Business-friendly Bahrain... yeah right

The Rise and Fall of Gulf Finance House

“The Rise and Fall of Gulf Finance House” a report authored by three Reading University postgraduate Islamic Finance students has certainly ruffled a few feathers. A copy of the report can be found here.

This report provoked a response allegedly from an ex-employee that has been doing the rounds by email, and is reproduced in full below:

The report is a very bad report!

For the following reasons:

1) The Authors are very unknown and just trying to claim some credit!

2) The Authors are very unfamiliar with any tangible information and they are just trying to get some credit for a dead horse that they did not know anything about and that they still don’t know anything about! (لين طاح الجمل إكثرت سكاكينه!)

3) The analysis is so academic (analysis of decline in assets and profits, etc.) and doesn’t include any “qualitative” analysis; i.e. why really this happened (every loser blames his shit on the global financial crisis!)

4) The Authors of this report could be best described as amateurs who are happy with themselves learning big terminologies. They failed to identify even the smallest part of the problem.

5) By producing this silly report they are giving so much credit to GFH to be a “real” investment bank!!

6) The Authors have no clue that the bank they are talking about and trying to analyze in such a lengthy report doesn’t and didn’t even exist except in the eyes of the naive people who only saw the growth of the gimmick business called GFH, without realizing that the whole GFH was nothing more than a real estate trader with a rosy picture of a bank … It was nothing more than a glamorous version of the latest scandal of the BD 38 million pulled off by that Bahraini from Sanabis!

7) Nothing about GFH was real .. Nothing but lies .. No real products; i.e. Where is BFH (though it was the very first mega project is Bahrain)?! Nothing but 2 lousy buildings! But this is not BFH! … BFH was supposed to be almost a city. The 2 towers at BFH are successfully operational only because they are now owned by some powerful man, not because it was a “real” product by GFH. This powerful man forced the 2 towers to be profitable.

8) In fact to make these unreal products and cover up for them, GFH intentionally hired fresh college graduates and other juniors who would not know better and naturally wouldn’t have the courage to question anything. The report fails to mention anything about the management (the people who were running this operation). At the height of its time (in 2005 – 2007), the average age of the employees in the investment department was 26-28 years! Most of which never worked in any other place! This was done purposefully. During the same period the investment department was running without a head; the head of the investment department resigned and his position was empty for almost 2 years, during which several mega projects were launched. The report doesn’t mention anything about the number of seniors and heavy weight bankers hired only to be fired after less than 6 months for raising their voices in opposition to the very wrong banking practices conducted at GFH! One of the latest examples is that Lebanese-Australian CEO who did not last for more than few months!

9) This report could be applied to a real bank with real products, but not to GFH. Examples of their “false” products:

1. Balexco: they bought it, charged the investors a premium, without having a plan for doing anything with it!

2. BFH: The original DVD of the project was showing building a “city” that was supposed to be ready by 2008 (before the crises, so no one should blame this not happening on the financial crises!) It is worth mentioning that the project was launched in 2003, but they prepared the market study in 2005 after the auditors complained of not having any supporting business study for this “mega” project!

3. Dubai Land: They sold the residential lands to “their own” (the managers’) companies to sub-sell it and made tons of money (which is big time fraud). BUT, they never build the theme park (Legends) which was the reason for giving them the land in the first place. Finally, the Dubai government gave up on them and withdraw the land after 2 to 3 years of not showing any development for the theme park!

4. Al-Areen: started as a $66 million project. After a month, it became $80 million, another 3 weeks it became $180 million. This was 3 days before officially launching the project. On the official launch (within 3 days) it became a $600 million project with no feasibility study ever made. The project was sold before the Government allocates the land and before even the Government confirming its size! … These are only examples, the other products follow the same path.

10) The business model of GFH is a very well known one in the fraud world. GFH applied 2 well known techniques called the Ponzi scheme and Pyramid scheme. Here are their definitions: http://en.wikipedia.org/wiki/Ponzi_scheme and http://en.wikipedia.org/wiki/Pyramid_scheme. Ponzi and Pyramid schemes are very similar to each other with some differences.

11) After reading the definition of Ponzi Scheme, here are real examples to show that GFH followed this scheme:

1. Balexeco: It made loses unlike what they promised investors (due to lack of any real plan). So GFH “exited” the investors and paid profit to Balexeco investors out of its own pocket (out of new “unreal” products)!

2. Menajet: same as Balexeco.

3. Injazat: same as Balexeco.

4. Dubai Land (Legends): same as Balexeco.

5. Real estate project in Spain (Andalusia): same as Balexeco J

6. A number of losing real estate projects and companies and others: sold to its subsidiary Khaliji Commercial Bank at a profit!

7. And when they were done with the above, they sold their losing businesses to their partners in crime (some Kuwaiti Islamic investment company) at a profit in return for GFH buying its partners’ losing businesses and paying them a profit. In other words, widening this Ponzi Scheme.

8. I don’t know of any of GFH’s investments that made money except for KFI (Capivest now) and that is because Capivest followed the same business model!

12) After reading the definition of Pyramid Scheme, here are real examples to show that GFH followed this scheme:

1. GFH products from 2007 onward were partly sold by marketers who were not employees of GFH. They were marketers in other banks and companies who would sell GFH product on behalf of a GFH placement officer in return for sharing the commission between the two. In other words, the placement officer of GFH would set and collect commission for just “recruiting” other marketers, very much similar to a typical Pyramid Scheme.

13) The report doesn’t speak of any fraud or malpractice! It is enough to know that the CEO (Chairman now) of GFH was and still the chairman of all of the SPV’s and subsidiaries of GFH (numbered 36 plus), effectively allowing him to buy and sell from himself as he pleases to create bogus transactions! The report doesn’t speak of any conflict of interest.

14) Lastly, the report doesn’t even talk about any regulations or regulatory issues (to my surprise) and that is one of the reasons why I believe the Authors are amateurs. Can you imagine, for example, a report about the rise and fall of Enron or Lehman Brothers without having a section about regulatory issues! But again I am not surprised because all of this happened because of lack of regulations and professional environment. In my opinion, 90% of the blame goes to the CBB for allowing this to happen in the first place!

Part 2

Everyone knows that GFH charged premiums and took mark-ups, etc., but that wasn’t the problem, for example, none of the billion dollar investments where billion dollar investments! GFH just liked that propaganda to deceive people. Most of these investments where much less than a billion. This is not a secret! This information is published in their PPM’s! This deception is to confuse investors with the huge markups!

The economic and financial data published in GFH’s PPM’s had no support; no reference to any official meaningful data. If a school kid would had written that for a school project he would had gotten an “F” grade. But the CBB put a seal of approval on them!

Another example, Energy Bank, as per its PPM, it was set to have a capital of $750 million, but the product was oversubscribed for to $1 billion. Typically, and as an industry practice, GFH was supposed to return the extra $250 million, but instead it kept it. So again, this is public information, GFH announced (as per its CEO): “due to the oversubscription for Energy Bank, GFH has decided to increase the capital of Energy Bank to $1 billion”. The report should talk about this joke and should talk about the position of the CBB (if any)! Any central bank in the world would have asked GFH: How would you suppose to accommodate for the huge amount of $250 million in the business plan for Energy Bank? How would this amount (which is by itself is another capital for a bank) would affect returns and the performance of the new bank?! From this “public” data, they could have concluded that there was no business plan for Energy Bank to begin with. And I don’t think GFH could sue them for this logical conclusion!

The report, if it was really professional, should have had the “input” or “position” of the CBB and also the role the CBB played (if any) from the beginning to control (regulate) or to contribute to this miss. The report doesn’t even hint to any entity to be responsible for this tragedy. The only thing was left to say in the report was to blame all of what happened on the rain!! The tone of the report conveys a sad and deceiving message: that what happened was bad luck due to bad times!

Now this is what we are missing here: What we are talking about here is not personal “3agrah” about GFH, but it is about the economy and banking industry and fraud and Regulator (CBB), and how we can understand it better to prevent it from happening again. I would have wrote the same about any other bank (if I had the information).

You cannot claim that you have the “best regulator” in the region (the mighty CBB) and then a bank with the size of GFH is let alone to operate on its own without any control or regulation. Otherwise, why people strive to establish banks in Bahrain?! .. they would simply go to Somalia!

Ex Employee of GFH

P.S. Again, sorry for the lengthy comment, but the topic is beyond GFH. It is about our livelihood and future and economy.

I first came across GFH in 2002, and quickly realised that you should not do business with these shysters at all costs… so in some ways it is satisfying to see their come-uppance now, but sad that the party was allowed to continue for so long, and that respectable financial institutions in Bahrain are likely to be tarred by the same brush.

Expect a lot more articles to follow as the rest of the world catches on to Bahrain’s home-grown version of a banking business model based on fraud, and gullible investors. And then there are several other financial institutions, whether linked to GFH's shareholders or not, who imitated GFH’s “successful in the boom-times” business model…

And where was the CBB in all this? It seems that the people who were supposed to regulate began to see the world through the eyes of its most “successful” private sector player.

Ministry of Culture & Information Website wins the Best e-content

Very funny... click on the "Ministry of Culture & Information Website win the Best e-content" link on their website, and what do you get... a blank page.  And this is from the best e-content website in Bahrain... says it all.

UPDATE: 26 May 2010... all the Ministry's news links have now disappeared, and clicking on "read more" gives another broken link...

Is Bahrain open for tourism?

A letter sent to Bahrain Tourism via their website:

Is Bahrain open for tourism?

Is Bahrain open for tourism to passport holders other than those listed on the eVisa website as able to obtain a visa on arrival? Evidence would suggest not.

In assisting Indonesian friends to obtain a tourist visa, the eVisa website states that “You must have a sponsor who can apply for a visa on your behalf. Contact one of the following for assistance:

• Your airline.
• Your intended hotel in Bahrain.
• A Bahrain travel agent.
• A Bahrain company which is willing to sponsor you.
• A Bahrain citizen who is willing to sponsor you. “

Upon enquiring to the 4* and 5* hotels (Sheraton, Diplomat Radisson, Crowne Plaza, Mercure, Elite, Regency Intercontinental) mentioned by the same website, the response in each case (for those that bothered to respond) was that hotels are only able to obtain business visas, and visitors still needed to be sponsored by a company in Bahrain. From my understanding this was not the case in the past. So effectively if tourists from countries such as Indonesia are not family members or relatives of residents in Bahrain, they are denied access to the country as tourists. Does Bahrain not realize that people from other countries can legitimately want to visit Bahrain to visit friends, to see the cultural and historical sites and shop?

What a shame for Bahrain’s tourism strategy in so many ways… what are you going to do about this?

Regards,

xxx

And their response:

Delivery Status Notification (Failure)

From: "postmaster@info.gov.bh" postmaster@info.gov.bh
Add to Contacts
To: xxx

Delivery Status Notification (Failure).eml (7KB)
______________________________________
Note: Forwarded message is attached.

This is an automatically generated Delivery Status Notification.

Delivery to the following recipients failed.

ahmed.fathi@info.gov.bh

Reporting-MTA: dns;HQEXCHBE.moi.gov.bh
Received-From-MTA: dns;hqexchfe.moi.gov.bh
Arrival-Date: Wed, 19 May 2010 14:44:27 +0300

Final-Recipient: rfc822;ahmed.fathi@info.gov.bh
Action: failed
Status: 5.2.2
X-Display-Name: Ahmed Fathi Sayed Shaheen

You get the picture... Not only is it not possible to get a tourist visa for nationalities who are unable to obtain a 'visa on arrival', but like most websites in Bahrain, you can't communicate with them... why do websites bother with 'Contact Us' details or forms to complete?  Why not just state "don't bother to contact us.... this is Bahrain... get over it!"

So, to wrap up, only 3 hotels bothered to respond (Sheraton, Elite Grande and RadissonBlu). Another, Gulf Hotel even disqualified themselves from being asked to respond, since both email addresses attempted from  their website were rejected.  Algosaibi Travel Agents, the only listed travel agent on the eVisa website also didn't respond.

On seeking further clarification from the 3 hotel respondees that they were actually saying they could only provide assistance in obtaining business visas, which you had to get a company to sponsor anyway... and therefore making the hotel's assistance obsolete (but ensuring they can't accommodation pre-paid for!!), only one, Sheraton, responded a second time.  The response being:

Please note that we are only arranging a business visa. We are not processing a visit visa.

So it seems you have to use an under-the-table arrangement with a Bahraini visa agent to get his company to sponsor a visit visa... Is this the Tourism Sector of the Ministry of Culture and (Dis)Information's official tourism strategy?  Presumably.  The same Ministry that promotes Bahrain with propoganda like this:

Yeah right!

Airline price fixing in the Middle East? ...Surely not!

It’s that time of the year when thoughts turn to summer holidays, or in our case, winter holidays in NZ. And without fail, it's the yearly (or 2-yearly) battle with travel agents and airlines to get suitable flights at a suitable price from the Gulf to NZ. The one advantage with my current employer is that they pay business class flights for self and family once a year to my home country - of that fact, I can't complain!

I used to think that the travel agent’s were intellectually challenged when it came to trying to book flights, but each year it has become obvious that it is not just their fault that makes it so difficult to book flights, but something more sinister about the system they have to work with. I smell a rat… Why, when a travel agent, any travel agent, tries to book flights from Bahrain to NZ, the only viable option seems to be Cathay Pacific?

Only Emirates, and now very recently, Etihad, will allow travelers from Bahrain to NZ to book tickets online (though given the difficulties in the past with online bookings, that may be smoke and mirrors, and it maybe that you can’t actually book and pay online… I don’t know, I haven’t tried….yet). Emirates prices are so outrageous though that again you are forced on price anyway to take the Cathay route… via the Travel Agent (plus Emirates flight times suck!).

Over the years, in Bahrain and Kuwait, we have routinely put up with reservations being cancelled by Agents without warning, sometimes leading to re-bookings at higher prices and non-ideal dates, or being forced to make reservations for several different tickets with different Agents in the hope that one Agent/Airline will be able to confirm waitlisted bookings… and this is often 6-8 months in advance. One year we persevered with Thai Airways (and Kanoo Travel) to get tickets to NZ via Bangkok so we could have a stopover holiday, but we were on a waitlist for one of the legs for over 6 months. Last year they refused to let us pay for tickets as prices hadn’t been released by Thai Airways even a few weeks before the flight!!

So, roll around this year…

Prices for bookings via Travel Agent – 1 adult business class to N.Z. return:

Cathay Pacific BHD 1,485
Thai Airways BHD 2,331
Singapore Airways booked out for all the dates I want apparently
Emirates BHD 2,670
Etihad BHD 2,175

Etihad online price if I book myself = BHD 823. Yes, that’s right… if I avoid the travel agent I can buy tickets myself for almost a third of the price.

Either the airlines, or the agents appear to be artificially inflating prices to ensure business goes to Cathay Pacific on this route to NZ. It makes no sense for the other airlines to have exorbitant prices if they want custom, but it does make sense for the travel agents if Cathay is paying them better commissions… If customers realise they can now book online with Etihad (assuming the online booking system works), then this could be a breaking of the cartel on this route. But then, as in my current situation, most companies prefer to book flights for their employees themselves, and continue to prop up the cartel system.

Wouldn't it be nice if my employer would just give me the cash for business class flights instead!

UPDATE 26 May 2010: Yeah, should have known... Etihad website shows timetable for flights to NZ, but when I try to book any flight it then says unable to book flights for those dates, no matter which date you enter...

Villamar project update

An update on my earlier post on Villamar...

The word on the street is that most of the Villamar apartments were sold to speculators (like most of these projects, so nothing new there) who paid deposits only and then defaulted on making instalments... (and as an aside, many of those purchasers were GFH staff and associates. Given that many GFH staff have been laid off, don't expect they will be following through with their instalements!).  One building at least was bought outright by another developer on a downpayment.  They were then going to pay the original developer once monies were collected from end-users... same problem - end-users only put down deposits and then walked away/defaulted, with only 5-10% paying their instalments.
So to wrap up, speculators/end-users not paying the developer and/or other intermediaries, developer is not paying contractor, and contractor has stopped construction. Just what you would expect when a property bubble bursts, and not unexpected when the prices being fetched for dream apartments were at eye-watering levels.  And, this being the Gulf, the contractor hasn't started legal action to recover its costs yet due to the close relationship it has with the project sponsor - none other than GFH.

Of course, the word on the street maybe completely inaccurate... but any insiders are welcome to comment and tell me what I've got wrong!

Oh yeah, and the half-built development was scheduled for completion in June 2009... Aren't there any newspaper journalists out there with the guts to question Gulf Holding Company's blatant PR lies?

Bahrain's majlises sign petition to kick out British Ambassador

Yesterday the GDN finally provided something of value... a list of people not to do business with on any terms.  Unfortunately, the GDN isn't so kind enough to provide a PDF of that page, even though they have PDFs on their website of every other page for that day.  So here's a scanned version - click on this link or the image below.


Majlis petition

We can't let our slaves go on vacation or renew their visas, because [please insert excuse here]

Another example of defending the indefensible... In today's GDN, Habib Ali Awachi and Sons Company list a plethora of excuses for not letting staff go on vacations or renewing their visas, after one of their slaves labourers complains that he hasn't been allowed a vacation for six-and-a-half years, and they hadn't renewed his visa after it expired three years ago.  The story about the man who is getting a little desparate now and claims his wife is threatening to kill herself and their two children because his company "allegedly" refuses to send him home, is printed on the same page.  He also claims there are 150 others in a similar situation.

Habib Ali Awachi and Sons Company's response is laughable and repeated below in full.  What is the Ministry of Labour or the LMRA doing if they are allowing these shenanigans to continue?  Why isn't the company blacklisted and their CR annulled? 

Is there any property or infrastructure developer in Bahrain that applies ethical standards in awarding contracts to construction companies, or even attempts to vet them to ensure they meet the minimum criteria for treatment of their staff?

Construction crisis blamed for delays in labourers' vacations

Posted on » Thursday, March 11, 2010

A CRISIS in the construction industry was yesterday blamed for delays in vacations and the renewal of visas at the Habib Ali Awachi and Sons Company.
Chief executive officer Zuhair Awachi admitted the visas of several workers had expired, while others had been denied holidays.
He blamed global financial turmoil, delays in payments from clients - including the government - and a tax on expat workers for crippling the construction industry.
But he claimed the company was now in the process of cancelling the visas of its workforce and sending them back home.
"We are aware that visas of some of our workers have not been renewed," he told the GDN.
"And we also know that many have applied for annual leave, but their applications have been rejected.
"We are cancelling their visas and sending them back to their countries.
"We have already sent 28 last month and 10 at the beginning of this month.
"The reason is that we didn't get BD800,000 from one of the ministries and, on top of that, we have to spend a lot of money on expat workers when we bring them to Bahrain to work for us.
"We are spending a lot of money on their training, and Labour Market Regularity Authority (LMRA) and General Organisation for Social Insurance (Gosi) fees.
"The LMRA knows our situation very well, we are suffering as a construction company and due to budget problems.
"We haven't received payment from ministries for several months and we have an official letter from them asking us to bear with them.
"We, as a local company, can only wait and try to finish the work on time - but foreign companies abandon the work and leave the country.
"What happened in the case of the Isa Town flyover? The company (Sungwon) took the government to court.
"We as locals can't do that as we are Bahrainis and we have to live and work in Bahrain, in good or bad conditions."
Mr Awachi said the company had already flown home hundreds of workers in the past six months, and said 100 more were due to leave within two months.
"We have 800 expats and 250 Bahrainis working for us and we increased the basic salary for each employee last year," he added.
"Our company is located on the road - it's not hidden and everybody knows about it.
"The problem is that we can't satisfy all our workers and, unfortunately, we have to send them back.
"Around 100 workers are already on the list and we will finish the list in two months' time.
"We are now processing their documents and finalising their settlements so that they can leave for good and forever.
"Everybody knows that liquidity in the market is very low and, for us, it was really a bad season.
"In the last six months, 240 workers left Bahrain and we are looking for more idle manpower to be sent back."
Mr Awachi revealed that family funds were being pumped into the company, but said he hoped for a quick recovery from the crisis.
"We have high hopes that Bahrain will recover soon and all the sectors, not only construction, will boom again," he added.

Villamar project is on track says GHC. Yeah right!

In today's GDN, Kuwait-based Gulf Holding Company (GHC) attempts to defend the indefensible. Word on the street is that work on the Villamar project is at a standstill due to the lack of liquidity. You only have to look at the building to see that work has stopped.  Those cranes have stopped moving.  Meanwhile, as per the press release in the GDN...

"Construction on three towers of the flagship project is progressing round the clock," GHC senior investment relations officer Ahmad Al Shammari said....

..."Work on the development never stopped for a single moment and is progressing round the clock, because of the availability of sufficient liquidity needed to finance the construction coupled with the company's determination to deliver the development on schedule," he added.

Sorry mate... telling porkies ruins you and your's firm's credibility.  When will companies in this region wake up to this simple fact.  This is not an isolated case - this is the norm.  Last week we had a similar denial of the facts from the failing Amwaj Gateway project. When will these people learn that lying in public won't help their cause... the only people they can hope to influence with their lies are those that know the facts anyway.  Those naive enough to believe the lies probably don't care... they won't haven't invested/speculated on property in the development.

Rapists must not escape justice

The GDN has an article today from Women's Rights campaigners following up on the story I blogged earlier.

Rapists 'must not escape justice...'

By REBECCA TORR , Posted on » Monday, March 01, 2010

WOMEN's rights campaigners are demanding urgent changes to a draconian law that they claim encourages rape.

Under current Bahraini legislation, rapists are escaping punishment dished out by the courts by marrying their victims after they have been convicted.

Victims often agree to the marriage because of the social stigma, fearing that having been raped they will be unable to find another husband.

However, activists claim that in most cases the rapist divorces his victim soon after the marriage - having already secured his freedom.

They are now calling for changes to the law so that convicted rapists have to serve their full prison sentence, regardless of whether they marry their victims or not.

Batelco Care Centre for Family Violence Cases president Dr Banna Bu Zaboon argued the current law actually promoted violence against women.

"Because of the stigma in society they (the victims) agree to get married, but it causes more problems and leads to further sexual and physical abuse and psychologically it is very damaging," Dr Bu Zaboon told the GDN.

"In most cases they don't stay married because they (the rapists) say they never intended to marry a girl they already know."

In the latest case reported by the GDN, a convicted rapist sentenced to three years in jail was allowed to walk free after judges heard that he had married his victim - who had previously worked as his housemaid.

Bahrain Human Rights Watch Society secretary general Faisal Fulad said the loophole was simply a get out of jail free card for rapists.

"Imagine he raped her for a few weeks and beat her and when they come to the judge he says if you marry her you will be free," said Mr Fulad, who is also a Shura Council member.

"How is this? It's against human rights. Even if he (the rapist) doesn't divorce her straight away there is nothing to say he won't divorce her in three months, six months or one or two years later.

"This is not correct. He should go to jail under the rape law and then if he wants to marry her or not that is up to him.

"He should be punished otherwise the law will be very weak in society and make men feel it's easy to rape."

Mr Fulad warned that unless laws were toughened up rape would remain a silent crime.

He now plans to raise the matter with the Shura Council's women's committee.

"This law is weak against rape, we need the law to be tough," he said.

"A woman who is raped will be a shame in society, so she will feel forced to marry.

"I'm sure there are many women who are raped in Bahrain that don't talk because they feel shy or something bad in society.

"This will make her physically and mentally sick and this guy will rape again.

"We need better protection for women against rape."

Meanwhile, Bahrain Women's Union president Mariam Al Ruwaie said her organisation had long been campaigning for changes to the law and had already held meetings with decision makers - including a special committee set up by parliament.

"This law needs to be changed because he (the rapist) makes a marriage agreement with her (the victim) and then a week or one month down the line he divorces her," said Ms Al Ruwaie.

"We demand another law to protect women from violence.

"We think the rapist should be punished for his crime and there should be a law that gives women more protection against violence."

becky@gdn.com.bh

If you get caught as a rapist, marry her...

No wonder rape is so prevalent in this part of the world, if the guy has a 'get out of jail free' card... and the victim usually has no say in the matter. I can see why living in a country practicing shariah law can be quite attractive if you are a bloke. In today's GDN...

Rapist spared after marrying his housemaid
By NOOR TOORANI, Posted on » Monday, February 08, 2010

A CONVICTED rapist was yesterday released from a three-year prison sentence after marrying his victim.

The Bahraini was convicted by the High Criminal Court last year of raping his housemaid after luring her into a room.

Judges sentenced him to prison despite the woman dropping the charges against him.

He then lodged an appeal at the Supreme Criminal Appeals Court and his defence lawyer Majed Al Shehabi submitted a marriage certificate last week.The man appeared in court with his lawyers yesterday where he was acquitted by the judges.

The court axed the case after lawyers argued that the law stipulates that criminal charges are dropped if the man charged with rape marries the woman.

It is understood the defendant was earlier released from police custody on bail as his appeal case was underway.

Dubai's The World sinking?

According to the UK's Daily Mail, the islands in Dubai's World islands development are rapidly merging together and also appear to be sinking. The original article can be viewed here.

Naturally, the property developers, Nakheel vehemently deny this. Who is right? Time will tell. Certainly the NASA photo shows the huge differences in reality versus the myth that was promoted to investors (see image below).

The load-bearing capacity of The World islands' reclaimed land mass is about twice that of mainland Dubai, Nakheel noted.

I'm not a geologist or construction engineer, but I'd like to see some support for that statement from someone knowledgable in this area...

What a shame Nakheel has left New Zealand off in their map of the world... I guess we can be thankful that a true paradise is not caught up in Dubai's folly.

Bahraini taxi drivers attempt to fleece tourists

Today's chuckle from the GDN...

Premier orders probe
Posted on » Monday, January 25, 2010

MANAMA: An inquiry was ordered yesterday into the events that followed the docking of luxury cruise liner Brilliance of the Seas at Khalifa bin Salman Port on Saturday.

His Royal Highness Prime Minister Prince Khalifa bin Salman Al Khalifa ordered the inquiry after taxi drivers allegedly demanded $300 to $400 for taking tourists to Manama. Newspapers also criticised the manner in which officials received the management of Royal Caribbean International, the world's largest cruise company. HRH the Premier said such incidents created a bad impression about Bahrain and ordered the suspension all officials concerned (sic).

Welcome to Bahrain! Of course this type of incident creates a bad impression of Bahrain, however residents of Bahrain will no doubt feel like it is a good thing that the problem has finally caught the attention of the PM... Being naturally skeptical of any ministerial attempt to act, a probe to find someone to blame will probably mean that an expat or two gets fired, as is the way with these things... while the Bahraini taxi drivers will remain indifferent to any attempts to change the way they act. I kind of hope that more incidents like the docking of the luxury cruise liner are made public, and real attempts to reform are initiated... but change needs to start at the top, with those currently immune from reform. If that doesnt happen we will only continue to get window dressing, and half-hearted attempts to solve issues in the country.

As I sit in my office and see and hear VVIP motorcades pass by all hours of the day, most days, with police stopping all other traffic to ensure that the VVIPs are treated with the uppermost respect (not understanding or caring for the contempt it breeds instead), I wish the same VVIPs would also get the chance to sample life in the real world and put up with the same traffic issues everyone else on the island suffers from.

Saudi women have rights.... yeah right!

Just another example of craziness from our neighbours...

Saudi women gym shut
Published Date: January 21, 2010

RIYADH: Health authorities in Jeddah have shut down an "illegal" women's fitness centre attached to a hospital, closing one of the few venues where Saudi women are able to exercise, local media said yesterday. Although health officials have repeatedly blamed the high rates of heart disease and diabetes in the kingdom on poor diets and lack of exercise, health authorities said women's fitness centers were not allowed.

Anyone who violates regulations governing the running of health facilities would be punished severely because this involves people's health," Jeddah health official Muhammed Abdul Jawad told the English-language Arab News. The reports did not identify the Jeddah hospital affected, but a photograph in the Saudi Gazette showed an official sealing the club door with an announcement reading "Closed on the order of Jeddah Health Affairs.

While gyms for men in the gender-segregated conservative Islamic society
are permitted, women's health clubs are forbidden, despite a clear demand shown
by a surge in underground facilities in the past two years. But last year a number of stand-alone women's gyms were shut, though some attached to or inside hospital premises continued to function. The reports said the country's municipal and rural affairs ministry had recently closed two other gyms in the Red City of Jeddah and one in Dammam, eastern Saudi Arabia. - AFP

Hmmm... so let me understand this... a Jeddah health official closes woman's gym because this is a health issue. In other words, we don't want Saudi woman to be healthy... we like them obese and to die early from health complications. (please note sarastic tone!)

Freedom in the World 2010 Survey Release

On January 12, Freedom House released its findings from the latest edition of Freedom in the World, the annual survey of global political rights and civil liberties. Excerpts from the report's overview on Bahrain are as follows:

In Bahrain, political rights suffered as a result of the harassment of opposition political figures and discrimination by the minority Sunni elite against the Shiite majority.

Bahrain’s political rights rating declined from 5 to 6 and its status from Partly Free to Not Free due to arrests of prominent members of the Haq political society, an increase in systematic harassment of opposition political figures, and worsening sectarian discrimination.

The full survey, including the individual country reports, will be available in late spring 2010.

Shaikh Eisa not guilty... yeah right

What a joke! Members of a Royal Family are beyond the justice system, whichever Gulf country you are in. Shaikh Eisa's mates forced him to take all those pills so he was out of his mind... yeah right.

The One-Eyed War against Corruption in Bahrain

An article reproduced in full from the Bahrain Center for Human Rights, which by the way has it's website blocked by Bahrain's Ministry of (mis)Information and Culture.

The One-Eyed War against Corruption in Bahrain:
Chasing minor suspects of corruption while senior officials enjoy impunity
The Elected Members in the Council of Representatives and Municipality have to carry out their Responsibilities and not withhold any Information related to Corruption cases, Otherwise they are Associates in It
The Role of Media and Civil Society Institutions has to be activated to Fight Corruption
10 January 2010
The Bahrain Center for Human Rights is observing with grave concern and worry the double standards with which the Authority is dealing with corruption cases, and the apparent discrimination in the methods of dealing with the suspects in those cases. At a time where the smaller suspects in cases related to corruption are imprisoned and exposed both in the local newspapers and government media before even issuing any court ruling against them, and contrary to the principles that the accused is innocent until proven guilty, and imprisoning some of them in an arbitrary manner contrary to the reasonable period of detention for interrogation, and the ambiguity surrounding the charges brought against them or the laws they are based upon; yet on the other hand – and contrary to the rights of the individuals that they are equal before the law and their right to equal protection without any distinction or discrimination – on the other hand the leading officials accused in cases of corruption who received bribes or have taken over public lands remain not only on the loose but are clinging to their posts in complete impunity from monitoring or legal questioning, as they are either members of the ruling family or they are closely allied to one of the pillars of the regime.

In an unannounced campaign launched by the Deputy King and Crown Prince of Bahrain Sheikh Salman bin Hamad Al- Khalifa to fight corruption by making a group of subsequent press releases that are against corruption, and threatening the corruptors of the justice that will reach them, and the statements which were accompanied with some arrests of a group of officials in several government institutions or state-owned companies, and some of those arrests and detention processes were carried out in an arbitrary and exaggerated manner just to prove the credibility of this campaign against corruption and against the manipulation of public funds; however, all these cases and claims that were investigated only targeted by interrogation or detention of the middle and junior officials only, and it did not dare to reach the main people who remained on the loose all the time, maintaining their high posts in the state. These double standards in dealing with the cases of corruption and corruptors weakened the credibility and seriousness of this campaign led by the Crown Prince against corruption, as it did not reach the main deficiency and it did not exceed the red lines, and they are the untouchables and are immune individuals who are the main ones responsible for all these cases.
The claims and cases related to corruption and which were raised in the last couple of years in Alba Company[1] can be an example of this double standard approach in executing these laws. Some of the Bahraini newspapers[2][2] published a news piece that was sent by the Public Prosecution to the Bahraini newspapers stating that it had issued orders to arrest the officials in the marketing department in Aluminium Bahrain (Alba), on the charges of receiving commissions from a foreign company in exchange for reducing the sales price of the company’s products[3][3]. The Public Prosecution initiated the investigation with the defendants and they are two of the small officials in the company, the two defendants were kept in detention and undergone investigation for a period exceeding 8 months, and they were not informed of the nature of the charges against them or what the laws that these charges are based on. They were released on 5th June, 2008, after their health had deteriorated because they got infected with the dangerous tuberculosis disease[4][4] due to them mixing with one of the infected inmates[5][5]. Since their arrest, all their bank accounts and members of families’, including the minors’ bank accounts as well were frozen; their monthly salaries were suspended and their freedom to dispose of their properties was restricted. The arrest and detention campaign was followed with a smear campaign against them before issuing any court ruling that condemns them, and this campaign started since their moment of arrest and even before the interrogation started, either through the statements sent by the Public Prosecution which did not include their names, or through the leakages that were instigated here and there, and the intention of conveying it to the public opinion from various sources including the alleging company. It was apparent that some of the government bodies were working on convincing the public opinion at that time of the seriousness and firmness of the authority in this campaign to eliminate corruption, as well as to fulfill some of the requirement that is needed for some free trade agreements that was sign or to be signed like the one Bahrain did with the US government.

Most of the investigation with the suspects revolves around doubts that they received commissions from a mediating foreign company in exchange for reducing the sales price of the company’s products, and the institution accused of paying those commissions is the Swiss Glencore International AG[6][6] a global commodity trader[7][7]. What is surprising is the company’s contradicting performance in this file, as the Bahrain Aluminium Company (Alba) had struck a deal with this company that is accused of paying those commissions, and that deal states that Glencore International AG becomes the exclusive marketing agent to sell the company’s ( Alba ) products in the Asian countries. At a time where the company rewards the accused company ( Glencore International AG ) by striking this deal, those suspects in Bahrain face trial with the above mentioned charges.

In another case related to corruption in the same state-owned Bahrain Aluminium company (Alba) run by a called Bahrain Mumtalakat Holding company, the Wall Street Journal[8][8] published in several stories at different times, a news piece that states that the Aluminium Bahrain Company (Alba) filed a civil lawsuit to the specialized Federal Court in the United States against the ALCOA American Company[9][9] regarding immense corruption processes represented in that the company and for 15 years specified supply contracts to a group of companies founded by a consultant that holds the Canadian passport, and he is a partner of (Alcoa) as a secret way to pay the illegal commissions in order to get the tenders of providing (Alba) with the alumina substance, and that (Alba) paid two billion dollars more than the price in the market, in return for transferring that money as commission to the former Bahraini official, who is the former Minister of Oil and member of the King’s family Sheikh Isa bin Ali Al-Khalifa[10][10]. Despite the magnitude of this case, no investigation or lawsuit was initiated against this official, and that Alba company or the Mumtalakat that runs it, who had presented other people to court on charges relating to corruption and receiving money as commissions, had totally overlooked its responsibility in filing a criminal lawsuit in Bahrain against the above mentioned minister as he is a member of the ruling family. Yet, his work as a advisor for the Prime Minister in a rank of minister was not stopped, especially that this case exceeds a hundred times the former one in the magnitude of presented amounts of money and the clarity of charges, and even the Public Prosecution which is considered a branch of the judiciary did not carry out the role it is assigned to as an impartial judiciary body, and it did not initiate any lawsuit although this case is considered one of the largest corruption cases in the history of Bahrain. This civil case was accompanied with several lawsuits or criminal investigations that reached the same issue outside Bahrain and specifically in the United States and Europe, but the government of Bahrain who was the main loser turned a blind eye to all that as if the matter did not concern it.



Since the current King of Bahrain came to the throne, the process of appointing members of the ruling family occupy high executive ranks in the government or owned or run by the State institutions, companies and administrative boards accelerated. Those posts are given to them as privileges enjoyed by the ruling family away from their academic or professional background, or ability to hold those posts. For the first time, since the independence of Bahrain, the percentage of the members of the ruling family exceeds the total number of Sunni and Shiite citizens in the Council of Ministers[11][11] and around 50% of the board of directors of those companies that belong to government. This policy contributed in the spread of favoritism, tribal and accessibility factor in the government institutions and bodies on the expense of proficiency, professionalism and perfection at work which is no longer considered the standards used for the gradual growth of career in these institutions, and this had a large impact in flaccidity and poor performance and production of many of the government institutions. What is worrying in this matter as well is that those individuals, as they are members of the ruling family, are not subjected to monitoring or questioning usually, and there are no records that any of them was presented to court on any charges relating to corruption or bad administration, Bahrain is even considered one of the few countries in the GCC that has not presented any of the members of its ruling families to court, in a time where it is considered the most one which has members of the ruling family dominating the vital posts in the country, as well as its executive, economic and judicial bodies. The policy of Khalfana[12][12] that is happening to the vital posts in the state has led to that the majority of these government institutions, run by them, become in full impunity from questioning, monitoring and financial and administrative accountability.
While Sheikh Salman bin Hamad Al-Khalifa, King Deputy, Crown Prince, and President of the Economic Development Board and who is the first economic official in the governing body and who is responsible for initiating the campaign against corruption, had stated at an earlier time, ‘The campaign against corruption will not exclude anyone, and the hands of accountability and justice will reach any minister or official if he is proven to be involved in any case of corruption’[13][13]. However, the Bahraini authorities or the property institutions did not commit to these statements and dealt in apparent double standards in this case as opposed to the former ones and where the suspects were minor employees, in order to immune the above mentioned official from the hands of justice.
It became known today that the eminent officials in the country, and members of the ruling family, are participating in large investment projects that depend on taking over wide areas of public lands, and especially in the lands buried from the Bahraini beaches in what is estimated to have a value of billions of dollars, while the general budget and the states potentials are used to provide infrastructure to those privately-owned enterprises. Note that the Bahraini constitution prevents combining the public job with the private investment work.
While the Council of Representatives formed a investigation committee in the buried lands, and several MPs presented the case of overtaking state lands by influential figures, and the members of the municipal councils disclosing a large quantity of information relating to that, neither the Council of Representatives nor the members of municipal councils announced until now the information they have or the results they reached, and none of the officials have been questioned yet. They believe that the dominance of the influential figures in the state institutions, and the fear of the MPs and municipal councils from their influence, the publishing of any of that information or taking any procedure against those figures will be banned.
In light of the failure of the elected representatives of the people in treating the case of corruption or even exposing it, the media and civil society institutions specialized with human rights and transparency remain either pursued or prohibited from work, activity and expression or they are subjected to the influence and power of the influential figures themselves which makes their role marginal in treating corruption.
At a time where the Bahrain Center for Human Rights welcomes any course to eliminate corruption which includes the campaign of the Crown Prince Sheikh Salman bin Hamad Al-Khalifa, it yet believes that dealing with cases of corruption with double standards will weaken the credibility of this campaign, and any intention to fight corruption has to begin from the top by stopping the senior heads from depleting the state funds and it capabilities, this course if taken will give more public support and credibility in front of the local and international public opinion. The BCHR recalls the first article of the Universal Declaration of Human Rights that states, ‘All people are born free and are equal in dignity and rights’.
The Bahrain Center for Human Rights demands that the principle that all individuals are equal before the law should be respected and promoted, as was stated in the first paragraph of the International Covenant on Civil and Political Rights that states, ‘All persons shall be equal before the courts and tribunals. In the determination of any criminal charge against him, or of his rights and obligations in a suit at law, everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law.’ At a time where the BCHR believes in the necessity of eliminating corruption, it calls for the caution from exaggeration or arbitrariness with the suspects of minor employees or exposing them in the media in aim of convincing the media of the gravity of this campaign. The first paragraph of Article 11 of the Universal Declaration of Human Rights states that, ‘Everyone charged with a penal offence has the right to be presumed innocent until proved guilty according to law in a public trial at which he has had all the guarantees necessary for his defense.’
The Bahrain Center for Human Rights demands that public liberties should be released and especially the ones related to the press and the non-governmental bodies that should play a major role in fighting corruption or stopping the restrictions against them by trials or indirect punishments. It also demands the members of the municipal councils and Council of Representatives to take the responsibility and trust granted to them by the people to reveal, disclose and fight the corruption process otherwise they are associates in the corruption if they are proven to be negligent in carrying out their legislative and monitoring responsibilities in fighting corruption or if they were proved to cover up information relating to corruption.
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[1][1] Aluminium Company owned by the government of Bahrain
[2][2] Alwasat, Issue number: 1839 | Wednesday 19 September 2007
[3][3] Alwasat Newspaper http://www.alwasatnews.com/1838/news/read/253045/1.htm
[4][4] http://www.alwasatnews.com/2068/news/read/292891/1.html
[5][5] Alwasat Newspaper http://www.alwasatnews.com/2100/news/read/298746/1.html
[6][6] Glencore International AG http://www.glencore.com
[7][7] Alwasat Newspaper http://www.alwasatnews.com/2375/news/read/40975/1.html
[8][8] The Wall Street Journal – Role-Reversal: Bahraini Firm Sues Alcoa, Alleging Corruption – February 28, 2008
[9][9] ALCOA American Company is the largest alumina producer in the world and the third largest producer of aluminium, and it used to provide Aluminium Bahrain (Alba) with the alumna substance, and it is the main substance used in making aluminium, since the establishment of the company in 1971 http://www.alcoa.com/global/en/home.asp
[10][10] The Wall Street Journal – Alcoa Faces Bribery Probe After Bahrain Suit – Published March 21, 2008
[11][11] http://www.bahraninet.net/showthread.php?t=39489
[12][12] The sons of Al-Khalifa, and which is the ruling family in Bahrain, taking over the place of the Bahraini citizens
The Wall Street Journal, page B6 - Alleged Kickbacks at Glencore Probed - http://online.wsj.com/article/SB123639633890259917.html
[13][13] Alwasat Newspaper http://www.alwasatnews.com/1849/news/read/254985/1.html


View article...

Tighten visa rules for Russian, Thai, Ethiopian and Chinese women to combat prostitution? Somehow I don't think so

As reported in today's GDN...

Bid to curb women's visas blocked

PARLIAMENT blocked an attempt by a group of MPs to tighten
visa rules for Russian, Thai, Ethiopian and Chinese women to combat
prostitution.
Al Asala bloc proposed an urgent curb on women from these
countries, saying they made up the majority of prostitutes. It wanted the
proposal to be sent to the Cabinet for immediate action.
Other MPs acknowledged that prostitution was on the rise, but said the proposal should be discussed with the Interior Ministry without the mention of any nationalities.
They said instead of going after the victims, they must focus on tackling
human trafficking.
The MPs said it was an opportunity to listen to ministry officials on the issue and get the related statistics.
Independent MP Dr Aziz Abul said attacks on nationalities would have repercussions on Bahrainis visiting these countries.
"We have ties with these countries and making such allegations, even if true, means that we dislike them. There are other nationalities involved. Why are those excluded? Parliament financial and economic affairs committee chairman Abduljalil Khalil said Al Asala bloc was attacking the prey and leaving the predator.
"We should be looking for ways to combat having such women trafficked to Bahrain.
"Ministry officials should be called to give us an insight into what they have done to combat sleaze and give us figures. I see no logic in asking the government to tighten visa rules.
"There are respectable women from these countries who work in
companies, restaurants or as maids." Services committee chairman and Al Menbar
MP Dr Ali Ahmed said one of the countries mentioned was probing women being
trafficked to Bahrain.
"They don't accept what is happening and are taking measures to ensure their women are not brought here. I was present when they discussed the issue in their parliament.
The MPs were backed by Minister of State for Parliament and Shura Council Affairs Abdulaziz Al Fadhel, who promised that the Interior Ministry would discuss the issue with parliament. He proposed that the duty could be carried out by parliament's foreign affairs, defence and national security panel.
However, Al Asala MPs demanded that the issue is referred to the Cabinet.
"We are bombarded with calls from people complaining about these nationalities in particular and numbers on the street speak for themselves, so why wait for the Interior Ministry?" asked Al Asala MP Abdulhaleem Murad.
"Everything is clear. The Interior Ministry will in the end agree that rules for visit and work visas to these nationalities should be tightened."

It's good to see that there are some Parliamentarians demonstrating common sense when dealing with the intellectually challenged who want to implement a simple solution which does nothing to solve the issue and causes a lot of collateral damage. Unfortunately we see this all too commonly where a sledgehammer is deemed the most useful tool to crack a nut... Kuwait tried it with the Bangladeshis, only to rescind the ban a few months later when they tried to implement it.

If Bahrain is serious about dealing with prostitution it must address some fundamental religious-societal issues. The supply is there because of demand. Some of these religious-societal factors which would contribute to demand for prostitutes, and this may well be more applicable in general terms to visitors from a neighbouring country, would include the treatment of women as chattels and all that it entails, such as the enforcement to cover up, the lack of equality between sexes under sharia law, and not allowing men and woman to develop healthy platonic relationships; or, if you consider another 'customer' grouping driving local low-cost demand, a public policy to import low-cost foreign male labour, but not allowing in their wives and families...

If the Interior Ministry wants to implement sledgehammer like policies, I suggest they implement a ban on Saudi males that are not accompanied by female family members as a start... I can see that happening, NOT! But as part of pan-arab cooperation efforts, it may help out a fellow Gulf tourist destination that is short of cash at the moment - Dubai.

But seriously, I can't see how the issue of prostitution will be resolved in Bahrain, no matter what the Interior Ministry comes up with. There are too many powerful vested interests to keep things as they are on the supply side... I can only assume that the odd prostitution racket that is busted is due to their sponsor not having powerful enough wasta, and/or is a way of removing freelancers and other competitors from the cartel that is probably operating in this industry as in most other industries in the country. And as for tackling the demand side... what can be done without a wholesale religious conversion or reformation, or change of attitude (for those not religiously-inclined).

Passport discrimination

Discrimination by race, sex, nationality, etc. is sad... so it was good to see Dubai receiving a record fine for refusing entry to a lady on the professional tennis circuit because she was from a country that the UAE don't recognise.

Shame it is only high profile cases like this that make news, when thousands are discriminated based on the passport they carry... like, the unfortunate Iranian student from British School of Kuwait who was refused entry to the Young Musician of the Gulf competition in Bahrain because he was on an Iranian passport! It will be little consolation to him that the three other members of the quartet competed without him and won their category in the competition.

Update - seems like UAE authorities have learned their lesson somewhat by letting in an Israeli for the men's tennis competition.

Human trafficking at the Crossroads

So whilst one Government Ministry is sponsoring this upcoming conference in Bahrain, where I'm sure lots of nice words will be said, sadly the Council of Deputies are heading off in the other direction and through their actions supporting human trafficking... and if it seems like I'm using a leap of logic here... ensuring the abused is viewed as a criminal, rather than the abuser, means that not only are a runaways human rights being denied, but it is encouraging human trafficking to continue unabated, as an underground network is required to circumvent the legally enshrined human rights violations...

So, is this Conference just a talking shop to demonstrate to the rest of the world that Bahrain is serious about stopping human trafficking, with the underlying reality being that those in power aren't really serious about stopping human trafficking, as it suits too many vested interests? (Kind of like the "Business Friendly Bahrain" PR... reality is very different from a PR campaign). Or, will some concrete proposals for action come from this conference?

As for the MPs and their proposal to fine the runaways... I guess this is what can be expected from people who yearn for the good old days when slavery was legitimate. The GDN has a good editorial on the issue in today's GDN - 18 Feb. 2009 - but unfortunately the GDN doesn't make editorials available online.