In the early part of the past decade, two of the biggest solicitors of cash for Bernard Madoff's investment scheme could regularly be found in the cities of the Gulf pitching their funds over lunch meetings and boardroom presentations.
Sonja Kohn, the Austrian founder of Bank Medici, and Philip Toub, an executive at Fairfield Greenwich Group, were regularly seen in Abu Dhabi, Dubai and Bahrain with investment managers and sovereign wealth funds.
"They were all over the region pitching their funds and often local investors loved the idea," said one UAE financial adviser who was involved with several deals for funds to be invested with Madoff.
Abu Dhabi Investment Authority (ADIA), the largest sovereign wealth fund in the world, originally placed US$400 million (Dh1.46 billion) with Madoff through Fairfield Greenwich but eventually redeemed $268m of it. The fund has publicly admitted it had $132m invested in a fund with exposure to Madoff.
Other investors across Bahrain, the UAE and Kuwait managed to redeem hundreds of millions of dirhams invested with Madoff before the collapse of the Ponzi scheme, according to a financial adviser involved with the deals. Some of these investors are being targeted in a series of lawsuits from the court-appointed liquidators involved in the Madoff case. They are seeking to recover profits made before the collapse, which would be distributed among victims.
The deadline for those suits ended yesterday, but not all the cases have emerged.
Like funds and investors around the world drawn into the scheme, the allure of the exclusivity of Madoff's fund and the seemingly bulletproof returns attracted Gulf investors, said sources familiar with the transactions.
Mrs Kohn, who stood out in her travels around the region as a grandmotherly Austrian banker and who wore a large red wig because of her adherence to Orthodox Judaism, was seen as a European power broker with strong ties to the elite Swiss banking world.
Introduced by a former trade commissioner of Austria, she frequently boasted of her close relationship with Madoff, according to a financial adviser to a local investor.
"She was a good marketer with lots of connections around the world," said the adviser.
On Friday, Mrs Kohn was accused by Irving Picard, the court-appointed liquidator of Madoff's estate, of being the single largest source of funds for the Ponzi scheme and an accomplice to the crimes he committed. She and 53 others involved in the alleged "Medici enterprise" are being sued for $19.6bn - triple the amount lost because of the allowance for penalties under US law.
"Sonja Kohn went by many names and operated under many guises, creating an international network of spurious investment entities and masterminding an illegal scheme not only to support the Madoff fraud but also to enrich herself, her family, and the largest banks in Austria and Italy," said Timothy S Pfeifer, Mr Picard's attorney. Mrs Kohn could not be reached for comment.
Mr Toub, described by a fellow investment banker who encountered him while he was promoting the fund in the region as "slick, Miami Beach-type guy", was responsible for maintaining Fairfield Greenwich's relationships with some of the region's institutional investors, including ADIA. Married to a daughter of the founder of the Connecticut fund, Mr Toub rose up the ranks of the company to become responsible for investors in the Middle East and Brazil.
In an e-mail to his colleagues in August 2008, disclosed as part of the lawsuits originated by Mr Picard, he described how he was trying to raise new money from an Oman sovereign wealth fund to replace money being redeemed by investors during the financial crisis. Two years after the revelation that Madoff's investment fund was the largest Ponzi scheme in history and the source of widespread financial ruin, encounters with Mrs Kohn and Mr Toub are serving as a reminder of the need for due diligence and a healthy dose of scepticism when it comes to investments, say bankers.
"Few regional investors will even touch hedge funds right now," said Kamran Malik, an executive director of the Dubai office of Julius Baer - which did not invest in Madoff. "Cases like Madoff make them more sceptical about non-regulated entities."
But investors can often have a short-term memory when it comes to frauds, said John McGaw, a senior adviser at Golden Oryx Business Development in Abu Dhabi.
"The whole concept of risk has been highlighted by problems overseas, especially cases like Madoff," he said. "Probably the mentality for a lot of the Emirati investors is to hang on to what cash there is and at the same time to try and deal with investments that have gone wrong. Inevitably though, they will start getting bold again and risks will increase."
* with additional reporting by Asa Fitch
bhope@thenational.ae
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
THE BIO
Ms Al Ameri likes the variety of her job, and the daily environmental challenges she is presented with.
Regular contact with wildlife is the most appealing part of her role at the Environment Agency Abu Dhabi.
She loves to explore new destinations and lives by her motto of being a voice in the world, and not an echo.
She is the youngest of three children, and has a brother and sister.
Her favourite book, Moby Dick by Herman Melville helped inspire her towards a career exploring the natural world.
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The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
Killing of Qassem Suleimani
Killing of Qassem Suleimani
Killing of Qassem Suleimani
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
Manchester United's summer dealings
In
Victor Lindelof (Benfica) £30.7 million
Romelu Lukaku (Everton) £75 million
Nemanja Matic (Chelsea) £40 million
Out
Zlatan Ibrahimovic Released
Wayne Rooney (Everton) Free transfer
Adnan Januzaj (Real Sociedad) £9.8 million
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
What is graphene?
Graphene is extracted from graphite and is made up of pure carbon.
It is 200 times more resistant than steel and five times lighter than aluminum.
It conducts electricity better than any other material at room temperature.
It is thought that graphene could boost the useful life of batteries by 10 per cent.
Graphene can also detect cancer cells in the early stages of the disease.
The material was first discovered when Andre Geim and Konstantin Novoselov were 'playing' with graphite at the University of Manchester in 2004.
