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Diana T Fritz  12/06/2006 06:10:16 PM  From  DB/Inbox:  Search Results

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C O N F I D E N T I A L        DUBAI 00092

SIPDIS
CXABU:
    ACTION: POL
    INFO:   RSO AMB DCM MEPI P/M ECON

DISSEMINATION: POL
CHARGE: PROG

VZCZCADO275
PP RUEHAD
DE RUEHDE #0092/01 0081311
ZNY CCCCC ZZH
P 081311Z JAN 05
FM AMCONSUL DUBAI
TO RUEHC/SECSTATE WASHDC PRIORITY 0791
INFO RUEHAD/AMEMBASSY ABU DHABI PRIORITY 0471
RUEHDE/AMCONSUL DUBAI 3551
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 02 DUBAI 000092 
 
SIPDIS 
 
E.O. 12958: DECL:  1/8/2015 
TAGS: PGOV EINV ECON TC
SUBJECT: DUBAI'S "EXECUTIVE OFFICE" SPLITS INTO BUSINESS AND 
GOVERNMENT ARMS 
 
REF: A) DUBAI 4630   B) DUBAI 4361  C) DUBAI 5013  D) DUBAI 3286  E) DU 
 
I 4719 AND PREVIOUS  F) DUBAI 2849  G) DUBAI 49  H) DUBAI 1466 
 
 
CLASSIFIED BY: Jason Davis, Consul General, Dubai , UAE. 
REASON: 1.4 (d) 
 
¶1. (C) Summary: Dubai's "Executive Office," headed by Mohammed 
Gergawi, has long been a key player in "Dubai Inc," the term 
used to describe the various parastatal organizations that the 
Ruler's Office has set up to manage and oversee the development 
of Dubai.  The Executive Office has recently been split into two 
separate arms, one (known as "Dubai Holding") consisting of all 
the for-profit businesses, and a second consisting of the 
regulatory and governmental functions of the rump Executive 
Office.  Still fully owned by the Dubai government, Dubai 
Holding is now organized as a major corporation, with six 
companies worth billions of dollars under its umbrella. The 
three regulatory/government entities of the Executive Office, 
meanwhile, have been organized as separate government agencies. 
The purpose of the restructuring, according to Dubai Holding CFO 
Fadel Al Ali, is to adopt international standards of corporate 
governance and transparency so that Dubai Holding can emerge as 
a respected global player. End Summary. 
 
From the Executive Office to Dubai Holding 
------------------------------------------ 
 
¶2. (U) Dubai's "Executive Office," headed by Mohammed Gergawi, 
has long been a key player in "Dubai Inc," the term used loosely 
to describe the various parastatal organizations that the Dubai 
Ruler's Office set up to manage and oversee the development of 
Dubai. (The other two major components of Dubai, Inc are Sultan 
bin Sulayem's "Corporate Office," which includes Dubai Ports and 
Customs as well as the real estate giant "Nakheel"; and Mohammed 
Al-Abbar's "Emaar," another real estate giant.) 
 
¶3. (U) Until recently, the Executive Office was an umbrella 
organization incorporating both business and government 
operations -- everything from the quasi-governmental Dubai 
Development and Investment Authority (DDIA) to the purely 
for-profit Dubai Internet City. On October 8, however, the 
government of Dubai announced that the Executive Office would be 
split up into three "independent" government bodies and one 
private corporation which would be known as "Dubai Holding." 
With Dubai Crown Prince and de facto ruler Sheikh Mohammed bin 
Rashid (MbR) as its Chairman, Dubai Holding is one of the 
biggest companies in the region, holding billions of dollars in 
assets. It remains 100 percent owned by the government of Dubai, 
though rumors abound that it was spun off from the Executive 
Office in part so that it can eventually be taken public in an 
IPO. 
 
¶4. (C) On January 2, PolEconoff spoke to Fadel Al Ali, Chief 
Financial Officer of Dubai Holding and formerly a Citibank Dubai 
executive for 18 years, about the reasons behind the recent 
restructuring. Al Ali's take was that Dubai, now that it was 
emerging as a major international player, needed to meet 
accepted international standards -- and this meant in part 
"drawing a line" between the government and the private sector. 
He said Dubai Holding would have a corporate structure, clear 
standards of corporate governance, a board, and -- eventually -- 
a public declaration of its balance sheet. "We are perhaps 70 
percent transparent now; our aim is to become 100 percent 
transparent. We can no longer be run on a project-by-project 
basis....His Highness's (MbR's) vision is for Dubai Holding to 
be a truly multinational company." Al Ali predicted that Sultan 
bin Sulayem's Corporate Office (Ref A) -- see para 2, above -- 
would soon undergo a similar restructuring. 
 
Dubai Holding -- The Breakdown 
------------------------------ 
 
¶5. (C) Al Ali said Dubai Holding (DH) was essentially a shell 
company, and one with a very small staff. "We basically created 
a mother after the birth of the children," he noted wryly. Al 
Ali said DH had nine Board Members (not including MbR) and that 
there were six distinct companies inside Dubai Holding. Gergawi 
(as CEO), Al Ali himself, and the CEO's of the six companies 
CEO's were all Board Members; the ninth board member was the 
head of MbR's private "Investment Office" (which is charged with 
investing MbR's personal wealth), selected because his office 
has large investments in DH. 
 
¶6. (C) The first of DH's six companies is TECOM Investments, 
headed by CEO Ahmed Bin Byat. TECOM includes Internet City, 
Media City, Knowledge Village, Arabian Radio Network, and 
several other media-related firms. The second of the six DH 
companies, run by Saeed Al Muntafig (who also heads DDIA -- see 
para 7) is known as "Tatweer Dubai" ("Developing Dubai"). 
Tatweer controls free zone projects such as Dubai Healthcare 
City (in cooperation with Harvard Medical -- ref B), Dubai 
Humanitarian City (ref C), and large non-free zone projects such 
as Dubailand and Dubai Industrial City. The third DH company is 
Dubai Properties, the property development and management arm of 
DH, run by Hashem Al Dabal. (Dubai Properties controls the USD 
two billion freehold real estate development Jumeirah Beach 
Residence (ref D) as well as "Business Bay," the newly-announced 
multi-billion dollar project to develop and extend Dubai's Creek 
into a high-rise lined arc stretching back through the desert to 
Sheikh Zayid road.) 
 
¶7. (C) The fourth arm of DH is Dubai International Capital, a 
completely new entity run by Sameer Al Ansari, until recently 
Chief Financial Officer of the Executive Office. (Al Ansari's 
company will invest money raised by the DH's other branches into 
companies in the Middle East, Europe, and the US. The fifth 
company, Jumeirah International, has a hotel and hospitality 
focus; it is headed by Gerald Lawless. (Jumeirah owns the 
landmark "seven star" Burj Al Arab Hotel, the Emirates Towers 
Hotel, and several other hotels in Dubai and the UK.) The sixth 
and final DH company is Dubai International Properties, headed 
by Farhan Faraidooni, which will invest in projects throughout 
the region, including Lebanon, Libya, and Qatar. 
 
The Government Authorities 
-------------------------- 
 
¶8. (C) The spin-off of all the Executive Office's business 
projects into DH left a rump Executive office now divided into 
three governmental entities.  The first of those, TECOM 
Authority, does licensing, free zone rules, and other government 
activities for the TECOM free zones (including Dubai Internet 
City and Dubai Media City). A second governmental entity, the 
Dubai Development and Investment Authority (DDIA), run by Saeed 
Al Muntafiq, is the project-germinating wing of the government 
and will continue to generate ideas aimed at attracting outside 
investment to further develop Dubai. DDIA has responsibility for 
the planned Dubai Mercantile Exchange, to be jointly run with 
the New York Mercantile Exchange (ref E). 
 
¶9. (C) The third governmental entity remaining following the 
spin-off of Dubai Holding will oversee existing government 
improvement-related initiatives such as the Dubai Government 
Excellence Program (ref F) and the new Dubai School of 
Government (ref G).  This third entity will continue to be 
known, somewhat confusingly, as "The Executive Office." 
According to Al Ali, the new Executive Office will "backstop" 
the Executive Council, Dubai's Cabinet-like government 
consultative body made up of all the Dubai government department 
heads and chaired by MbR (Ref H). Nabil Al Yousuf, a top 
director at the Executive Office, told us the new Executive 
Office would liaise with all the government departments and 
present new policy initiatives to the Executive Council. DH's Al 
Ali, however, downplayed the Executive Office's role, saying it 
would be "limited to government performance benchmarking, 
education programs, and improvement of government efficiency." 
 
Comment 
------- 
 
¶10. (C) "Dubai, Inc." is the somewhat sardonic catchphrase used 
to describe the government-led, public-private sector 
partnerships that have been responsible for Dubai's meteoric 
rise from a smallish fishing and trading town to something 
approaching a world-class metropolis. The restructuring of the 
Executive Office and the spinning off of Dubai Holding suggests 
that Dubai's leaders understand the need for greater 
transparency and better business practices.  The restructuring 
is also a tacit acknowledgement that the blurry borders between 
government and business that have served Dubai so well until now 
could become a liability as Dubai's focus becomes more 
international. 
 
 
DAVIS