UAE asked to find and freeze Ben Ali assets as market in Tunis reopens

The Tunisian stock market staged its biggest one-day gain since October 2010 in its first day of trading

The main Tunindex stock index closed 4.1 per cent higher yesterday.

TUNIS // A group of French and Tunisian lawyers yesterday asked the UAE's Central Bank to trace, identify and freeze assets owned by the deposed Tunisian president Zine el Abidine Ben Ali and his associates.

The request is part of a worldwide asset-seizure campaign that began shortly after Mr Ben Ali's fall on January 14. Similar efforts are under way in Egypt, where government bodies and private sector groups are trying to find and recover the assets of the former president Hosni Mubarak.

"Tracing and freezing [Mr] Ben Ali's assets in the UAE, in strict adherence to the UAE's international obligations under the UN Convention Against Corruption, is the only appropriate measure to meet with the expectations of the Tunisian population," said William Bourdon, the president of Sherpa, a group of French lawyers.

Sherpa has led the efforts to find assets of North Africa's fallen regimes before they can be removed.

It teamed with R'NAC, a group of Tunisian anti-corruption advocates created after Mr Ben Ali's fall, to make the request to the UAE.

Officials at the Central Bank could not be reached for comment. The Dubai Financial Services Authority (DFSA), which regulates businesses in the Dubai International Financial Centre, in January alerted companies in the financial free zone to monitor any outflow of assets from Tunisia.

Sherpa and R'NAC are unsure about the value of the former Ben Ali regime's holdings in the UAE, according to a source familiar with their efforts, but his assets could be large given that the UAE is a hub for financial transactions and investments.

Carlo Fedrigoli, a lawyer at DLA Piper in Dubai who advised the groups on regional regulations, said an investigation by the Central Bank would be useful.

"I believe action by the UAE authorities will help to clarify how many assets there are," Mr Fed-rigoli said.

Sherpa and R'NAC said yesterday that while European countries had frozen Mr Ben Ali's assets, "no similar measures have been taken so far in the UAE and in the Gulf region".

Mr Fedrigoli said this might be partly because of more highly developed legal structures in Europe.

"Europe, maybe because of the more sophisticated cross-jurisdictional legal tools, has already moved and taken steps to at least do a trace and identify these assets," he said.

"It doesn't seem to be the same case across the Middle East."

Activity was brisk on the Tunis Stock Exchange as it reopened yesterday for a second time since the fall of Mr Ben Ali.

The main Tunindex stock index closed 4.1 per cent higher yesterday.

"We're optimistic because there is more transparency" after Mr Ben Ali's fall, said Raouf Proudabou, an exchange spokesman. "That is a very important change in the economy and politics. The listed companies are better about releasing their financial statements and indicators about their outlooks."

Tunisia's exchange was closed between January 17 and 28 after Mr Ben Ali's ousting. It opened for a month before closing again on February 28 as pressure intensified to rid a transitional government of the vestiges of the Ben Ali regime.

With the recent announcement of elections for a constitutional congress on July 24, regulators decided to reopen the market.

"Everyone assumed that the market would open down [because] it closed at the depth of despair, but you generally find, when there is a tremendous problem in the market, there are bigger discounts available," said Sven Richter, the managing director and the head of frontier markets at Renaissance Asset Management in London.

Renaissance oversees more than US$2 billion (Dh7.34bn) including investments in Egypt.

"At the open there can be euphoria, but as the days and weeks go by, a correction is likely to be seen," Mr Richter said.

Tunisia is classed as a "frontier market" on MSCI's index. Institutional investors often shy away from these types of markets because of their perceived volatility, Mr Richter said, adding that only the top companies by market capitalisation are on the radar of traders.

Frontier markets are instead dominated by local investors, although this can help to promote activity, some experts have said.

"In the case of Tunisia, foreign investment was always quite small, so local investors holding on to their positions has helped to stabilise the market for a little while," said Ann Wyman, the head of Mena equity at Nomura.

Before yesterday's opening, Tunisian stocks had declined by 20 per cent this year, exchange officials said. The value of trading had also dropped from an average of 10 million dinars (Dh26.3m) a day last year to 7m dinars a day this year.

A planned listing of Tunisie Telecom, the country's biggest telecommunications operator, was cancelled after civil unrest in January.

But Mr Proudabou said confidence was returning and at least one company was already planning to list on the exchange this year.

"We have a new company which has got the agreement of [regulators] to be listed in a few months," he said. "The board of the stock exchange gave its agreement to a new company called Telnet, which is a company in high technology and software programs."

In Egypt, continuing protests after the fall of Mr Mubarak have kept its much bigger stock market closed for weeks despite several announcements of a pending reopening.