Frisson of fear as Saudis crack down on suitcase bankers

Frank Kane writes about the alleged phone-hacking on the Daily Mirror group and the Saudi Capital Market Authority's strongly worded statement warning anybody who deals in, advises on or tries to sell financial products in the kingdom.

The talk of the town in London, at least among the media gossips, are the allegations against the Daily Mirror group of newspapers about phone hacking.

The Financial Times splashed its British edition with the story, together with a picture of the former editor of the Daily Mirror, Piers Morgan, which the FT says is based on legal filings by a variety of celebrities, including the former England football manager, Sven-Goran Eriksson.

Morgan, currently a high-flying chat show host in the United States who recently scored an exclusive interview with the Iranian president Mahmoud Ahmadinejad, has vehemently denied the allegations. They were first whispered around at the height of the phone hacking scandal last year.

It couldn't come at a worst time for Morgan, who is deep into his coverage of the American presidential election. Dealing with the legal claims will surely be a distraction as he battles in the US ratings wars the election always sparks.

The former editor, famously a fan of Arsenal football club, was not letting it get him down yesterday. One of his tweets showed his usual rapier wit.

In answer to a tweeted question: "would you ever support Manchester United," he replied: "If I suffered 15 failed lobotomies, sure."

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There is a little frisson of fear passing through the DIFC and other financial circles in Dubai in the wake of a warning by the Saudi Capital Market Authority (CMA) that threatens to hobble financial professionals based in the emirate but hoping to do business in the kingdom.

A strongly worded statement by the CMA warns "all institutions who are not authorised persons authorised by the CMA … against carrying out securities business in Saudi Arabia".

The warning is a blanket threat that anybody who deals in, advises on, or tries to sell securities or other financial products in Saudi Arabia must be registered with the CMA.

It seems sensible, on the face of it, for a regulator to insist on licensing the people who do business within its borders, but there could be a serious effect for Dubai.

The emirate has often listed one of its attractions as its proximity to Saudi Arabia and the closeness of the financial authorities in the two countries.

Many financial professionals prefer to live in Dubai and Abu Dhabi, travelling to the kingdom to do business only when they must. CMA insistence that they have a physical base in the kingdom, as well as local partners and all the paperwork involved, seems to threaten the army of "suitcase bankers" who regularly make the trip from DXB to Riyadh.

"If all the other states in the GCC insist on the same restrictions, it'll be bad news for the growing integrity of the financial sector in the region," said one worried financial adviser.

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The US presidential candidate Mitt Romney has been catching up on the president, Barack Obama, in the polls ahead of the vote on November 6. That is causing murmurs of excitement in some parts of Dubai's financial firmament. The Republican candidate has some prominent supporters in the emirate, including Jeff Singer, the chief executive of Dubai International Financial Services Authority.

But I am told Mr Singer is not the owner of the only car that I've spotted in Dubai with a Romney support sticker proudly on display. I'll offer a substantial reward for information leading to the identification of that Mitt-man.