- - Monday, June 17, 2019

One of the problems that keeps developing nations from developing is corruption. When crooked leaders don’t honor deals with foreign investors, it scares away potential future ones and leaves their country in poverty. Alas this isn’t just a problem for Latin American banana republics or oil-rich African nations. This is even a problem for so called middle powers like the United Arab Emirates, where a Canadian investor was apparently the victim of the largest fraud case in Middle East history.

Many local leaders, notably Sheikh Mohammed Bin Rashid of Dubai, have gone out of their way to welcome global investors into their country, enriching all sides and diversifying the UAE’s economy beyond oil. Emiratis didn’t build the Burj Khalifa just to be tall; they built it as a beacon to the world. But some malfeasance from an elite Saudi family is jeopardizing the Emiratis’ hard work.

To contribute to Dubai’s real estate boom in the early 2000s, Omar Jamal Ayesh, a Canadian businessman, founded Tameer Holding Investments in Dubai, partnering with members of the powerful Al Rajhi Saudi family at the peak of its success in 2005. The family has massive influence throughout the Gulf Coast. The five Al Rajhi brothers include Abdullah, chairman of both Al Rajhi Holding and Al Rajhi Bank — the world’s largest Islamic bank — and Ahmed, recently appointed as Saudi Arabia’s Minister of Labor and Social Development and chairman of the Kingdom’s Chambers of Commerce.

In 2007, the company had become wildly successful, with the Gulf International Bank evaluating their property portfolio as $5 billion USD before a proposed IPO valuing Mr. Ayesh’s 25 percent share at $1.25 billion, and continued growth would have made for yet another amazing Dubai success story.

But the Al Rajhi brothers had other ideas for Mr. Ayesh’s share of the company he’d built.

The Al Rajhi family fraudulently transferred or “sold” Tameer assets to shell companies they owned to demolish the value of Tameer overall, Ayesh’s quarter share, and the hundreds of deposits made by foreign investors. The Al Rajhis’ actions constitute financial fraud, embezzlement, conflict of interest, breach of fiduciary duty, and misappropriation of assets — all as part of a pattern of racketeering activity.

And one doesn’t need to use the word “allegedly” to describe this, because it was affirmed by the UAE Supreme Court in 2018, which held in Ayesh’s favor — but the Al Rajhi brothers haven’t written any checks, Tameer’s doors are cordoned off with yellow tape, and it appears the UAE has no mechanisms to force the Al Rajhis to do so.

It is particularly concerning that this is going on under the supposed crackdown of Saudi Arabia Crown Prince Mohammad bin Salman (MBS), as he tries to crackdown on corruption among senior princes, ministers and top businessmen. The Al Rajhi brothers have successfully avoided this crackdown so far, despite their history of controversy.

The case has much broader implications because both Saudi Arabia and the UAE want to establish themselves as centers of international commercial that marry sound legal frameworks and political stability. Indeed, since MBS’s vaunted anti-corruption drive lacks any transparency, many senior cabinet members continue to drive corruption within and beyond Saudi’s borders.

Tackling the obstruction of his cabinet minister into the judicial proceedings of the Tameer case — again, probably the biggest case of fraud in Middle East history — would go a long way to demonstrate MBS’s commitment to reform and showing the world that Saudi Arabia is ready to enter the modern world.

To help redress this issue, Mr. Ayesh founded the Global Justice Foundation alongside the foundation’s legal counsel, former U.S. Solicitor General, Appeals Court Judge and Special Prosecutor Kenneth W. Starr, and the chair of the foundation’s board, former Federal Prosecutor Sydney Powell, to raise standards of business ethics around the world. The foundation focuses on cases where people in positions of power undermine justice through corruption, racketeering, and fraud. One hopes it will help.

While the UAE has a legal framework to address financial crime, this case demonstrates a need for further reform. If the UAE wants to guarantee foreign investors’ faith, government resources need to expand to pursue financial crimes. Emiratis are excited to welcome the world next year with Expo 2020, but if they can’t provide more legal protection than a banana republic, the world may not want to stay.

• Jared Whitley has worked in the U.S Senate, the White House and the defense industry.

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