VZCZCXRO5767
RR RUEHDH RUEHDIR
DE RUEHDE #0505/01 3271225
ZNY CCCCC ZZH
R 231225Z NOV 09
FM AMCONSUL DUBAI
TO RUEHC/SECSTATE WASHDC 6725
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEHDE/AMCONSUL DUBAI 0019

C O N F I D E N T I A L SECTION 01 OF 03 DUBAI 000505 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR NEA/FO; NEA/ARP/BMCGOVERN; TREASURY FOR NATASHA 
ZAMECNIK 
 
E.O. 12958: DECL:  11/23/2019 
TAGS: ETRD KIPR EFIN ECON PREL AE
SUBJECT: DUBAI RULER SHAKES UP SENIOR FINANCIAL MANAGEMENT 
 
REF: REFTEL: DUBAI 354 
 
DUBAI 00000505  001.2 OF 003 
 
 
CLASSIFIED BY: Justin Siberell, Consul General. 
REASON: 1.4 (b) 
¶1. (C) SUMMARY:  A shake-up in Dubai's financial services and 
investment nerve centers over the weekend has brought down four 
of the principal architects of Dubai's rapid, debt-fuelled 
economic expansion.  Dubai Ruler Sheikh Mohammed bin Rashid al 
Maktoum (MbR) replaced Dr. Omar bin Suleiman as head of the 
Dubai International Financial Center (DIFC) with Ahmad Humaid al 
Tayer, Chief Executive Officer of Emirates NBD bank, and a 
member of one of Dubai's most prominent merchant families.  MbR 
also reshuffled the board of the Investment Corporation of Dubai 
(ICD), removing three key board members and Dubai heavyweights: 
Mohammed Gergawi, Chairman of Dubai Holding and Minister of 
Cabinet Affairs; Mohammed Alabbar, Chairman of property giant 
Emaar; and Sultan bin Sulayem, Chairman of Dubai World, each of 
them U.S.-educated proponents of a globalized, integrated Dubai. 
 These changes come just two weeks after MbR subordinated the 
new-guard dominated "Executive Office" to the Ruler's Court, 
Dubai's traditional, but until recently eclipsed, nexus of 
power.  The moves represent a public "shaming" of some of 
Dubai's highest flyers and are intended primarily to reassure 
the investors upon whom Dubai must rely to secure continued 
financing on its reported $80-plus billion in debt.  But they 
also signal the reemergence of Dubai's traditional merchant 
class through men like Al Tayer who, in his role at Emirates/NBD 
Bank had a poor record of responsiveness to U.S. policy 
objectives, particularly on the issue of Iran-related trade and 
financial sanctions.  END SUMMARY. 
 
 
 
---------------- 
 
WEEKEND SHAKE UP 
 
---------------- 
 
 
 
¶2. (C) Dubai awoke Friday, the beginning of the UAE weekend, to 
news that Ruler Shaykh Mohamed bin Rashid al Maktoum had 
restructured the Board of the Investment Corporation of Dubai 
(ICD), an investment vehicle that channels ruling family 
investments and borrowed funds into the myriad companies owned 
by the Dubai ruling family.  The changes removed from the ICD 
Board three of the (U.S. educated) government executives most 
associated with Dubai's boom and bust cycle of the past decade: 
Mohamed al Gargawi, Sultan Ahmed bin Sulayim, and Mohamed Ali 
Alabbar.  Each retains positions in the individual companies 
with which they were previously associated, but removal from the 
ICD Board in above-the-fold headline announcements constitutes 
public shaming of three of the highest-flying Dubai executives 
behind the city's dramatic rise of the past decade.  The three 
were replaced by members of the Dubai ruling family.  This news 
was followed on Saturday by news of the replacement of Dr. Omar 
bin Suleiman as Governor of the Dubai International Financial 
Center (DIFC), Dubai's showcase development intended to 
establish Dubai as a global financial services hub. 
 
 
 
¶3. (C) Elan Fabbri (protect), Strategic Advisor to the Dubai 
Executive Office told polecon chief that the shake-ups were 
months in the making and "nothing personal."  She claims that 
MbR in early Fall 2009 convened many of Dubai's high-fliers to 
remind them that they serve at his pleasure and could be 
dismissed at his pleasure, implying that major moves were in the 
offing.  Fabbri argued that the removal of Gergawi, Alabbar, and 
Bin Sulayem from the ICD was "long overdue" as that entity has 
an oversight role in the companies each of them oversee and that 
reports any of the three had fallen out of the Ruler's favor 
were false.  (Note: Fabbri was equally sanguine about her own 
office's recent subordination to the Dubai Ruler's Court, headed 
by Mohammed Al Shaibani.  While she conceded that move was part 
of a consolidation of power by Dubai's more conservative old 
guard, which Shaibani represents, she argued that the day-to-day 
activities of the Executive Office, charged with strategic 
planning and decision-making in Dubai, would remain unchanged. 
End Note) 
 
 
 
¶4. (C) Michael Zamorski, Managing Director of Dubai Financial 
Services Authority (DFSA), the regulatory arm of DIFC (strictly 
protect), told polecon chief, though, that MbR had been 
personally disappointed by the mismanagement of Dubai's finances 
by the men arguably closest to him.  He also claimed that the 
ouster of Dr. Omar bin Suleiman was more clearly linked to 
performance, alleging that Suleiman had been caught with his 
"hand in the cookie jar."  This reportedly came to light through 
 
DUBAI 00000505  002.2 OF 003 
 
 
an audit of the DIFC which was to have been conducted in 2006, 
but was later brushed under the rug, and was only recently 
completed under explicit instructions by MbR himself. 
Allegations of corruption within the leadership of DIFC, a crown 
jewel of Dubai and a self-described island of transparency and 
openness in the region, are considered a serious threat to 
DIFC's longer-term viability and thus Dubai's hopes of emerging 
strong from the financial crisis. 
 
 
 
--------------------------------------------- -- 
 
FIRINGS: A SIGN OF ACCOUNTABILITY TO ABU DHABI? 
 
--------------------------------------------- -- 
 
 
 
¶5. (C) The personnel changes at DIFC and ICD have fueled 
increased speculation regarding the role Abu Dhabi continues to 
play in Dubai's restructuring efforts.  The four officials swept 
up in this latest round of management reshuffling once 
represented some of the most powerful and arguably influential 
figures in Dubai's economic miracle and are now its highest 
profile casualties.  Although Gergawi, Bin Sulayem and Alabbar 
maintain their posts as CEOs in their respective companies, 
their futures at Dubai Holding, Dubai World and Emaar remain 
uncertain as Dubai Holding and Emaar continue to finalize merger 
proceedings (Reftel) and Dubai World continues to restructure. 
Dr. Omar's position as Deputy Chairman of the Central Bank has 
to also be considered in question.  A senior VP at General 
Electric who had recent conversations with top Abu Dhabi 
officials told econoff before the shake-ups that personal 
accountability, along with increased transparency and equity 
stakes in Dubai Inc., would be at the top of Abu Dhabi's list of 
demands in exchange for continued assistance to see Dubai 
through the present financial crisis. 
 
 
 
¶6. (C) Additionally, Zamorski suggested to polecon chief that 
public firing of these top officials could be the public shaming 
of reckless Dubai CEOs that has been long overdue in the eyes of 
frustrated investors.  In fact, Zamorski explained that Abu 
Dhabi was especially outraged about how Dubai World managed the 
first tranche of the USD 10 billion underwritten by the UAE 
Central Bank.  He alluded to rumors that Dubai authorities 
sanctioned significant bonuses to Nakheel leadership last spring 
from the USD 10 billion bailout, even as the developer continued 
to sink under significant debt obligations which it is still 
struggling to meet. A senior consultant to the Dubai government 
told Consul General that as dramatic as the changes were, they 
were only the beginning of a broader restructuring expected to 
play out over the coming three or four months.  Expected to fall 
further, in particular, is Nakheel Chief Sultan bin Sulayim 
whose Dubai World holding company is alone estimated responsible 
for some $59 billion in debt.  Among Dubai World's investments 
is the massive Las Vegas City Center project, reportedly the 
largest privately-funded real estate project in history that 
came close to bankruptcy in 2008.  City Center's scheduled 
December opening may be the one thing saving bin Sulayim from a 
more dramatic public humiliation. 
 
 
 
--------------------------------------------- - 
 
AHMAD AL TAYER AND THE RETURN OF THE OLD GUARD 
 
--------------------------------------------- - 
 
 
 
¶7. (C) With Dr. Omar's removal, Ahmed Humaid al-Tayer, Chairman 
of Emirates NBD bank, will take over as the new head of DIFC. 
Al-Tayer is a former Minister of State for Finance and Industry 
and Minister of Communication.  He is a member of one of Dubai's 
most powerful and influential merchant families.  Relatives hold 
positions as head of the Road and Transport Authority and the 
Dubai Water and Electricity Authority.  His brother, Obaid al 
Tayer, is the current Minister of State for Financial Affairs. 
In remarks to the press, Al Tayer said he would pursue the same 
strategy as his predecessor at the DIFC.  Kito De Boer, Manager 
of the Dubai office of McKinsey &Co., told Consul General that 
Al-Tayer is regarded as a "solid", if conservative banker of 
strong reputation, something many outside the DIFC (read: Abu 
Dhabi) will welcome.  Ahmed Saeed, head of Cerberus Capital's 
Dubai office (and former Treasury DAS) told polecon chief that 
 
DUBAI 00000505  003.2 OF 003 
 
 
he suspects the shift to the old guard and the return to 
prominence of the old merchant families, of which al Tayer is a 
member, may be accompanied by a new focus at DIFC away from the 
West and toward "Eastern" or Islamic banking institutions.  One 
question that remains is whether Al Tayer's appointment is 
intended as a stop-gap measure or a longer-term posting to the 
DIFC flagship.  Al Tayer's duties at Emirates/NBD, the region's 
largest bank, are considerable, particularly as the merger 
between the former Emirates Bank and National Bank of Dubai is 
only just being completed. 
 
 
 
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COMMENT 
 
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¶8. (C) Although long expected, the Dubai Ruler's weekend shakeup 
has nonetheless excited local analysts into divining a true 
meaning for Dubai's future.  The four men displaced are all of a 
young generation that rose along with Mohamed bin Rashid's own 
ascendance in the 1990's.  They were chosen deliberately by him 
for their non-association with the old Dubai merchant class, and 
admired for their U.S. education and willingness to match MbR's 
ambitious thinking, something the merchant families could not be 
counted upon to do.  But now that the bubble has burst, and 
Dubai has had to turn to Abu Dhabi and the merchant families 
earlier spurned, the new guard has been sacrificed.  More 
changes are likely as Dubai continues to claw its way back to 
financial stability.  Of particular interest will be how Ahmad 
Al Tayer manages DIFC. As CEO of Emirates/NBD, he has been less 
than fully-responsive to USG demarches to restrict the Bank's 
exposure to Iranian banks at the heart of Iran's nuclear 
procurement activity.   END COMMENT 
SIBERELL