Eric Lewis can tell a good gag. A partner with the New York firm Lewis Baach, he knows it's all about timing.
Mr Lewis has been working for the Al Gosaibi family of Saudi Arabia ever since their world collapsed in a maelstrom of fraud allegations, international legal actions and billions of dollars worth of debt in May 2009.
The family, one of the kingdom's most venerable merchant dynasties, pointed the finger at (now) estranged family member Maan Al Sanea, whom they accused of stealing the family fortune and running up the mind-boggling debts.
Mr Al Sanea denies the allegations and has taken legal action on three continents to protect his reputation
All that is history, but the affair is still having big repercussions in Saudi financial circles, and among the 110-odd banks still owed billions.
Mr Lewis was in Dubai recently, addressing a conference of fraud experts (lawyers, accountants and investigators) in the emirate, and he used his speech to put the Al Gosaibi affair into global perspective. But there was a sting in the tale too.
"Is business culture in the Middle East different?" he asked. The answer was yes, and no.
Yes to the extent that there are different family and cultural practices compared with the West, more overlap of ownership and management, and historically less reliance on audited standards. This all adds up to the practice of "name lending", which has been seriously tarnished by the Al Gosaibi scandal and has virtually disappeared in the kingdom, if not elsewhere in the Gulf.
But on the other hand, business is business everywhere in the world, said Mr Lewis, and the Middle East is no different. The normal criteria of commercial banking must be applied: due diligence on borrowers must still be undertaken, and security provided, whatever the borrowers' names; "know your customer", whether through personal relationship or detailed study of the accounts, is an imperative.
So what went wrong with the Al Gosaibis? Mr Lewis asked. The banks failed to get to know the family and relied instead on relationships with expatriate employees and with Mr Al Sanea. Above all, the banks ignored their own policy on lending and turned a blind eye to transactions that made no sense.
It was at this point that the stand-up in Mr Lewis took over. He proposed an "alternative outcome" and bid the audience to "imagine where we would be today if the banks that received this email had undertaken due diligence to protect their interests".
He then flashed up on PowerPoint an email dated 2001 signed by "The Whistleblower" - apparently an expatriate executive at The Money Exchange, the AlGosaibi unit at the centre of the scandal. He says the email was sent to about 25 of the biggest AlGosaibi creditors, warning them of financial irregularities at the companies and telling them to do due diligence before it was too late.
The email was strongly worded: "the financials are a joke, completely fabricated … the crunch is coming". It was designed to ring alarm bells among the creditors.
But the banks, said Mr Lewis gravely as he wound up his tour de force, ignored the warnings.
It was the first time the "Whistleblower" email had been revealed, and even seasoned observers of the long-running saga took a sharp breath when Mr Lewis pulled the email from his hat. There are apparently a couple of dozen others from the same source, all warning bankers that their loans to The Money Exchange were at risk. As far as we know, none of the creditors followed up the email, said Mr Lewis.
You can understand his logic. If the international banks now seeking repayment of billions by the Al Gosaibis and Mr Al Sanea were warned all that time ago that their loans were at risk and did nothing about it, their moves now to seek repayment of the sums are undermined.
No doubt that it, and other "Whistleblower" emails, will feature as evidence in the legal actions in New York, London and the Cayman Islands.
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
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.”
Indoor cricket in a nutshell
Indoor Cricket World Cup – Sep 16-20, Insportz, Dubai
16 Indoor cricket matches are 16 overs per side
8 There are eight players per team
9 There have been nine Indoor Cricket World Cups for men. Australia have won every one.
5 Five runs are deducted from the score when a wickets falls
4 Batsmen bat in pairs, facing four overs per partnership
Scoring In indoor cricket, runs are scored by way of both physical and bonus runs. Physical runs are scored by both batsmen completing a run from one crease to the other. Bonus runs are scored when the ball hits a net in different zones, but only when at least one physical run is score.
Zones
A Front net, behind the striker and wicketkeeper: 0 runs
B Side nets, between the striker and halfway down the pitch: 1 run
C Side nets between halfway and the bowlers end: 2 runs
D Back net: 4 runs on the bounce, 6 runs on the full
