The political upheaval in Egypt and Tunisia has triggered a surge in money flowing out of both countries.
But now that Hosni Mubarak, the Egyptian president, has followed the Tunisian head of state Zine al Abidine Ben Ali and stepped down, European "safe havens" are preparing to examine his assets abroad.
Widespread protests finally saw Mr Mubarak leave office over the weekend and his decision to go will renew scrutiny over the legitimacy of some Middle East assets sitting in bank accounts in places such as London and Zurich.
Suspicion that certain politicians in Egypt and Tunisia were benefiting unfairly from their positions in government was one of the reasons behind the mass protests.
"Economic growth can be a driver of illicit flows," says Karly Curcio, an economist at Global Financial Integrity (GFI), a think tank in Washington. "When there's more cookies in the cookie jar more people want to get their hands in there."
Globally, illicit flows of cash totalled US$1.26 trillion (Dh4.62tn) in 2008, a rise of 18 per cent from the start of the decade, according to GFI. Much of that money flowed from developing to developed economies. China was the biggest source of such funds.
One of the problems for financial crime investigators is trying to differentiate the good money from the bad. Much of the funds, called hot money, flowing from the region in recent weeks has been from citizens merely wanting to safeguard their savings or investors retreating from equity markets. But authorities are worried some of the cash being moved may be suspect.
"It's not always easy to tell the difference between what's dirty and what's not. It becomes even more difficult once it's invested in blue-chip stocks, expensive cars or real estate," says Richard Blaksley, a partner at the corporate investigative firm GPW in London, which has received a flood of calls about potential financial detective work connected to recent north African events.
Analysts say, however, there is a marked difference between illicit flows and hot money looking for higher returns in emerging markets. The movement of money, however, has fuelled recent global tensions, with China blaming quantitative easing by the US for stoking inflation in the developing world.
The Gulf is no stranger to this money. A flood of speculative cash entered the region in 2007 as investors brought in funds on the expectation that local currencies would be revalued. The revaluation did not happen and the financial crisis sparked a sudden outflow of capital, exacerbating the credit crunch.
But while such flows are considered unstable because of their short-term nature they are still legal.
On the other hand, illicit money is cash obtained unlawfully from public sources, or through bribery, tax evasion or other crimes.
Ms Curcio is clear about the role money laundering plays in generating social unrest.
"Illicit money flows play a part in perpetuating instability," she says. "Because of illicit outflows you see a widening of income deficits: the rich getting richer and the poor getting poorer."
But while the developing world may be responsible for much of the problem, regulators also blame leading financial centres sucking the money in.
"More transparent and accountable legal and financial governance is required in the world's financial centres to stop the outflow of stolen assets," wrote Transparency International, the global anti-corruption group, in a working paper on the subject in 2009.
Such centres have been quick to act following the emergence of worries about the assets of Egyptian and Tunisian government officials.
The Swiss government has frozen all funds held by Mr Ben Ali and is examining whether Mr Mubarak has assets in the country. Authorities in both countries are investigating the finances of former key political figures.
If any of the money is proven to have been taken unlawfully, and is recovered, it would provide a much-needed boost to the economies of both countries.
tarnold@thenational.ae
Dr Afridi's warning signs of digital addiction
Spending an excessive amount of time on the phone.
Neglecting personal, social, or academic responsibilities.
Losing interest in other activities or hobbies that were once enjoyed.
Having withdrawal symptoms like feeling anxious, restless, or upset when the technology is not available.
Experiencing sleep disturbances or changes in sleep patterns.
What are the guidelines?
Under 18 months: Avoid screen time altogether, except for video chatting with family.
Aged 18-24 months: If screens are introduced, it should be high-quality content watched with a caregiver to help the child understand what they are seeing.
Aged 2-5 years: Limit to one-hour per day of high-quality programming, with co-viewing whenever possible.
Aged 6-12 years: Set consistent limits on screen time to ensure it does not interfere with sleep, physical activity, or social interactions.
Teenagers: Encourage a balanced approach – screens should not replace sleep, exercise, or face-to-face socialisation.
Source: American Paediatric Association
if you go
The flights
Emirates fly direct from Dubai to Houston, Texas, where United have direct flights to Managua. Alternatively, from October, Iberia will offer connections from Madrid, which can be reached by both Etihad from Abu Dhabi and Emirates from Dubai.
The trip
Geodyssey’s (Geodyssey.co.uk) 15-night Nicaragua Odyssey visits the colonial cities of Leon and Granada, lively country villages, the lake island of Ometepe and a stunning array of landscapes, with wildlife, history, creative crafts and more. From Dh18,500 per person, based on two sharing, including transfers and tours but excluding international flights. For more information, visit visitnicaragua.us.
How much do leading UAE’s UK curriculum schools charge for Year 6?
- Nord Anglia International School (Dubai) – Dh85,032
- Kings School Al Barsha (Dubai) – Dh71,905
- Brighton College Abu Dhabi - Dh68,560
- Jumeirah English Speaking School (Dubai) – Dh59,728
- Gems Wellington International School – Dubai Branch – Dh58,488
- The British School Al Khubairat (Abu Dhabi) - Dh54,170
- Dubai English Speaking School – Dh51,269
*Annual tuition fees covering the 2024/2025 academic year
THE SPECS
Engine: 1.5-litre
Transmission: 6-speed automatic
Power: 110 horsepower
Torque: 147Nm
Price: From Dh59,700
On sale: now
Five expert hiking tips
Always check the weather forecast before setting off
Make sure you have plenty of water
Set off early to avoid sudden weather changes in the afternoon
Wear appropriate clothing and footwear
Take your litter home with you
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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
Fixtures
Tuesday - 5.15pm: Team Lebanon v Alger Corsaires; 8.30pm: Abu Dhabi Storms v Pharaohs
Wednesday - 5.15pm: Pharaohs v Carthage Eagles; 8.30pm: Alger Corsaires v Abu Dhabi Storms
Thursday - 4.30pm: Team Lebanon v Pharaohs; 7.30pm: Abu Dhabi Storms v Carthage Eagles
Friday - 4.30pm: Pharaohs v Alger Corsaires; 7.30pm: Carthage Eagles v Team Lebanon
Saturday - 4.30pm: Carthage Eagles v Alger Corsaires; 7.30pm: Abu Dhabi Storms v Team Lebanon
Top tips
Create and maintain a strong bond between yourself and your child, through sensitivity, responsiveness, touch, talk and play. “The bond you have with your kids is the blueprint for the relationships they will have later on in life,” says Dr Sarah Rasmi, a psychologist.
Set a good example. Practise what you preach, so if you want to raise kind children, they need to see you being kind and hear you explaining to them what kindness is. So, “narrate your behaviour”.
Praise the positive rather than focusing on the negative. Catch them when they’re being good and acknowledge it.
Show empathy towards your child’s needs as well as your own. Take care of yourself so that you can be calm, loving and respectful, rather than angry and frustrated.
Be open to communication, goal-setting and problem-solving, says Dr Thoraiya Kanafani. “It is important to recognise that there is a fine line between positive parenting and becoming parents who overanalyse their children and provide more emotional context than what is in the child’s emotional development to understand.”