Another day in Dubai, another executive detained.
Officials in Dubai have recently detained one current and one former executive at Nakheel, the real estate development arm of the state-owned Dubai World Group. The executives are being investigated for “mistrust and bribery”, according to Zawya Dow Jones.
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Separately, the vice-chairman of government investment fund Istithmar World is under investigation for alleged financial wrongdoing in his previous post at Islamic mortgage firm Tamweel.
Earlier this month, Dubai’s ruler Sheikh Mohammed bin Rashid al Maktoum issued a statement outlining a zero-tolerance approach to corruption in both the public and private sectors. The government has also vowed to publicize details of any probes once they are concluded.
The clampdown is part of the effort to increase investor confidence, attract more international capital, and transform Dubai into a thriving international financial hub.
It’s a well-orchestrated endeavour, endorsed at the highest level. Unlike in previous crackdowns, the government is also vowing to publicize details of any inquiries. That would make Dubai the first within the Gulf Co-operation Council to pursue such transparency. The anti-corruption drive goes along with Dubai’s other moves to modernize. The emirate has eased tourism travel restrictions.
State-backed newspapers are increasingly running controversial front page stories of social unrest. There has also been an effort—at least on paper—to increase the rights of low-paid migrant workers.
All this is certainly virtuous. Yet, the relative successes of China and Russia show neither transparency nor a free media are necessary cornerstones of a burgeoning financial market. Dubai will need more than these to fulfil its financial vision.
These new efforts can’t compensate for Dubai’s remaining missing essential: liquidity. A clampdown on corruption may inch the emirate past Qatar on next year’s Transparency International index, yet a functioning international stock market is the foremost ingredient of success.
Unless the highly touted Dubai International Financial Exchange can attract additional primary listings to add to its measly current four, the emirate’s other visionary efforts are unlikely to be richly rewarded.