DUBAI // Four employees of the property developer Sama Dubai have been arrested and are being questioned by Dubai's Public Prosecution office on allegations of bribery and mistrust, according to documents seen by Zawya Dow Jones yesterday. One of the people being held is Abdulsalam Almarri, the chief executive of Sama Dubai's The Lagoons project, Public Prosecution documents show.
Sama Dubai, which is part of state-owned Dubai Holding, was not immediately available for comment, saying that its executive chairman, Farhan Faraidooni, is out of the country. The arrests at Sama Dubai are part of a widening police dragnet among senior corporate executives in the emirate, in what is a concerted effort by Government officials to target corruption. Dubai is at the centre of the Gulf region's construction boom, triggered by the introduction of foreign ownership rights in 2002.
The emirate expects to attract Dh184 billion in property investment by 2010. Dubai Holding's property companies are at the forefront of this boom. Tatweer, which is developing the emirate's Dh404.1bn Dubailand project, and Dubai Properties are also part of the same group. The Sama Dubai arrests follow a series of corporate scandals beginning in April, which have taken a toll on the emirate's reputation, ensnared some of the best-known corporate brands and hurt financial markets.
Earlier this week, Nakheel said that an existing employee and a former employee were being questioned on suspicion of bribery. And earlier this month, Adel al Shirawi, the former chief executive of the Islamic mortgage lender Tamweel and deputy chairman of Istithmar World, was arrested on suspicion of embezzlement. Recent arrests suggest that Sheikh Mohammed bin Rashid, Vice President and Prime Minister of the UAE and Ruler of Dubai, wants to clean up the emirate's reputation to ensure foreign investment continues to flow as Dubai seeks to position itself as a world-class tourism, property, financial and transport hub.
In a rare statement, Sheikh Mohammed's office earlier this week warned that "there will be no tolerance shown to anybody who tries to exploit his position to make illegal profits". "Transparency is a problem in the UAE but right now the Government is increasing its regulatory role," said Marius Maratheftis, the head economist at Standard Chartered Bank in Dubai. Shares of Tamweel, which fell 2.9 per cent to Dh5.78, have lost 25 per cent so far this month. The UAE's largest mortgage provider has said it was not being investigated by Dubai police in an inquiry that led to the arrest of Mr Shirawi along with Feras Kalthoum, the company's former head of investments.
Other property shares - some of whose names have surfaced in the investigations and others who have not - have also suffered. "There is a general lack of confidence, especially in the property sector, which put Dubai on the map," said Vyas Jayabhanu, the manager of Al Dhafra Financial Broker. "While corruption investigations are still ongoing, investors don't have an incentive to buy. They are either selling to be safe, or are in a wait and watch mode.
* Zawya Dow Jones and Bloomberg