Former Dubai Islamic Bank executives get 10-year prison terms

Former Dubai bank executives get 10-year prison terms

Four businessmen, two Britons, an American and a Turkish citizens — are charged with criminal complicity, as the American and the Turk were sentenced in absentia because they have fled the country

Reuters Available at: http://english.ahram.org.eg/~/NewsContent/3/12/10925/Business/Economy/Former-Dubai-bank-executives-get-year-prison-terms.aspx

Two former Dubai Islamic Bank (DIB) executives and four businessmen were sentenced to 10 years each in prison by a Dubai court on Wednesday and fined 1.8 billion dirhams ($496.5 million), the amount they were accused of embezzling from the bank.

The case was one of the largest financial fraud cases in the United Arab Emirates, home to tourism and financial hub Dubai.

The convicted were charged with appropriating public funds, illegal profiteering and inflicting intentional loss to the government and its interests.

The two executives, Pakistani citizens, were arrested in 2008 and first appeared before a Dubai criminal court in March 2010.

The public prosecution said they accepted bribes totalling $1.7 million.

The two were tried as government officials — the Dubai government owns a 30-percent stake in DIB — leading to a stiffer penalty under the UAE penal code which stipulates more severe punishment for government employees.

The businessmen — two Britons, an American and a Turkish citizens — were charged with criminal complicity. The American and the Turk were sentenced in absentia because they have fled the country.

Prosecutors said the suspects swindled DIB by submitting “documents and invoices about fraudulent deals.”

Dubai launched an anti-corruption campaign in 2008 that led to the arrest of several high-profile business figures, including government ministers.

Dubai adopted a new law in December 2009 under which the state can impose prison terms of up to 20 years for financial crimes shortly after a debt crisis erupted when flagship conglomerate Dubai World requested a standstill agreement on $26 billion of debt. The company reached a debt restructuring deal with its creditors late last year.

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ZULKIFLI HASAN

Gaza border crossing to be permanently opened

Egypt FM: Gaza border crossing to be permanently opened

Egyptian FM tells Al-Jazeera that preparations are already underway to permanently open Rafah border crossing, which would allow goods and people in and out of Gaza with no Israeli supervision.

By Avi Issacharoff Available at: http://www.haaretz.com/news/diplomacy-defense/egypt-fm-gaza-border-crossing-to-be-permanently-opened-1.358690

Egypt’s foreign minister said in an interview with Al-Jazeera on Thursday that preparations were underway to open the Rafah border crossing with Gaza on a permanent basis.

Egyptian Foreign Minister Nabil al-Arabi told Al-Jazeera that within seven to 10 days, steps will be taken in order to alleviate the “blockade and suffering of the Palestinian nation.”
Palestinians Rafah border – AP

Palestinians at the Rafah border crossing before leaving the Gaza Strip to Egypt after Egypt opened the border in 2008 for two days.
Photo by: AP

The announcement indicates a significant change in the policy on Gaza, which before Egypt’s uprising, was operated in conjunction with Israel. The opening of Rafah will allow the flow of people and goods in and out of Gaza without Israeli permission or supervision, which has not been the case up until now.

Israel’s blockade on Gaza has been a policy used in conjunction with Egyptian police to weaken Hamas, which has ruled over the strip since 2007. The policy also aims to reduce Hamas’ popularity among Gazans by creating economic hardship in the Strip.

Rafah’s opening would be a violation of an agreement reached in 2005 between the United States, Israel, Egypt, and the European Union, which gives EU monitors access to the crossing. The monitors were to reassure Israel that weapons and militants wouldn’t get into Gaza after its pullout from the territory in the fall of 2005.

Before Egypt’s uprising and ousting of longtime leader Hosni Mubarak, the border between Egypt and Gaza had been sealed. It has occasionally opened the passage for limited periods.

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Zulkifli Hasan

Gulf Arab rulers tense over Egypt’s policy shifts

ANALYSIS-Gulf Arab rulers tense over Egypt’s policy shifts

By Andrew Hammond Available at: http://af.reuters.com/article/egyptNews/idAFLDE73L0C920110427?sp=true

DUBAI, April 27 (Reuters) – At a recent conference in Abu Dhabi, a confidant of the emirate’s crown prince vented his frustration over the downfall of a major ally who Gulf Arab rulers once thought was as entrenched in power as they are.

“How could someone do this to him? He was the spiritual father of the Middle East. He was a wise man who always led the region,” the aide told Reuters. “We didn’t want to see him out this way. Yes, people want democracy but not in this manner. It’s humiliating!”

But yesterday’s strongman is today’s fallen dictator. Brought down in three weeks of protests in Egypt that took his allies by surprise, Hosni Mubarak now faces prosecution on accusations of abusing influence to enrich himself and ordering police to open fire on protesters who toppled him 75 days ago.

Gulf newspapers have carried days of angst-ridden commentary on the stunning denouement. “There is a very real danger that mob rule is destroying Egypt’s reputation, stability and economy,” Khalaf Al Habtoor, head of a leading merchant family in Dubai, wrote in an angry article in the Gulf News last week.

Mubarak was not only a friend of Gulf Arab rulers, he was a vital part of Arab political architecture during his three decades in power, setting the standard on Arab approaches to the Israeli-Palestinian conflict and offering Saudi Arabia and Gulf countries solid backing in their long cold war with Iran.

Now that he has gone, the Gulf has seen those shibboleths challenged and governments are scrambling to limit the damage.

“There’s no doubt the Saudis are very concerned about Egypt’s new foreign policy orientation. Egypt has already in a short amount of time shifted its foreign policy,” said Shadi Hamid, analyst at the Brookings Centre in Qatar.

POLICY SHIFTS

Egypt’s ruling military council allowed two Iranian warships to pass through Egypt’s Suez Canal in February, despite loud objections from Israel and irritation in Washington — a sign that the new Egypt wanted to play by a different set of rules.

Egyptian Foreign Minister Nabil Elaraby said this month Cairo was ready to re-establish diplomatic ties with Iran that were severed in the early days of the Islamic Republic, at a time when Egypt was forging ahead with peace with Israel.

Egypt intends to try seven officials including a former energy minister over controversial low-priced gas sales to Israel. And post-Mubarak Egypt has eased the movement of Palestinians from Hamas-ruled Gaza over its Gaza border.

All are signs of a shift away from a policy that was very much in harmony with the Western-aligned spirit that has for decades characterised foreign policy in most Gulf Arab capitals.

“Gulf policymakers are concerned about Iran making inroads into Egypt,” said Ted Karasik, a defence analyst based in Dubai.

“Saudi Arabia is seeking to regain its heavyweight position in the region and doing so in a very assertive manner. It does not want to see Egypt erase any Saudi gains.”

Although the U.S. administration took its time before expressing support for protester demands that Mubarak step down, Riyadh was shocked at what it saw as Washington’s abandoning of a trusted ally who stuck his neck out to back U.S. policies.

It is hosting exiled Tunisian leader Zine al-Abidine Ben Ali after an uprising ousted him in January, and has taken a muscular approach to perceived threats from unrest in the Gulf.

Saudi Arabia and the United Arab Emirates (UAE) sent troops to Bahrain last month to help suppress a pro-democracy protest movement that could have empowered its majority Shi’ites, who are seen by Sunni elites as susceptible to Iranian influence.

Riyadh also helped arrange $20 billion in aid from the large Gulf oil producers to help Bahrain and Oman quell protesters.

Iran, a non-Arab Shi’ite giant with over 70 million people, seemed to confirm the fears of Gulf rulers when it complained to the United Nations of a Saudi “invasion” of Bahrain, a small island state over which it once claimed sovereignty.

NEW CHAPTER

During a visit to the Gulf this week, Egyptian Prime Minister Essam Sharaf made conciliatory noises about Gulf security but defended what he called a “new page”.

“We have turned a new page that does not involve personalising issues. Iran is a country like any other,” the leader of Egypt’s “post-revolution” government said after meeting 87-year-old Saudi King Abdullah, who has handed out $130 billion in largesse to Saudis to encourage them not to make pro-democracy demands.

“We are extremely keen that interference in these countries should be a red line. The security of the Gulf states is part of Egypt’s own national security,” Sharaf added.

But he also defended democracy and prosecuting Mubarak.

“We have started on a one-way path to democracy,” he said. “We are trying to take the first step towards the rule of law and no one is above the law, whoever they are.”

Sharaf was also expected in the UAE and Qatar, a tiny Gulf state widely seen as having eclipsed Egyptian clout through its pan-Arab media outlet, Al Jazeera, and maintaining channels with Palestinian group Hamas, Lebanese Shi’ite group Hezbollah and Iran — allies all opposed to the American tilt in the region.

Egypt’s need for financial aid could offer the Gulf countries a conduit to influence its policy direction.

Egypt is calling for up to $10 billion in loans as it forecasts that its budget deficit could widen to 9 percent in the current fiscal year. Sharaf said on Tuesday he was hoping for more annual aid from Kuwait or other Gulf states.

“We would rather get money from our friends than going to the International Monetary Fund,” he told reporters.

Sharaf also denied there was tension with the UAE over visas for Egyptian expatriates, millions of whom work in the Gulf. Bahrain has begun expelling Lebanese in apparent retribution for Hezbollah criticism over its crackdown on disaffected Shi’ites.

“Egypt doesn’t want to alienate the Gulf countries too much. They can benefit a lot from financial assistance during a difficult period,” Hamid said. (Additional reporting by Amena Bakr, Marwa Rashad and Eman Goma; editing by Mark Heinrich)

Best Regards
ZULKIFLI HASAN

Risk-sharing ‘vital for Islamic finance’

Risk-sharing ‘vital for Islamic finance’
Manama: Tue, 26 Apr 2011 Available at: http://www.tradearabia.com/news/BANK_197516.html

To move forward the Islamic finance industry would do well to go back to its roots, according to HSBC Amanah global chief executive officer Mukhtar Hussain.

‘Islamic finance has become a force in its own right, especially in the emerging markets of Asia and the Middle East,’ he said.

‘However, this has not been without its fair share of ups and downs. The industry suffered the after-effects of the global financial crisis and has been criticised for products that look too much like their conventional cousins.

‘The main principles of Islamic finance are that of risk-sharing – taking on risks for possible rewards or losses and a requirement for financial transactions to be backed by assets such as properties or land.

‘Going back to these principles, especially the latter, will pave the way for what we believe, are the strongest opportunities for Islamic finance which are sukuk project finance and Islamic real estate investment trusts (REITs),’ he said.

‘Although nascent, there is so much opportunity for more of these deals because project finance bonds and REITs are a natural fit with Islamic finance, which is about building a stable future by investing in the real economy,’ he added.

‘As the global population is forecast to reach 9.2 billion by 2050 from 7bn currently, project finance sukuk can help raise more capital to build infrastructure in developing countries.

‘Islamic REIT, which by definition, is asset-backed by a portfolio of properties, is a new asset class that fund managers and private investors can consider, post the financial crisis, when money has flown out of traditional equities,’ he added.-TradeArabia News Service

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ZULKIFLI HASAN

Muslim BRIC has arrived

Muslim BRIC has arrived

By Rushdi Siddiqi Available at: http://www.btimes.com.my/Current_News/BTIMES/articles/SAMI/Article/

The investing and financing world is about country linkages that are economic and financial opportunities clustered as growth stories. The most recognised country linkage is BRIC (Brazil, Russia India and China): it conjures mental images of geographies, growth, size, demand, etc.

Another term that is increasingly invoked by businesses looking for opportunities is ‘RDE,’ or Rapidly Developing Economies, and includes examples of Brazil, China, India, Mexico, and so on. To put theory into practice, globally committed firms, like Thomson Reuters, have established positions like Global Head of RDE.

But, as this column is about Islamic finance, Halal industry, and Muslim countries, we now need to think a ‘Muslim BRIC.’ But, why? The simple answer is ‘why not,’ but the relevant answer is the present Muslim country clusters news and information is more about coverage than investing and trading opportunities.

The acid test is this; are Muslim country investors, from middle class to high net-worth to institutional, investing in a meaningful way in fellow Muslim majority OIC countries like Albania, Benin, Comoros, Gabon, Kyrgyzstan, Mali, Niger, Somalia and/or Yemen?

Today, we have 57 Muslim countries and 1.6 billion Muslims, we need a Muslim BRIC that conjures similar focused images of potential, opportunity, and accessibility. We can look at the Silk Road countries, OIC (Organisation of Islamic Conference) countries, CIS (Commonwealth of Independent States) countries, and so on, yet, outside of conferences in or about Muslim countries, such clusters are not capturing the investors’ imagination or attention.

SAMI

On April 4, Thomson Reuters, along with their partners, IdealRatings, and World Halal Forum launched the SAMI Halal Food index. The SAMI Halal food index stands for Socially Acceptable Market Investments.

The index is about the beginning of convergence between Islamic finance and Halal industry. But, more importantly, its about Muslim country inward investing as Muslims, presently as ‘consumer investors’ in these halal food firms become shareholder investors.

Now, within the ‘BRIC context,’ SAMI stands for Saudi, Ankara, Malaysia and Indonesia. Without getting into the multitude of economic and financial numbers for these four countries on GDP growth, inflation, foreign direct investment, exports, debt capital market development, population growth patterns, and so on, we have a compelling established emerging market that happens to be Muslim countries on the old Silk Road.

Branding

The question is why the SAMI acronym? As with any branding exercise, it comes down to recall, recognition and reach whilst conveying a visual message of sustainable and scalable opportunities. The opportunities have become increasingly de-linked from the political minefield commonly found in emerging markets, which happen to be all Muslim countries.

Some general observations about SAMI countries include:

1. Three countries are G-20 countries: Saudi Arabia, Turkey (Ankara), and Indonesia. But, these countries are also the anchors for their respective geographies; Saudi Arabia for GCC (6) countries, Indonesia for Asean (10) countries, and Turkey for (5) CIS countries and beyond. These regions, especially GCC and CIS, may be viewed as pre-RDE countries.

2. Malaysia is the recognised global leader in both Islamic finance and Halal Food. Much has been written about Malaysia’s achievements, but the real take away message for any country, Muslim or non-Muslim, wanting to be a hub, is the holistic and consistent approach of the country on the two inter-related sectors.

3. Saudi Arabia is the world’s largest oil producer and largest halal food importer. The political crisis in the Arab world has shown the importance of Saudi Arabia, as the country stepped up oil production to offset the loss of Libyan oil from the markets.

4. Indonesia has the largest Muslim population and growing

Meanwhile, Turkey is the ‘sizeable’ bridge to the east and west, as led by the present Islamist party.

Indexes & MNEs

One of the many spin-off possibilities here is a four country SAMI equity indexes for syariah-compliance, halal and conventional food.

Much like BRIC indexes convey a pulse of health, opportunities, fund flows, etc, the SAMI indexes will present not only ‘conventional,’ but Islamic and halal food (consumer non-cyclical sector) opportunities, information and insights.

From Indexes come firmsthat become the alter-ego of the country. The Financial Times had an interesting observation on Multinational Enterprises (MNEs) from RDEs, like Petro-China, Embraer (Brazil), Wipro (India), as these firms have become global brands and country ambassadors in a short time.

The ‘good will’ created and disseminated globally by such firms about their countries has detached them from the political landmines associated with emerging markets.

In the Muslim world, according to Dinar standards (DS), Muslim MNEs, as part of the DS-100 index, may be the next hidden gems for all investors. Thus, firms like Petronas, Emirates Airlines (Dubai), Kuwait Finance House (Kuwait), Ulker (Turkey), Indomie (Indonesia), and others represent tomorrow’s Muslim country global ambassadors of investable opportunities.

Thus, the Muslim BRIC, SAMI, has arrived in Malaysia.

Best Regards
ZULKIFLI HASAN