Panama Papers aviation executive in legal battle with Rakia over Georgia hotel

An Iranian-American businessman who features in the Panama Papers has become embroiled in a massive legal dispute with the Ras Al Khaimah Investment Authority (Rakia) over an aborted hotel deal in Georgia.

Both sides have named each other in lawsuits, both filed on the same day in London and Washington DC, The National can exclusively reveal.

They contain extraordinary claims and counter-claims of secret commissions, computer hacking and stolen files hidden in the Dark Web. Both actions are linked to the business activities of former Rakia chief executive Khater Massaad.

Farhad Azima, who runs an aircraft leasing company and was a political donor to former US president Bill Clinton and his wife Hillary, the Democrat presidential nominee, is named as a defendant in a writ that has been lodged in the London High Court by Rakia.

It relates to a failed deal to sell the Sheraton Metechi Palace Hotel in Tbilisi in 2011.

The authority is claiming more than US$2.6 million in damages from Mr Azima, a Kansas City-based aviation executive, for his alleged role in brokering an aborted attempt to sell the hotel for $62.5m to a company called Eurasia Hotel Holdings Limited.

That company was beneficially owned by Iranian businessman Houshang Hosseinpour, according to court documents seen by The National.

It is just one strand in a tangled web of legal cases being prepared by the investment agency of the northernmost emirate that relate to deals linked to Khater Massaad, its former chief executive who holds dual Lebanese-Swiss citizenship and is currently being detained in Saudi Arabia on an arrest warrant issued from the UAE.

In its legal claim dated September 30, 2016 Rakia alleges that Mr Massaad entered into an agreement with Mr Azima to receive a commission in return for referring potential third-party purchasers for the Tbilisi hotel. It was agreed he would get 5 per cent of the sale price, Rakia alleges.

It claims that Mr Azima had without its prior knowledge agreed with Mr Hosseinpour to receive a separate 10 per cent interest in the hotel on completion of the sale – a stake that would be worth $6.25m based on its intended sale price.

But last month while Rakia lawyers were preparing their claims against Mr Azima over the Tbilisi hotel deal, his lawyers were also getting ready to serve court documents alleging he had been unfairly blamed for the collapse of “settlement discussions” with the authority over deals involving Mr Massaad that started last year and continued into 2016.

The 15-page complaint filed in the US district court for the District of Columbia by lawyers acting for Mr Azima focuses on talks that started when Mr Azima was asked to mediate in a dispute between the investment agency and other parties, including Mr Massaad.

When those talks broke down after intense discussions on or about July 23, 2016, Rakia’s counsel “ominously threatened that Mr Azima would become collateral damage” in its actions against Mr Massaad, the complaint alleges.

The complaint, which seeks $20m in punitive damages, claims that shortly after this meeting, Mr Azima learnt that computers in the United States used by him had been hacked.

It says that “a massive volume of emails and other electronic data of Mr Azima and his business associates had been illegally misappropriated and stolen on or about August 7, 2016”.

The claim estimates the volume of data to be about 65 gigabytes.

A spokesman for the RAK Government dismissed Mr Azima’s US complaint as “without merit and baseless and an attempt to distract attention from its own conduct”.

In a statement to The National, Mr Azima said that he had behaved honourably and in good faith in his dealings with Ras Al Khaimah and in attempts to mediate in a dispute with Khater Massaad.

“I spent extraordinary amounts of my time, energy and resources trying to help the parties reach a settlement,” he said.

He also described the lawsuit brought against him as “baseless”.

“I will fight this unethical and improper behaviour every step of the way.” he said.

Mr Azima appears in the so-called Panama Papers, which refer to more than 11.5 million leaked documents dating back to the 1970s from the law firm of Mossack Fonseca that relate to thousands of offshore companies.

An article published by the International Consortium of Investigative Journalists on April 5, 2016 in the wake of the leaks, describes how Mr Azima hosted a fundraising event for Bill Clinton in September 1996 during his presidential re-election campaign, where a quarter of a million dollars in campaign fundraising was at stake.

The article says he later hosted Hillary Clinton when standing for election to the Senate in December 1999, along with 40 guests in a private dinner that raised $2,500 a head. It said he had contributed to both Republican and Democrat administrations in the past.

scronin@thenational.ae

Follow The National’s Business section on Twitter

Saudi Arabia broke emerging market records with a US$17.5 billion bond sale that marks a turning point in the kingdom’s economic history.

The record issuance is expected to pave the way for more debt sales from regional oil exporters as they seek to plug budget deficits created by a weaker oil price.

The sale drew strong interest from global investors seeking more attractive yields amid low interest rates in developed markets.

That interest was demonstrated by the estimated $67bn in orders that the sale attracted, the Wall Street Journal reported, citing a person familiar with the issuance.

Saudi Arabia’s record bond sale is a key part of a massive economic reform programme aimed at weaning the region’s largest economy off its dependence on oil, slashing subsidies and putting thousands of young unemployed Saudis to work.

The sale could finance about a third of next year’s budget deficit and stabilise foreign exchange reserves.

“This should dampen any lingering concerns that the Riyal will be devalued,” said Jason Tuvey, Middle East economist at London-based Capital Economics.

The sale will propel the kingdom’s debt burden to almost a fifth of GDP by the end of the year from less than two per cent in 2014.

Despite the sharp increase analysts say an expected oil price recovery could soften the blow.

“If we’re right in expecting oil prices to edge up over the coming years then most of the spending cuts needed to rein in the deficit and stabilise the debt ratio have already happened,” added Mr Tuvey.

The debt sale was split into three tranches of five, 10 and 30-year-old tranches.

They yielded 2.63 per cent, 3.44 per cent and 4.64 per cent respectively.

scronin@thenational.ae

Follow The National’s Business section on Twitter

Flydubai seat back screens await update after supplier suspends operations

Flydubai passengers may be jabbing their seat back entertainment screens a little harder after the company supplying them was forced to suspend operations.

The Dubai budget carrier was the launch customer for an entertainment system supplied by US-based Lumexis Corporation, which hit a cash crisis this summer and has since axed most of its staff.

Still, the airline said it was committed to the system and is planning a software update with new features. It added while it was aware of some technical issues, these were not representative across its fleet.

Passengers pay about Dh30 for full access to the system, which includes movies and TV shows that can be pre-ordered or bought onboard.

“The system, which offers state-of-the-art communication and entertainment on board for all passengers, remains an integral part of our onboard offering,” said a flydubai spokesperson. “In instances where there is a technical issue with one of the screens we will reset the display, where possible offer the passenger another seat or where this isn’t possible provide a refund.”

The low-cost carrier set up in 2008 operates a fleet of Boeing 737-800 aircraft and will have 100 planes by the end of 2023.

Flydubai was the launch customer for the Lumexis Fiber To The Screen system. One of its selling points was that it was fibre-optic rather than copper based and so made it lighter than some competing systems offering fuel savings.

Lumexis also supplied the system to Indonesia’s Lion Air. The Asian airline did not respond to a request for comment.

Such multifunctional entertainment screens are especially important for the revenue model of low-cost carriers because they also automate the ordering of snacks and food with the aim of relieving crew workloads.

Lumexis, headquartered in California, released a statement on June 22 saying that due to “liquidity constraints” it had suspended many aspects of its business operations and was forced to terminate the majority of its personnel. Calls to the company went unanswered.

Flydubai relaunched its in-flight entertainment system in 2012 with more content.

The US$3 billion global in-flight entertainment market is expanding rapidly as carriers seek competitive advantage over rivals by offering more functionality, greater bandwidth and a bigger choice of media.

“In-flight entertainment is considered to be a definite must-have now by the airline industry; a way to differentiate their service offerings and to foster brand loyalty,” said Nitin Bhas, head of research at UK-based Juniper Research. “Although the take-up rate of paid in-flight entertainment services currently remains low, passenger surveys continually show growing demand for connectivity and more entertainment options in the cabin.”

scronin@thenational.ae

Follow The National’s Business section on Twitter

Video glitch for Flydubai after entertainment system supplier suspends operations

Flydubai passengers may be jabbing their seat back entertainment screens a little harder after the company supplying them was forced to suspend operations.

The Dubai budget carrier was the launch customer for an entertainment system supplied by US-based Lumexis Corporation, which hit a cash crisis this summer and has since axed most of its staff.

Still, the airline said it was committed to the system and is planning a software update with new features. It added while it was aware of some technical issues, these were not representative across its fleet.

Passengers pay about Dh30 for full access to the system, which includes movies and TV shows that can be pre-ordered or bought onboard.

“The system, which offers state-of-the-art communication and entertainment on board for all passengers, remains an integral part of our onboard offering,” said a flydubai spokesperson. “In instances where there is a technical issue with one of the screens we will reset the display, where possible offer the passenger another seat or where this isn’t possible provide a refund.”

The low-cost carrier set up in 2008 operates a fleet of Boeing 737-800 aircraft and will have 100 planes by the end of 2023.

Flydubai was the launch customer for the Lumexis Fiber To The Screen system. One of its selling points was that it was fibre-optic rather than copper based and so made it lighter than some competing systems offering fuel savings.

Lumexis also supplied the system to Indonesia’s Lion Air. The Asian airline did not respond to a request for comment.

Such multifunctional entertainment screens are especially important for the revenue model of low-cost carriers because they also automate the ordering of snacks and food with the aim of relieving crew workloads.

Lumexis, headquartered in California, released a statement on June 22 saying that due to “liquidity constraints” it had suspended many aspects of its business operations and was forced to terminate the majority of its personnel. Calls to the company went unanswered.

Flydubai relaunched its in-flight entertainment system in 2012 with more content.

The US$3 billion global in-flight entertainment market is expanding rapidly as carriers seek competitive advantage over rivals by offering more functionality, greater bandwidth and a bigger choice of media.

“In-flight entertainment is considered to be a definite must-have now by the airline industry; a way to differentiate their service offerings and to foster brand loyalty,” said Nitin Bhas, head of research at UK-based Juniper Research. “Although the take-up rate of paid in-flight entertainment services currently remains low, passenger surveys continually show growing demand for connectivity and more entertainment options in the cabin.”

scronin@thenational.ae

Follow The National’s Business section on Twitter

Tough Mudder in Dubai: Meet the Harvard diplomat who made $100 million from playing in the mud

One of the world’s toughest tests of strength, stamina and grit is set to arrive in Dubai as the US$100 million global phenomenon that is Tough Mudder makes its regional debut.

If crawling through mud, wading through ice or sprinting through live electricity cables is your kind of thing, then head to the Hamdan Sports Complex on December 9-10, when as many as 5,000 punishment seekers will be getting down and dirty among a selection of larger-than-life obstacles.

Will Dean, the unassuming founder of the event, came up with the idea as a 28-year-old student at Harvard Business School and entered it into a business plan contest. In 2010 the first event was held at a ski resort in Pennsylvania and since then it has become a $100m-revenue business and will this year host 120 events in 10 countries.

Sipping a coffee in the foyer of a Dubai hotel, the now 35-year-old says caffeine is his main vice and a necessary accompaniment to spending much of his time flying around the world on red-eye flights looking for the next potential Mudder venue.

Dubai was always an obvious location for this kind of event where endurance sports, cross-training and other physical pursuits have ballooned in recent years. But the focus is less competitive than some of those other activities. There are no timing chips or focus on passing the finishing line first as much as testing yourself and helping fellow competitors through.

The narrative that has been skilfully created around Tough Mudder is one of non-competitive character-building camaraderie and confidence.

Such personal tests are perhaps filling a broader void in our increasingly urbanised and globalised society and smartphone-connected society, where tribal rites of passage once fulfilled the same essential purpose.

“When you can get through something that scares you and take on things that intimidate you then they don’t intimidate you any more,” Mr Dean says.

The event is being organised with IMG and with the help of du and Dubai Sports Council.

“Anywhere where you have a world-class city there are lots of people that tend to gravitate towards challenges; you know people who tend to push themselves and are adventurous and open-minded,” says Mr Dean. “Tough Mudder caters to all those character traits.”

The event will include 8 kilometre and 16km courses aimed at fitness enthusiasts with a smaller du Mini Mudder 1.5km obstacle course for seven to 13-year-olds.

It also sounds fiendishly perilous, but he insists that the most dangerous thing about taking part in the event is the drive to the venue, where he says you are seven times more likely to be injured. And that statistic was calculated before the arrival of the event in Dubai – where the odds may need to be recalculated.

“Like any event there’s an element of danger but that’s true of almost anything you do, so we are very proud of our safety record.”

As for the level of fitness required to tackle the event, that is slightly more difficult to define.

“It is a tough challenge – there’s no getting away from that. But you can get through it with your mates – that’s always been at the centre of it. It’s all about team.”

Growing up in the UK’s Sherwood Forest, home to the fables of Robin Hood, was perhaps the perfect place to develop an early sense of adventure – building swing ropes and climbing trees.

Being part of a close-knit community and having a sense of humility all fed into what he would later become, he acknowledges.

“All those things are woven into who I am for sure,” he says.

He arrived at Harvard from an early career as a British diplomat (he worked as a counter-terrorism officer), where he says he clashed with some of the bureaucracy of the system “more than was healthy for everyone”. Still he values the experience – especially so when he started at the elite business school where his background was not typical among the other young financiers and management consultants.

“I probably could not have been the entrepreneur I am today had I not had the experience and the training of the British civil service,” he says. “I feel being rude about the British civil service is a bit like being rude about your own kids. It’s fine if I do it, but I get a bit defensive if anyone else has a go. In its own way it was quite entrepreneurial. It also meant when I came to business school I had a completely different perspective.”

How did studying at the world’s most famous business school play in his entrepreneurial journey?

“I went to business school thinking there was this kind of secret source to business and I figured there were all these things you had to know – so, yes, you need to know how to read a balance sheet and do a business plan but you don’t need two years for that and you definitely don’t need two years at Harvard Business School to do that stuff.

“It gives you access to a lot of people who have done interesting things and some of those people are brilliant, some are articulate, some of them are hugely creative – but a lot of them are just quite gritty resilient people and it wasn’t that I left Harvard saying: ‘I’m definitely going to be successful’. But I did leave Harvard thinking there’s no reason to think I’m not in with a chance to be as successful as these people.

“The irony is at least of third of the people aren’t all that smart – or maybe half. And I’m probably in that half,” he says with what sounds like unaffected self-deprecation.

“I think sometimes people overplay the [Harvard] network. I think the brand is worth something and people give you the benefit of the doubt, but more than anything it’s while you are there, [you have] access to lots of people who have been successful in their own way.”

He talks about “experience” being the new luxury good and of being part of a global “tribe” of mudders.

Some 5,000 people have had the Tough Mudder logo tattooed on them.

It feels like “tribe” is the key word in all of this.

In a modern, globalised and increasingly tribeless society, perhaps events such as this and others like it fill a void left by what we once were and have now become.

After Dubai, Mr Dean will be boarding his next red-eye to Shanghai.

“May you live in interesting times,” goes the Chinese proverb.

But living in dull times may be why events like this are so popular.

scronin@thenational.ae

Follow The National’s Business section on Twitter

Tough Mudder in Dubai: Meet the former diplomat who made $100 million out of mud

One of the world’s toughest tests of strength, stamina and grit is set to arrive in Dubai as the US$100 million global phenomenon that is Tough Mudder makes its regional debut.

If crawling through mud, wading through ice or sprinting through live electricity cables is your kind of thing, then head to the Hamdan Sports Complex on December 9-10, when as many as 5,000 punishment seekers will be getting down and dirty among a selection of larger-than-life obstacles.

Will Dean, the unassuming founder of the event, came up with the idea as a 28-year-old student at Harvard Business School and entered it into a business plan contest. In 2010 the first event was held at a ski resort in Pennsylvania and since then it has become a $100m-revenue business and will this year host 120 events in 10 countries.

Sipping a coffee in the foyer of a Dubai hotel, the now 35-year-old says caffeine is his main vice and a necessary accompaniment to spending much of his time flying around the world on red-eye flights looking for the next potential Mudder venue.

Dubai was always an obvious location for this kind of event where endurance sports, cross-training and other physical pursuits have ballooned in recent years. But the focus is less competitive than some of those other activities. There are no timing chips or focus on passing the finishing line first as much as testing yourself and helping fellow competitors through.

The narrative that has been skilfully created around Tough Mudder is one of non-competitive character-building camaraderie and confidence.

Such personal tests are perhaps filling a broader void in our increasingly urbanised and globalised society and smartphone-connected society, where tribal rites of passage once fulfilled the same essential purpose.

“When you can get through something that scares you and take on things that intimidate you then they don’t intimidate you any more,” Mr Dean says.

The event is being organised with IMG and with the help of du and Dubai Sports Council.

“Anywhere where you have a world-class city there are lots of people that tend to gravitate towards challenges; you know people who tend to push themselves and are adventurous and open-minded,” says Mr Dean. “Tough Mudder caters to all those character traits.”

The event will include 8 kilometre and 16km courses aimed at fitness enthusiasts with a smaller du Mini Mudder 1.5km obstacle course for seven to 13-year-olds.

It also sounds fiendishly perilous, but he insists that the most dangerous thing about taking part in the event is the drive to the venue, where he says you are seven times more likely to be injured. And that statistic was calculated before the arrival of the event in Dubai – where the odds may need to be recalculated.

“Like any event there’s an element of danger but that’s true of almost anything you do, so we are very proud of our safety record.”

As for the level of fitness required to tackle the event, that is slightly more difficult to define.

“It is a tough challenge – there’s no getting away from that. But you can get through it with your mates – that’s always been at the centre of it. It’s all about team.”

Growing up in the UK’s Sherwood Forest, home to the fables of Robin Hood, was perhaps the perfect place to develop an early sense of adventure – building swing ropes and climbing trees.

Being part of a close-knit community and having a sense of humility all fed into what he would later become, he acknowledges.

“All those things are woven into who I am for sure,” he says.

He arrived at Harvard from an early career as a British diplomat (he worked as a counter-terrorism officer), where he says he clashed with some of the bureaucracy of the system “more than was healthy for everyone”. Still he values the experience – especially so when he started at the elite business school where his background was not typical among the other young financiers and management consultants.

“I probably could not have been the entrepreneur I am today had I not had the experience and the training of the British civil service,” he says. “I feel being rude about the British civil service is a bit like being rude about your own kids. It’s fine if I do it, but I get a bit defensive if anyone else has a go. In its own way it was quite entrepreneurial. It also meant when I came to business school I had a completely different perspective.”

How did studying at the world’s most famous business school play in his entrepreneurial journey?

“I went to business school thinking there was this kind of secret source to business and I figured there were all these things you had to know – so, yes, you need to know how to read a balance sheet and do a business plan but you don’t need two years for that and you definitely don’t need two years at Harvard Business School to do that stuff.

“It gives you access to a lot of people who have done interesting things and some of those people are brilliant, some are articulate, some of them are hugely creative – but a lot of them are just quite gritty resilient people and it wasn’t that I left Harvard saying: ‘I’m definitely going to be successful’. But I did leave Harvard thinking there’s no reason to think I’m not in with a chance to be as successful as these people.

“The irony is at least of third of the people aren’t all that smart – or maybe half. And I’m probably in that half,” he says with what sounds like unaffected self-deprecation.

“I think sometimes people overplay the [Harvard] network. I think the brand is worth something and people give you the benefit of the doubt, but more than anything it’s while you are there, [you have] access to lots of people who have been successful in their own way.”

He talks about “experience” being the new luxury good and of being part of a global “tribe” of mudders.

Some 5,000 people have had the Tough Mudder logo tattooed on them.

It feels like “tribe” is the key word in all of this.

In a modern, globalised and increasingly tribeless society, perhaps events such as this and others like it fill a void left by what we once were and have now become.

After Dubai, Mr Dean will be boarding his next red-eye to Shanghai.

“May you live in interesting times,” goes the Chinese proverb.

But living in dull times may be why events like this are so popular.

scronin@thenational.ae

Follow The National’s Business section on Twitter

Tough Mudder: The Harvard diplomat who made $100 million from mud

One of the world’s toughest tests of strength, stamina and grit is set to arrive in Dubai as the US$100 million global phenomenon that is Tough Mudder makes its regional debut.

If crawling through mud, wading through ice or sprinting through live electricity cables is your kind of thing, then head to the Hamdan Sports Complex on December 9-10, when as many as 5,000 punishment seekers will be getting down and dirty among a selection of larger-than-life obstacles.

Will Dean, the unassuming founder of the event, came up with the idea as a 28-year-old student at Harvard Business School and entered it into a business plan contest. In 2010 the first event was held at a ski resort in Pennsylvania and since then it has become a $100m revenue business and will this year host 120 events in 10 countries.

Sipping a coffee in the foyer of a Dubai hotel, the now 35-year-old says caffeine is his main vice and a necessary accompaniment to spending much of his time flying around the world on red-eye flights looking for the next potential Mudder venue.

[embedded content]

Dubai was always an obvious location for this kind of event where endurance sports, cross-training and other physical pursuits have ballooned in recent years. But the focus is less competitive than some of those other activities. There are no timing chips or focus on passing the finishing line first as much as testing yourself and helping fellow competitors through.

The narrative that has been skilfully created around Tough Mudder is one of non-competitive character-building camaraderie and confidence.

Such personal tests are perhaps filling a broader void in our increasingly urbanised and globalised society and smartphone-connected society, where tribal rites of passage once fulfilled the same essential purpose.

“When you can get through something that scares you and take on things that intimidate you then they don’t intimidate you any more,” Mr Dean says.

The event is being organised with IMG and with the help of du and Dubai Sports Council.

“Anywhere where you have a world-class city there are lots of people that tend to gravitate towards challenges; you know people who tend to push themselves and are adventurous and open-minded,” says Mr Dean. “Tough Mudder caters to all those character traits.”

The event will include 8 kilometre and 16km courses aimed at fitness enthusiasts with a smaller du Mini Mudder 1.5km obstacle course for seven to 13-year-olds.

It also sounds fiendishly perilous, but he insists that the most dangerous thing about taking part in the event is the drive to the venue, where he says you are seven times more likely to be injured. And that statistic was calculated before the arrival of the event in Dubai – where the odds may need to be recalculated.

“Like any event there’s an element of danger but that’s true of almost anything you do, so we are very proud of our safety record.”

As for the level of fitness required to tackle the event, that is slightly more difficult to define.

“It is a tough challenge – there’s no getting away from that. But you can get through it with your mates – that’s always been at the centre of it. It’s all about team.”

Growing up in the UK’s Sherwood Forest, home to the fables of Robin Hood, was perhaps the perfect place to develop an early sense of adventure – building swing ropes and climbing trees.

Being part of a close-knit community and having a sense of humility all fed into what he would later become, he acknowledges.

“All those things are woven into who I am for sure,” he says.

He arrived at Harvard from an early career as a British diplomat (he worked as a counter-terrorism officer), where he says he clashed with some of the bureaucracy of the system “more than was healthy for everyone”. Still he values the experience – especially so when he started at the elite business school where his background was not typical among the other young financiers and management consultants.

“I probably could not have been the entrepreneur I am today had I not had the experience and the training of the British civil service,” he says. “I feel being rude about the British civil service is a bit like being rude about your own kids. It’s fine if I do it, but I get a bit defensive if anyone else has a go. In its own way it was quite entrepreneurial. It also meant when I came to business school I had a completely different perspective.”

How did studying at the world’s most famous business school play in his entrepreneurial journey?

“I went to business school thinking there was this kind of secret source to business and I figured there were all these things you had to know – so, yes, you need to know how to read a balance sheet and do a business plan but you don’t need two years for that and you definitely don’t need two years at Harvard Business School to do that stuff.

“It gives you access to a lot of people who have done interesting things and some of those people are brilliant, some are articulate, some of them are hugely creative – but a lot of them are just quite gritty resilient people and it wasn’t that I left Harvard saying: ‘I’m definitely going to be successful’. But I did leave Harvard thinking there’s no reason to think I’m not in with a chance to be as successful as these people.

“The irony is at least of third of the people aren’t all that smart – or maybe half. And I’m probably in that half,” he says with what sounds like unaffected self-deprecation.

“I think sometimes people overplay the [Harvard] network. I think the brand is worth something and people give you the benefit of the doubt, but more than anything it’s while you are there, [you have] access to lots of people who have been successful in their own way.”

He talks about “experience” being the new luxury good and of being part of a global “tribe” of mudders.

Some 5,000 people have had the Tough Mudder logo tattooed on them.

It feels like “tribe” is the key word in all of this.

In a modern, globalised and increasingly tribeless society, perhaps events such as this and others like it fill a void left by what we once were and have now become.

scronin@thenational.ae

Follow The National’s Business section on Twitter

British expats in UAE ready to cash in on weak pound again as remittances surge

British expats across the region will be getting ready to cash in on renewed sterling weakness if the pound comes under further pressure this week.

Already, currency exchanges are reporting a surge in remittances to the United Kingdom after sterling took a hammering last week, hitting a 31-year low.

Remittance volumes handled by UAE Exchange surged 135 per cent last week compared to the same week a month earlier.

“Though uncertainties prevail around the UK’s economic prospects outside the EU, British expats are cashing in on the favourable exchange rate,” said the chief executive Promoth Manghat.

Now top banks are predicting further pain for the pound.

Banks that include HSBC, Goldman Sachs, Deutsche Bank and Bank of America all expect the pound to come under further pressure after tumbling about 6 per cent this month as traders eye Brexit-related risks.

The US dollar, to which the UAE dirham is pegged, received a further boost last week after the publication of positive retail industry data.

The post-Brexit slide has been good news for British expatriates in dollar-pegged economies remitting funds home. While Dh1,000 on Sunday fetched about 223 pounds, before the June 23rd referendum the same amount would only have bought about 185 pounds

The pound has been a big driver of global currency volatility since Britain voted to leave the European Union in June.

The pound dropped about 10 per cent immediately after the vote and has extended losses since to almost 20 per cent.

A “flash crash” of the currency on October 7 created more concerns around negotiations with Brussels on the country’s departure from the EU.

Trading volatility is being fuelled by speculation over the as yet undefined nature of the UK’s departure from the EU and what kind of trading relationship it will have with the bloc after it leaves.

A “soft” Brexit would preserve some preferential access, while a “hard” Brexit would mean the UK would essentially trade under World Trade Organisation rules.

A report due to be released on Monday from Ernst & Young’s Item Club is expected to say signs of resilience in the UK economy since the Brexit vote may be lulling people into a false sense of security, Bloomberg reported.

The Bank of England Governor Mark Carney on Friday said that the bank was not indifferent to the level of the pound which helped to support the currency at the end of the week.

Although he reiterated the usual position that the Bank of England did not target a particular rate of exchange for sterling, he elaborated on its significance for the economy.

“Our job is not to target the exchange rate, our job is to target inflation,” he said during a public meeting. “But that doesn’t mean we’re indifferent to the level of sterling. It does matter, ultimately, [for] inflation and over the course of two to three years out, so it matters to the conduct of monetary policy,” Reuters reported.

scronin@thenational.ae

Follow The National’s Business section on Twitter

British expats in UAE ready to cash in on weak pound again as remittances surge

British expats across the region will be getting ready to cash in on renewed sterling weakness if the pound comes under further pressure this week.

Already currency exchanges are reporting a surge in remittances to the UK after sterling took a hammering last week, hitting a 31-year low.

Remittance volumes handled by UAE Exchange surged 135 per cent last week compared to the same week a month earlier.

“Though uncertainties prevail around the UK’s economic prospects outside the EU, British expats are cashing in on the favourable exchange rate,” said chief executive Promoth Manghat.

Now top banks are predicting further pain for the pound.

Banks that include HSBC, Goldman Sachs, Deutsche Bank and Bank of America all expect the pound to come under further pressure after tumbling about 6 per cent this month as traders eye Brexit-related risks.

The dollar, to which the UAE dirham is pegged received a further boost last week after the publication of positive retail industry data.

The pound has been a big driver of global currency volatility since Britain voted to leave the European Union in June.

The pound dropped about 10 per cent immediately after the vote and has extended losses since to almost 20 per cent.

A “flash crash” of the currency on October 7 created more concerns around negotiations with Brussels on the country’s departure from the EU.

scronin@thenational.ae

Follow The National’s Business section on Twitter

RAK ring-fences troubled investments in $1.5bn fraud investigation

Ras Al Khaimah is ring-fencing troubled overseas investments worth hundreds of millions of dollars in a special company as it seeks the extradition of its former investment chief from Saudi Arabia.

The National has learnt that the northernmost emirate is transferring a slew of purchases that were overseen by Khater Massaad, RAK Investment Authority’s (Rakia) former chief executive, a 63 year-old dual national of Switzerland and Lebanon, as it claws back funds from a decade-long spending spree.

It intends to wind up the company as early as next year, by which time it hopes to have recouped as much as 50 cents on the dollar spent on the portfolio before litigation and settlement amounts.

Mr Massaad is being held by Saudi authorities. He was detained at Jeddah airport last month on an arrest warrant issued from the UAE that relates to his conviction, in his absence, last year in Ras Al Khaimah on fraud charges. This is part of a wider US$1.5 billion fraud and overpayments investigation.

He denies all charges against him by his former employer and challenges the judicial process that led to his conviction.

In an exclusive interview, a senior Ras Al Khaimah official has revealed for the first time the purpose of the company that few people outside the emirate’s leadership will have heard of.

RAK Development and its assets represent an eclectic mix of purchases made during the heady decade of lavish deal-making before the global financial crisis.

“The principal reason for the establishment of RAK Development was to ring-fence the troubled assets and bring focused management and expertise to address the complexities associated with distressed assets,” said Jamie Buchanan, a spokesman for the RAK Government. “This is in keeping with the totally transparent approach we have taken with ratings agencies and other interested parties. Our investigations identified serious malpractice, malfeasance and corruption. As a matter of policy rather than sitting on it, and if you sit on these things they will ultimately come out, we said here’s the problem and here’s what we’ve done about it.”

Some of the purchases being transferred to the troubled assets unit have triggered investigations into fraud and embezzlement that span continents and involve overseas government officials and business executives. Others relate to projects where suspected overpayments have been made but may or may not involve allegations of fraudulent activity.

Among the companies being transferred to the unit is the Sheraton Tbilisi hotel in Georgia and a massive infrastructure project in the Indian state of Andhra Pradesh.

Ras Al Khaimah aims to conclude the work of RAK Development by June next year by which time the assets it controls are expected to either be sold, written off or returned to health and transferred to other RAK-owned operating companies.

Some of the assets held in the company are also expected to be the focus of planned litigation overseas by the emirate.

It has already retained lawyers and forensic accountants, with legal fees running into many millions of dollars to date.

By consolidating all the troubled assets into one company it could make it easier for the emirate to tap international debt markets should it seek to sell bonds in the future.

It says ratings agencies are already aware of the work of RAK Development and have taken full account of its activities in their most recent ratings.

Standard & Poor’s in its latest update for the emirate affirmed its A/A-1 rating with no negative watch. The ratings agency was unavailable for comment when contacted by The National.

Mr Massaad was a key figure in building tile maker RAK Ceramics into a global brand, which helped to rapidly raise his profile in an emirate that lacked the hydrocarbon wealth of some of its neighbours. His success in turning what was a small provincial factory into the world’s biggest tile maker propelled him into his next role, leading Rakia, where he was appointed chief executive in 2007. Over the next five years he oversaw an unprecedented spending spree overseas until leaving the auth­ority and the country in 2012. Forensic accountants hired by the authority are now trying to unpick some of those deals and following paper trails and cash transfers that one official described as “untangling spaghetti”.

Mr Buchanan says that, in addition to his Swiss and Lebanese citizenships, Mr Massaad holds passports from Georgia and Kyrgyzstan.

For the first time since his arrest on September 20, Mr Massaad last week issued a statement through a Saudi legal firm reiterating his innocence and highlighting his contribution to the economy of the emirate. “I have been told that the request by RAK for my extradition is based on two criminal judgments against me and others in the RAK courts dating from 2015. These allegations are made by the emirate itself acting as the owner of the businesses. However, I have never been served with a summons for either of the two cases made against me, which means I have never been able to defend myself in court. Indeed, I do not even know the particulars of the allegations,” said Mr Massaad in a statement from Jeddah, where he is being detained.

Ras Al Khaimah in a statement rejected the claims by Mr Massaad that he was unaware of the case against him.

“It is not true that he had no notice of the allegations put to him,” said Mr Buchanan in a telephone interview. “On num­erous occasions representatives of the government of Ras Al Khaimah have met with him and his lawyers to discuss the allegations and set out the findings of a wide range of investigations into his conduct as a senior civil servant.”

He says claims by Mr Massaad that he was unaware of the allegations against him were “disingenuous and false”.

The court saga is being watched closely by the legal fraternity in the UAE and Saudi Arabia as lawyers from both sides dig in for what could be a protracted court battle.

scronin@thenational.ae