Thursday, Aug 21, 2008

(Adds background, comment.)

DUBAI (Zawya Dow Jones)--Four employees of Dubai-based real estate developer Sama DubaiSama Dubai have been arrested and are being questioned by Dubai's Public Prosecution on allegations of bribery and mistrust, according to documents seen by Zawya Dow Jones Thursday.

One of the people being held is Abdulsalam Almarri, chief executive of Sama DubaiSama Dubai's The Lagoons project, Public Prosecution documents show.

Sama DubaiSama Dubai, which is part of state-owned Dubai HoldingDubai Holding, the conglomerate owned by Dubai's ruler Sheikh Mohammed bin Rashid al Maktoum, wasn't immediately available to comment, saying that its executive chairman - Farhan Faraidooni, according to Zawya.com - is presently out of the country.

The arrests at Sama DubaiSama Dubai are part of a widening police dragnet among senior corporate executives in the emirate, in what is a concerted effort by government officials to crack down on corruption.

Dubai is at the center of the Gulf region's construction boom triggered by the introduction of foreign ownership rights in 2002. The emirate expects to attract 184 billion U.A.E. dirhams ($50.1 billion) in real estate investment by 2010.

Dubai HoldingDubai Holding's real estate companies are at the forefront of this boom. TatweerTatweer, which is developing the emirate's $110 billion DubailandDubailand project, and Dubai Properties, are also part of the same group.

The Sama DubaiSama Dubai arrests follow a series of corporate scandals beginning in April.

Earlier this week, Dubai-based Palm developer NakheelNakheel said that an existing employee and a former employee are being questioned on suspicion of bribery.

Dubai government officials told Zawya Dow Jones Tuesday that Egyptian national Karim Masaad, who NakheelNakheel said resigned as a sales executive a month ago, is being questioned in connection with alleged wrongdoing while working for the developer.

Masaad is the second person held by Dubai authorities in the NakheelNakheel investigation. Walid Al Jaziri, NakheelNakheel's general manager for sales, is also being questioned, the officials said.

Earlier this month, Adel Al Shirawi, the former chief executive of Islamic-mortgage lender TamweelTamweel (TAMWEEL.AI) and deputy chairman of Istithmar WorldIstithmar World, was arrested on suspicion of embezzlement.

Recent arrests suggest that Dubai's ruler Sheikh Mohammed bin Rashid Al Maktoum wants to clean up the emirate's reputation to ensure foreign investment continues to flow into the emirate as it seeks to position itself as a world-class tourism, real estate, financial and transport hub.

In a rare statement, Sheikh Mohammed's office earlier this week warned that "there will be no tolerance shown to anybody who tries to exploit his position to make illegal profits."

"Transparency is a problem in the U.A.E. but right now the government is increasing its regulatory role," said Marius Maratheftis, Standard Chartered Bank's head economist in Dubai.

Privately-held Sama DubaiSama Dubai is developing eight projects across the Gulf region and North Africa, including the estimated $17.7 million The Lagoons project in Dubai and the Mediterranean Gate project in Morocco. It also has projects in Bahrain, Oman, Qatar and Tunisia.

By Majdoline Hatoum, Mirna Sleiman and Stefania Bianchi, Dow Jones Newswires; +9714 364 4962; majdoline.hatoum@dowjones.com

Copyright (c) 2008 Dow Jones & Company, Inc.

(END) Dow Jones Newswires

21-08-08 1028GMT