Who said what to whom at a meeting in the Shangri-La hotel in Dubai last month?
That question has assumed big significance in legal actions in the US and London, and it has repercussions for investors in the GCC. The answer could also determine the fate of some potentially life-saving biotechnology affecting the health of thousands of hospital patients around the world.
The meeting took place on June 17 at the hotel on Sheikh Zayed Road. We know the names of at least two of the people present: Dr Liam Fox and Harvey Boulter.
Dr Fox is the UK's minister of defence and a member of the cabinet. He has a tough job in these difficult times, trying to balance the demands of his government's austerity measures, which require millions of pounds of cuts from the country's armed services, with the needs of service members on active duty around the world, especially in Afghanistan.
Mr Boulter is an entrepreneur who has been based in Dubai for the past five years after a stint in Hong Kong. His area of expertise is the commercialisation of projects and technologies developed by the defence industry. A former investment banker in the City of London, he has helped to bring several projects to profitable fruition, to his own benefit and that of the UK public exchequer.
One such was BacLite, a technology developed by the British ministry of defence (MoD) as a test for biochemical weaponry in battlefield conditions.
Mr Boulter's private-equity fund Porton Group (backed significantly by some powerful investors in Saudi Arabia and Kuwait) acquired a controlling stake in BacLite from the MoD in 2005. He and his scientific experts believed that BacLite could also be a weapon against a disease called MRSA, caused by a bacterium that attacks humans, especially in hospitals.
By 2006, Mr Boulter had found a buyer for BacLite, in the shape of the US giant 3M. The Minnesota group is best known for its Post-it notes and Scotch tape but is also involved in a host of "innovative" industrial processes, including medical products.
What happened thereafter is the subject of legal action in the US and the UK. Mr Boulter claims 3M reneged on a deal to pay as much as £51 million (Dh306.9m), depending on BacLite's commercial performance over three years.
3M denies this and says instead that BacLite never lived up to expectations. Trials by the US food and drugs administrator showed a lower success rate in detecting MRSA than previous tests in Europe, 3M says.
In the barrage of claim and counterclaim that has followed, nothing has so far been conclusively proved. Mr Boulter wants the balance of the £51m.
3M, headed by the British businessman Sir George Buckley, seems equally determined not to stump up. The courts will decide.
What was said, or not said, at the Shangri-La may have a bearing on the court's decision. Apart from the commercial suits, there are also legal actions for defamation and blackmail going on in the US and the UK. There is no need to go into the details of those allegations here.
The MoD says that "Dr Fox met with Mr Boulter to discuss an entirely different matter. At no point did he enter into discussion about this legal case".
It could be assumed the MoD is referring to the commercial litigation going on over BacLite, but that is not clear from the statement.
Mr Boulter, meanwhile, is adamant that BacLite was discussed, for five minutes out of a 45-minute meeting, and says he has a couple of witnesses to back him up. He denies any blackmail allegations.
But if there was no discussion of BacLite, what did they meet to talk about? The MoD has not, so far, answered that one. Why did Dr Fox take time out from his tour of the region, which included a trip to Afghanistan, to meet Mr Boulter if not to discuss the burning question of the day? Who else was at the meeting?
So many questions from the Shangri-La meeting. It's time the MoD came up with some answers.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Gulf Under 19s final
Dubai College A 50-12 Dubai College B
Directed by: Craig Gillespie
Starring: Emma Stone, Emma Thompson, Joel Fry
4/5
