Dubai re­buffs Kuwait bid to re­lease funds

Kuwait Times - - Front Page -

DUBAI: Dubai’s ruler has re­sisted ef­forts by Kuwait to re­lease nearly $500 mil­lion in frozen funds at the heart of a money laun­der­ing probe strain­ing re­la­tions be­tween the two Gulf al­lies, ac­cord­ing to cor­re­spon­dence seen by Reuters. The in­ves­ti­ga­tion is tak­ing place as the United Arab Emi­rates tight­ens fi­nan­cial reg­u­la­tions to fight a per­cep­tion among some for­eign in­vestors that it is a hot spot for il­licit money flows ow­ing to its free trade zones and prox­im­ity to Iran, the tar­get of US sanc­tions.

The frozen funds be­long in part to the Kuwait gov­ern­ment and have been frozen at Dubai’s state-owned Noor Bank since late 2017, when the emi­rate’s pub­lic pros­e­cu­tor, in col­lab­o­ra­tion with Kuwait’s prose­cu­tors, started prob­ing the law­ful­ness of their trans­fer to Dubai from the Philip­pines. Ex­ec­u­tives in­volved deny wrong­do­ing. “I am fully con­fi­dent the joint ef­forts of Kuwait’s Pub­lic Pros­e­cu­tor Of­fice and Dubai’s Pub­lic Pros­e­cu­tor Of­fice will re­sult in fair so­lu­tions to this case and uti­lize the le­gal sys­tem to ad­dress dam­ages in­curred by share­hold­ers,” Dubai ruler Sheikh Mo­hammed bin Rashid Al-Mak­toum said in a let­ter dated Nov 3.

He was re­spond­ing to a let­ter sent by Kuwaiti Prime Min­is­ter HH Sheikh Jaber Al-Mubarak Al-Ha­mad AlSabah in Septem­ber ask­ing for help to re­lease the funds. “In light of the se­vere dam­ages to gov­ern­ment agen­cies and other in­vestors due to the con­tin­ued freeze on th­ese funds, we ask your high­ness to di­rect your rel­e­vant en­ti­ties to swiftly re­lease the funds,” Sheikh Jaber had writ­ten. Reuters ob­tained a copy of both let­ters.

The cor­re­spon­dence is the lat­est twist in a case be­tween two of the rich­est coun­tries in the Gulf Co­op­er­a­tion Coun­cil. The $496 mil­lion in ques­tion be­long to Port Fund, a Cay­man Is­lands-reg­is­tered fund that is part of a Kuwaiti pri­vate equity group. Two gov­ern­ment en­ti­ties, Kuwait’s port author­ity and the coun­try’s pen­sion fund, had in­vested in the fund and are owed around $200 mil­lion. Kuwait’s prose­cu­tors have charged two Port Fund di­rec­tors for al­legedly em­bez­zling funds that the Kuwait Port Author­ity and the Pub­lic In­sti­tu­tion for So­cial Se­cu­rity had in­vested in Port Fund. The ex­ec­u­tives deny that.

A spokes­woman for the Dubai gov­ern­ment said: “UAE ju­di­cial author­i­ties are await­ing a fi­nal judg­ment from Kuwaiti courts on the funds frozen in Dubai to trans­fer them back to Kuwait based on in­ter­na­tional stan­dard laws and pro­ce­dures.” The of­fice of Kuwait’s prime min­is­ter did not re­spond to a re­quest for com­ment on Kuwait’s de­mands and on the con­tent of the let­ter sent in Septem­ber. Kuwait had fol­lowed up that let­ter a month later with a re­newed re­quest from the at­tor­ney gen­eral to his coun­ter­part in Dubai, which de­tailed how the funds should be dis­trib­uted to the Kuwaiti gov­ern­ment en­ti­ties, as re­ported by Reuters last month.

The money was frozen at the be­hest of the UAE cen­tral bank in Nov 2017 to de­ter­mine if the funds sent from a bank in the Philip­pines to an ac­count of Port Link, which man­ages Port Fund, con­sti­tuted money laun­der­ing. US-based law firm Crow­ell and Mor­ing, which rep­re­sents Port Fund, told Reuters the money was a le­git­i­mate pay­ment after Port Fund sold its in­vest­ments in the Philip­pines. — Reuters

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