : “They do not understand anything.”

Posted by 7starsdubai on December 3, 2009


original source The Independent

Headline: Sheikh attacks investors for global fallout of Dubai debt

The ruler of Dubai hit out at international investors yesterday as his government’s impecunious investment vehicle revealed plans to restructure $26bn of its debts.

Sheikh Mohammed al-Maktoum said: “They do not understand anything.”

After days of uncertainty that sent shudders throughout the world’s stock markets, Dubai World finally unveiled plans to address the liabilities of its two property ventures – Nakheel and Limitless – after midnight on Monday night.

The timing of Dubai’s request for a debt standstill, on the eve of the four-day Eid holiday, drew criticism from financial communities across the globe.

But in his first public comments since the crisis broke, Sheikh Mohammed had harsh words for investors and remained bullish about Dubai’s economy. “We are strong and persistent,” he said. “It is the fruit-bearing tree that becomes the target of [stone] throwers.”

more… The Independet

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Nakheel and its parent will be a test case for Dubai

Posted by 7starsdubai on December 3, 2009


original source Business Standard

Dubai World’s guarantee to bondholders could prove worthless. The emirate’s holding company, which is seeking a six-month standstill from creditors, pledged to repay a $3.5 billion Islamic bond issued by its now troubled property subsidiary Nakheel. Yet with local creditors effectively calling the shots, foreign lenders might find enforcing that guarantee impossible.

Nakheel has asked for trading in all three of its listed Islamic bonds to be suspended. Only the first, which was issued in 2006 and is due to mature December 14, was guaranteed by parent Dubai World. The liability on the subsequent two bonds, which have a total face value of $1.7 billion and mature in 2010 and 2011, appears to be limited to Nakheel itself.

The Dubai property developer’s 2008 accounts show $41.5 billion of assets and $17.5 billion of liabilities — a net asset value of $24 billion. But real estate prices in the emirate have fallen around 50 per cent in 2009.

That means Nakheel, which funded some of the emirate’s most outlandish projects, could easily now have a negative equity value of $5.5 billion.

The equity value at parent Dubai World, which had liabilities of $59 billion at the end of 2008, is also likely to be negative. Its portfolio of 10 companies looks mostly troubled. However, Dubai World does hold 77 per cent of publicly-listed ports operator DP World. That was worth $5.1 billion on November 25, just before Dubai World announced its intention to restructure.

Nakheel’s foreign creditors shouldn’t get excited about their recovery prospects.

To get a lawsuit against Dubai World off the ground, 75 per cent of Nakheel’s bondholders have to agree. But the majority of creditors are local banks, which are likely to accede to any request to roll over Nakheel’s debt — even if the capital structure remains unsustainable, according to one ratings analyst. And even if local lenders joined in, Dubai’s law might not support a claim that forced the sale of the assets of government-related entities.

Lawyers agree the restructuring of Nakheel and its parent will be a test case. That makes Dubai World’s guarantee look less than solid.

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If Nakheel Dubai defaults, it will be the largest-ever sukuk default in the world

Posted by 7starsdubai on December 3, 2009


original source Wall Street Journal

The price drop in bonds related to Dubai World’s real-estate subsidiary has posed a question for investors: Does the discounted debt represent an attractive buying opportunity or an ill-advised journey into the uncharted world of debt restructurings of this size in the Persian Gulf?

Bonds of real-estate subsidiary Nakheel dropped in value after the Gulf city-state said last week that it was delaying payment of state-run Dubai World’s debt.

The conglomerate said Tuesday that it was seeking to restructure $26 billion in debt, of which about $6 billion is related to Nakheel, and would ask for a six-month standstill on debt payments. 

But with no precedent in the United Arab Emirates for a restructuring of this size, and its government ownership, creditors are in the dark as to how the process may work. As a result, investors will be watching events related to the Nakheel bonds for a road map for future restructurings in the region.

Prices of the roughly $3.5 billion of Islamic bonds, called sukuk, from Nakheel had traded at about 110 cents on the dollar before the Nov. 25 announcement of a delay in Dubai World’s debt payments. Prices had fallen to as low as about 40 cents, but by late Wednesday had rebounded to about 60 cents.

Investors buying the bonds, on which Dubai World is due to pay a principal amount of about 116 cents on the dollar on Dec. 14, are betting that the guarantee and the underlying assets will be worth more than the prices at which the bonds have been trading.

But there remains uncertainty because Dubai World has provided few details about what the restructuring plan would entail.

Moreover, bondholders are unsure of their options if they don’t want to accept the offer.

It isn’t clear that Dubai courts would enforce any rights that holders may have to seize Dubai World’s assets, either land used to secure the Nakheel sukuk or other property the parent company owns, as Western courts might.

Dubai’s legal system is “untested” for a restructuring of this size and international scope, given Dubai World’s overseas assets, said Jawad Ali, a partner at law firm King & Spaulding based in Dubai. “There isn’t a mechanism in place that is laid out clearly,” he said.

Julian Lim, a bond analyst at Nomura Holdings in London, said bond holders are in a weak legal position. As a result, Mr. Lim said bondholders potentially could recoup less than 50 cents on the dollar.

Bondholders representing about a quarter of the nominal value of the $3.5 billion sukuk have formed a group and have appointed London law firm Ashurst LLP to represent them in negotiations.

An added complexity is that bondholders will be in competition with the more than 80 bank creditors of Dubai World.

The banks on Wednesday began formulating a plan for negotiating a restructuring of the conglomerate’s debt to lenders and bond holders. KPMG LLP is expected to be appointed this week to advise the interests of the lenders, said people familiar with the situation.

All creditors must agree to the standstill in order for it to be valid, according to restructuring professionals from two law firms who have seen Dubai World’s sukuk documentation.

If the standstill isn’t agreed to by Dec. 14, when Nakheel’s sukuk is due, Dubai World will technically be in default. If Nakheel defaults, it will be the largest-ever sukuk default in the world and the first sukuk default in the United Arab Emirates.

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Dubai is down, but fighting for its place in the sun

Posted by 7starsdubai on December 2, 2009


original source Wall Street Journal

Dubai 2 December 2009

Finally, a chink of light. Dubai World has belatedly provided some of details on its planned debt restructuring.

But for investors the situation still resembles a darkened room, where the outlines of the furniture are now visible but little else. And for Dubai itself, there is more than just the future of $26 billion of debt at stake. The emirate’s credibility as a financial center and its ability to continue financing good businesses, such as ports operator DP World, will hinge on its handling of the crisis.

Tuesday brought some good news. The $26 billion of debt affected is less than the $60 billion feared last week. Even so, questions linger. The restructuring process will include Dubai World itself and property developers Nakheel World and Limitless World. Analysts at Barclays Capital have identified $8.5 billion of debt at Nakheel, $5.5 billion at Dubai World and $1.2 billion at Limitless. That still leaves $10 billion unaccounted for. It may be in bilateral bank loans where there is no public disclosure. But it still leaves creditors unsure of their position.

It is also encouraging that Dubai World intends to adopt a policy of regular communication, though again the process lacks detail. For example, it is unclear whether the six-month standstill requested from creditors is voluntary or enforced. Given the looming Nakheel maturity — just two weeks away — it will be a challenge to secure creditor agreement in advance. If some lenders reject a stand-still it could trigger another bout of uncertainty and bondholders are organizing themselves for battle: a group holding 25% of the Nakheel bonds has hired Ashurst as a legal adviser.

Dubai’s strategy relies on ringfencing certain key businesses from the general restructuring — possible because of the lack of cross guarantees in the Dubai World group. For example, Ports & Free Zone World, which includes port operator DP World and P&O Ferries, is now clearly excluded from the process. But the initial lack of clarity on this issue has already cost Dubai Inc. a swathe of ratings downgrades. Of Moody’s six ratings on Dubai companies, four are now junk.

The history of debt restructurings suggests that investors will not be scared off Dubai forever. Russia, for example, returned as an oil-fuelled darling of international investors even after its sovereign default in 1998 and amid continuing corporate governance and transparency problems.

If Dubai handles the painful process sensibly, it will emerge chastened from the experience, but not necessarily a spent force. The infrastructure built during the bubble will not vanish. The emirate now has to prove its status as one of the most western-friendly places to do business in a region still attractive for its massive oil wealth. If it can do so, Dubai will be down, not out.

Write to Richard Barley at richard.barley@dowjones.com

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Project Maritim Hotel Dubai Land – DUBAI 1000 Hotel Fund – Arrest Warrant against Georg Recker

Posted by 7starsdubai on December 1, 2009


DUBAI 1000 Hotel Fund – Warrant of Arrest against Georg Recker

Based on research by German newspaper “Westfälischen Allgemeine”, since a couple of weeks a warrant of arrest has been issued by Dortmund Court of Justice (Germany) against German Georg Recker (36), initiator of “Dubai 1000 Hotel Fund”.

For Recker an international quest is conducted, assuming that he is staying since longer time now in Dubai. Recker is under suspect of embezzling from German investors an amount of approx. 25 Million Euros.
State Attorney Dr. Ina Holznagel from Dortmund Public Prosecution did reject on request any information since when the warrant is already issued. But she confirmed that prosecution against Gerog Recker is ongoing since early 2008.

Meanwhile prosecutors have been able to freeze five bank accounts in Germany with deposits in the amount of roughly 1Million Euros. A drip on hot stone with view to approx.
25 Million Euros collected
by Recker from more than 900 investors.

Up till now, just 2 claimants took seizing action against these accounts: one investor and one former employee. “For us it will always remain indistinct, how lame especially German investors are acting if they face fraud and embezzlement with regards to their own moneys,” says Martin Kraeter, Principal of KLP Group Emirates.

Law firm KWAG from Germany represents just 50 out of 900 investors with claims of approx. 1Million Euros. They try to seize blocked funds now, as long as there are remaining funds on the accounts.
All other investors seem to preferably follow Recker’s lawyer Mr. Eckehart Heberlein from Munich: Heberlein seriously states frequently that the investment object of the fund – a MARITIM Hotel in Dubai Land – will soon be built and that there is constant progress on the construction site . . .

Recker‘s “Group of Companies” in Hamm (Germany) already has been restructured in October 2009: New CEO of “Travel-Dubai AG” is now since 22.10.2009 Mr. Ben Neuendorf (45). He is seen as Recker’s right-hand – by this prosecution is also running against him.
Recker himself is not reachable, of course. Remaining employees in his „Enterprise Group“ back in Germany are advised not to give any kind of relevant information.
Source (in German language)

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Happy Birthday Burj Al Arab – Global Icon marks its 10th year

Posted by 7starsdubai on December 1, 2009


original source The National

The Burj al Arab hotel, identified the world over as the symbol of Dubai, is 10 years old today. As it celebrates its first decade in business, Leah Oatway looks at the history and significance of the stunning structure on its own manmade island off Jumeirah Beach

Dubai // They were asked to create an icon for the nation, a building to capture the imagination of the world and represent the hospitality, vision and history of the UAE.

Today that building, the Burj al Arab hotel, celebrates its 10 years in business
read the full story in The National

Website BurjAlArab Jumeirah

PS:
Personal Greetings to the Staff of the Majlis Al Bahar, Burj Al Arab Beach. From the beginning, the openening of the Burj Al Arab 1999 all our holidays in the past 10 years have been great – thanks to your excellent service.
Keep on in Quality – and enjoy this special Birthday

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Dubai Crisis : This is why investors are nervous. It’s not the lack of money

Posted by 7starsdubai on December 1, 2009


original source Wall Street Journal

Dubai’s troubles offer a warning of the perils of investing in places where leaders–whether of governments or companies–have limited accountability.

In fact, it raises questions about other investment destinations: China, for example.

One reason why markets continue to be jittery over last week’s news of a standstill on property conglomerate Dubai World’s debt is the lack of transparency surrounding it. That’s a direct function of a closed political system that is not conducive to foreign investment.

The announcement of the restructuring has been handled abysmally. Even with Dubai World divulging long-awaited details Monday, information has been spotty and contradictory.

It’s still not clear which creditors will be hit, and there are still big questions over how much of a guarantee oil-rich sister emirate Abu Dhabi is willing to give to back up Dubai’s debt.

Investors have been left to speculate over political motives.

One theory holds that Abu Dhabi ruler Sheik Khalifa bin Zayed Al Nahyan is withholding his support–despite the financial risks of not doing so–because he’s angered by his Dubai counterpart’s close ties to Iran.

Alternatively, others say that the naturally more conservative Abu Dhabi is simply reluctant to stoke moral hazard by bailing out Dubai’s risky property investments.

Either way, because they can’t divine what’s going on in either of these two billionaire monarchs’ heads is the essence of investors’ problems. In an information vacuum, many have imagined the worst and have felt compelled to sell their Dubai debt positions, which in turn creates problems for banks with exposures there and, by extension, for global stock and credit markets.

This all stems from the overarching political system in place.

In the absence of democratic institutions, the UAE’s sheikhs are not required to explain themselves.

And as the majority owners of many of the biggest companies, they face no checks and balances from minority shareholders. Meanwhile, contract law is fraught with the uncertainty of a legal system that’s low on judicial independence.

This is why investors are nervous. It’s not the lack of money.

After all, Abu Dhabi, with a sovereign wealth fund worth anywhere from $300 billion to $900 billion, has plenty of that.

The bigger lesson in all this is that investors need to be doubly careful of investing in countries with closed political systems.

With the spectacular failure of U.S. financial markets last year, it has become fashionable to laud the top-down central planning of countries like China, which was able to more quickly put its giant fiscal stimulus to work this year.

But if and when China faces a crisis, investors will have a more difficult time interpreting the actions of government officials and of the managers of its state-run corporations than they would in more openly governed countries.

To be sure, the Chinese Communist Party functions with more consensus than monarchy like Dubai. And for now, China’s capital controls make it nearly impossible for foreigners to make portfolio investments there.

Nonetheless, direct foreign investment in China is soaring, as is broader exposure to its boom via assets in neighboring countries. If nothing else, Dubai’s crisis is a reminder that those investments carry political risks that are absent from more transparent markets.

—Michael Casey writes a regular column on fixed income markets for Dow Jones Newswires. Previously he was Newswires’ Buenos Aires bureau chief and before that, assistant managing editor for the U.S. economy, Treasurys and foreign-exchange group in New York.

Write to Michael Casey at michael.j.casey@dowjones.com

Further Stories

read also: Dubai Debt Follows String of Troubles for Its Ruler  by Margaret Coker WSJ

read also from BBC : What is Dubai and who runs it ?

read also from BBC: Dubai shares see biggest fall this year


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Empty office space in Dubai totals 10 million sq ft

Posted by 7starsdubai on December 1, 2009


original source Arabian Business Monday 30 November 2009

About 40 percent of Dubai’s office space is lying empty after the emirate’s construction boom outpaced demand, broker Knight Frank LLP has said.

Empty office space totals 10 million sq ft (929,030 sq m) in Dubai, the firm said in a note on Monday, reported by Bloomberg news agency.

The vacancy rate for office space in the UAE capital Abu Dhabi is six percent, the broker said.
read the full report

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