标题: 2021.12.15 迪拜的债务陷阱 [打印本页] 作者: shiyi18 时间: 2022-7-30 00:33 标题: 2021.12.15 迪拜的债务陷阱 The Dubai debt trap
Ryan Cornelius has completed a sentence for fraud but he’s lost hope of ever leaving prison
Dec 15th 2021
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By Matthew Valencia
Ryan Cornelius hadn’t even intended to set foot outside Dubai airport. When he boarded a flight from Karachi on May 21st 2008, he planned only on changing planes to travel on to his home in Bahrain. At the last moment, the 54-year-old British businessman decided to stop over in Dubai to meet his business partner.
Three plain-clothes policemen arrested Cornelius as he left the airport. Even in his shock he was struck by how young they were. The police seized his phone and locked him in a windowless room. Customs officers searched him, saying that they believed he was carrying drugs. They found nothing.
At first he thought the authorities had simply made a mistake. Cornelius became more alarmed later that day when he was taken in an unmarked car, hands bound with zip ties, to Dubai’s police headquarters. No one spoke to him en route. As he entered the building, a compact structure with a façade of dark glass squatting between two steel pillars, a hood was placed over his head. After an hour it was taken off, and officers said he’d soon be released. He wasn’t told why he’d been arrested.
Cornelius was interrogated for hours in a padded, windowless room, without a lawyer present, then thrown into a bare cell. For ten days he was held incommunicado, with no access to his family, embassy officials or legal advisers. He didn’t even have a mattress to sleep on. He later learned that his two British business partners had been arrested around the same time.
A second interrogation was conducted by two police officers. Cornelius found it hard to follow their train of questioning. They had a file with them of what looked like invoices, though they referred to them only generally. The senior officer brandished a letter from a Dubai bank and kept asking whether the invoices were faked.
Most questions were about Dubai Islamic Bank (dib), the emirate’s second-largest lender. Cornelius’s property business had taken out a large loan from a German financial firm, which had itself borrowed money from dib for the purpose. From the officer’s rather confused questioning, Cornelius surmised that he stood accused of fraud. He explained to the officials that, though dib had recently accused him and his partners of misusing the loan, everyone involved had agreed a new plan to repay the debt.
Eventually, after grilling him for hours, the officers told Cornelius to make a statement laying out his version of events. Around 30 minutes after he did so, an officer reappeared with a typed document in Arabic, a language that Cornelius neither speaks nor reads. The man said he could leave for Bahrain once he’d signed it. When Cornelius asked for a lawyer, he was told that there wouldn’t be one available for days – by then, the officers ominously asserted, it would be “too late”. Confused and increasingly panicked, Cornelius signed the statement (he later insisted that it bore little resemblance to the interview). Instead of being released, he was returned to his bare cell.
Dubai lacks the oil wealth of its neighbours. To compensate, it turned itself into a commercial hub
Dubai is the glitziest of the seven emirates in the United Arab Emirates (uae). It’s a tourist playground of beaches, turquoise seas and imposing glass towers that gleam in the year-round sun. Entrepreneurs are attracted to Dubai, too, seeing it as a pristine, modern, rule-bound entrepot in which to invest. But foreigners doing business in Dubai are often unaware that local politicians and businessmen – elite figures are often both – may use the courts to pursue vendettas, settle scores or raid assets they covet. Even the smallest debt can lead to years in jail.
Cornelius is just one of thousands of expats who are either imprisoned in Dubai after falling foul of the emirate’s draconian legal system and the powerful people who manipulate it, or who are theoretically free but unable to leave. The crime he was charged with carried a sentence of three years in the uae. Yet, 13 years on, he remains locked up in a high-security prison in Dubai (one of his business partners is there too). He is now 67 and his sentence has been extended twice. His parents have died since he went to jail and he missed both their funerals. He is due to be freed when he is 85.
Born in South Africa in 1954, Cornelius was the son of a Welsh father and a mother of Australian heritage. He grew up in what was then Northern Rhodesia (it became Zambia in 1964), where his father’s company provided steel equipment to copper mines. Cornelius automatically received British citizenship through his father.
His parents weren’t typical colonialists. His mother befriended Kenneth Kaunda, the young firebrand who went on to become the first president of Zambia (he regularly sought her advice over tea at the state house). Cornelius grew up in a family of rugby fanatics, and his childhood overseas made him both resourceful and competitive. While studying in Britain in his early 20s, he played for Saracens, a north London rugby club. To this day, his accent remains unmistakably southern African.
Cornelius followed his father into engineering and, in 1981 he established a company called Aject, which specialised in precision tunnelling. The business environment in the Middle East was tricky, but Cornelius persisted and grew rich on the back of the oil and construction boom of the 1980s. He sold Aject in 1996.
Though he was only in his early 40s, Cornelius was wealthy enough to retire. But the quiet life didn’t interest him. According to Chris Pagett, his brother-in-law, he “was still driven by the same colonial-boy compulsion to show these posh-boy poms that you can make it into the big league”.
Along with some business partners, Cornelius embarked on three new projects, each larger than any that he’d previously attempted: the construction of a marina in Bahrain; a proposal to dismantle a Canadian oil refinery and reassemble it in Pakistan; and the development of a large site in Dubai, branded “The Plantation”, building a 200-room hotel and 110 luxury villas.
This last was potentially the most lucrative. Plans for the Plantation’s equestrian facilities were luxurious even by the standards of a region where the ruling elite has a passion for horses. They included an eventing course, an indoor show-jumping arena, two polo fields and a member’s club with bars and restaurants. It was, Cornelius once quipped, “the equivalent of having Ascot racecourse plonked in Fulham”.
In 2004, the business partners secured a 99-year lease to develop 450 acres of land. At the time, uae was eager for foreign investors to construct the grandiose property developments that would put Dubai on the map. The property market was running hot: new blocks of luxury flats often found purchasers within hours of going on the market. Cash deals were common and few sellers spent much time scrutinising a buyer’s source of funds.
Even so, entrepreneurs found it hard to raise enough for big projects like the Plantation unless they were backed by a major corporate developer. Some specialist lenders, however, made money by taking on riskier borrowers. Cornelius turned to one such firm, cch, which provided capital at a higher rate of interest than a typical bank loan. He hoped that this would help get the project off the ground and convince a mainstream bank to give him and his partners cheaper longer-term financing.
cch was backed by $500m in credit from dib. The chairmen of the two companies were reportedly on good terms – which was useful because Mohammed Kharbash, who headed dib, was also the finance minister of the uae. This gave the project an influential patron, a big advantage when doing business in the Middle East.
Cornelius was “fully implicated” in the creation of fabricated invoices to perpetrate a fraud
By 2007 huge mounds of sand had been excavated at the Plantation site, and much of the ground levelled. The service roads and stables were complete, and the polo fields had been laid. Around 30 plots had already been sold.
Then the financial climate started to deteriorate. The credit crunch was worsening and it was becoming harder to borrow money – a problem that soon exploded into a global financial crisis. Like other lenders, dib started to have second thoughts about its loan books. It had particular misgivings about what the money it had lent cch was being used for. The bank launched an investigation and decided to call in the loan. cch was in no position to repay it straight away, so the two parties negotiated an agreement to pay back the money over the course of three years. The deal, which Cornelius was included in, was signed in August 2007.
dib insisted that Cornelius put up his personal assets, including his family homes, as collateral. Cornelius wasn’t happy about being a personal guarantor, but he believed that his investments were comfortably worth more than the loan. The Plantation alone had recently been valued at around $1bn. In total, Cornelius and his partners provided collateral which they estimated was worth $1.6bn, more than three times the amount that dib had lent them. They reckoned that the new deal would allow them to keep developing the Plantation.
Cornelius and his business partners actually outpaced their repayment schedule to dib (helped, in part, by a further loan from cch). Their first two payments of $25m were on time, and on top of that they repaid an additional $10m. It was shortly after they’d made the second of those payments, in May 2008, that Cornelius was arrested at Dubai airport.
Dubai’s prisons are considerably less luxurious than its hotels. Central prison, where Cornelius is incarcerated, can hold around 4,000 inmates. Each steel-barred cell, which is roughly the size of a shipping container, is supposed to house six inmates, but sometimes two or three more are crammed in and they have to sleep on the floor. Prisoners are issued with thin, rubber mattresses. There is no bed linen, only heavy woollen blankets. Some prisoners don’t even have pillows and instead use empty plastic water bottles taped together.
The temperature in the cells is kept low. The air conditioning runs noisily and ceaselessly; strip lights are left on 24 hours a day. Hanging up anything to dim the brightness is treated as a punishable offence: it might obscure the cameras that monitor the prisoners. Taps drip. One former prisoner wrote that the “constantly running toilets are inhumane and relentless brutal forms of mental torture”. There is no toilet paper, so prisoners have to use a hose. Occasionally, they are allowed to exercise for 45 minutes in a small, concrete yard.
In Dubai, inmates have to buy everything, including soap and detergent for cleaning the cells, as well as newspapers and phone calls. They pay using cards issued to them when they first enter the prison, which can be loaded with spending money if the prisoner is lucky enough to have relatives or friends who can afford to top them up.
Food is one of the biggest expenditures. The menu is bleak for prisoners who can’t afford to buy their own: black tea and a bowl of daal for breakfast; for lunch or dinner, a chicken drumstick and a dollop of rice in yellow gravy which has the consistency of gruel; occasionally a couple of tinned frankfurters with stewed onions. Long-term inmates report that over the past ten years the quality of the meals has steadily declined. They used to receive a couple of pieces of fruit at lunchtime and fish once a week. These have now been cut.
A small range of food items can be bought from outside the prison, by placing an order through the police kitchen. Cornelius buys a hamburger twice a week and pizza on Thursdays. He also orders in bran flakes, milk, tea, coffee and biscuits. And he pays for bottled water so he doesn’t have to drink the water from the fountain at the end of the corridor, which is desalinated and tastes metallic.
Martin Lonergan, who spent nine months in the cell next to Cornelius’s in 2019-20 after getting caught up in a separate business dispute, carried out an informal survey among the prisoners. He reckons inmates lucky enough to have money on their cards spend an average of around 150 dirhams a week, or $40. (As a vegan, he spent 500 dirhams.) “Add in all the other items that have to be bought, multiply it by thousands of prisoners, and Dubai’s prison system starts to look like quite a money-making exercise.”
Cornelius undoubtedly committed fraud. The definition of the crime covers a wide spectrum of wrongdoing: at one end it includes schemes to steal billions of dollars, at the other are lesser forms of deceit that result in no personal gain, such as the failure to disclose information. Cornelius has always maintained that he never had any intention of stealing from dib. He did, however, admit that he used money for riskier endeavours than those for which it was lent. The bank provided credit for short-term needs, but it was instead used to fund unauthorised longer-term projects such as the Pakistan refinery and investments relating to the Plantation.
To pull this off, Cornelius’s business forged invoices for items such as furniture and building materials to match the investment capital being funnelled to the Plantation. A later civil case, brought by dib in Britain, concluded that Cornelius was “fully implicated” in the creation of fabricated invoices to perpetrate a fraud. He was also accused of bribery. The judge accepted the bank’s claim that $342m of the $500m lent by dib had been used for unauthorised projects.
Cornelius and his partners have always said that they intended to repay the loans with the proceeds of sales in the Plantation. A person close to Cornelius says he accepts that he “made mistakes”, but that he’d been assured by cch that he could borrow money to invest if he submitted “certain invoices in a certain way”. Though Cornelius never dealt directly with dib, he has said he was led to understand that the bank was “supportive” of this chicanery.
Dubai attracts Westerners looking to build businesses in a place with a frontier mentality
All the parties knew about the irregularities when they agreed to restructure the loan in 2007. According to an international banker who worked in the Middle East at the time, there was plenty of money washing around and the economy of the uae was booming: “As long as this continued, no one seemed overly worried about what the borrower did with the money, as long as he could be trusted. It’s how business was done back then.” Despite the misuse of the money they lent, dib continued doing business with Cornelius and his partners.
The origins of the fraud charges against Cornelius are unclear. The complaint may have come from dib itself, according to official documents that later came to light, though the bank has always denied this, insisting that Dubai’s police force first raised the concern. According to a legal statement made by Cornelius, during one interrogation a police officer “kept on asking me how much I could repay the bank immediately”.
This line of inquiry surprised Cornelius, because the agreement he and his associates signed with dib contained a specific clause whereby the bank waived its right to bring any claims against the other parties, as long as they kept to the repayment schedule. But the bank was now under new management. Kharbash, the chairman who had overseen the deal, owed his job to Dubai’s emir, Maktoum bin Rashid al-Maktoum. When Maktoum died in 2006, he was succeeded by his brother, Mohammed, and a changing of the guard followed. Many senior members of staff were pushed out, including Kharbash. He left dib in early 2008, a few months before Cornelius’s arrest.
The new chairman of dib was Mohammed al-Shaibani – no ordinary financier but one of the new emir’s closest lieutenants. He had previously overseen the ruling family’s commercial interests in Britain. His appointment at dib was the latest stage in a rise that has seen him become arguably the most powerful person in Dubai outside the royal family. He is now director-general of the Ruler’s Court, which controls the executive arm of government.
As Shaibani’s political star has waxed, his business interests have also grown. He is head of Nakheel, one of Dubai’s largest property developers, as well as the Investment Corporation of Dubai, a $300bn sovereign-wealth fund which holds many of the emirate’s highest-profile assets. He is also a director of Dubai World, a state-owned investment company, and of Dubai Aerospace Enterprise, one of the world’s largest aircraft-leasing companies.
Shaibani’s past calls into question Dubai’s claim to be run by the rule of law. He was involved in two of the most notorious episodes in Dubai’s recent history: the kidnappings of the emir’s daughters, Shamsa and Latifa. In August 2000, Shamsa was abducted from the streets of Cambridge, England, not far from the sheikh’s estate in Newmarket. She was drugged and taken to Dubai against her will. During a dispute between the ruler of Dubai and his estranged wife, the English High Court determined in December 2019 that Shaibani was “closely involved” in the “operation to remove” her and, indeed, that he was present when she was seized. She hasn’t been seen in public since.
Latifa, Shamsa’s younger sister, was 32 when she attempted to flee Dubai in a yacht in 2018. The boat was intercepted off the coast of Goa by Indian special forces, with their uae counterparts in tow. Shaibani’s name crops up repeatedly in messages and audio recordings that Latifa provided to the Free Latifa Campaign. She claims Shaibani was involved in her kidnapping and threatened to have her certified as insane and detained indefinitely. He forced her, she said, to make false statements to British courts and to the UN, which was investigating her case, denying that she was being held against her will.
When Shaibani was installed as dib chairman, he acted decisively. It was widely believed that Kharbash, the former chairman, had been lining his own pockets. Shaibani’s remit was “to clean the stables”, says a lawyer who worked on cases involving the bank. Kharbash was charged with embezzlement in 2009. The outcome of the case is unclear. He died in 2016.
British newspapers call Dubai “the new Costa del Sol”
Shaibani wanted not merely to remove Kharbash, but to crush those who had profited from their relationships with him, according to several British lawyers who have examined Cornelius’s case, as well as Lord Clement-Jones, a Liberal Democrat peer who has campaigned for Cornelius’s release. In one witness statement Cornelius said he believed that dib “took various calculated steps” to prevent him from fulfilling the restructuring agreement. These were “illegal acts of manifest bad faith” committed by the bank “in order to get its hands” on the Plantation.
After Cornelius was locked up in mid-2008, dib either seized or forced him and his partners to sell the assets that they’d pledged as collateral, even though the bank now referred in court to the restructuring agreement as a corrupt document. Detained without bail, Cornelius watched his assets disappear. In March 2010, almost two years after his arrest, Cornelius was tried on charges of fraud and money-laundering.
Things did not go to plan for his accusers. The money-laundering charge was dropped. In August the case took a dramatic turn, when the judge recused himself, apparently unwilling to continue the trial on the basis of the evidence presented. Nevertheless, Cornelius remained in jail. By October 2010 he had already served more time than the sentence he would have received had he been convicted (the maximum sentence for fraud in Dubai is three years, but there is a 25% reduction for good behaviour).
That month, Cornelius was put on trial again, before a new judge, and facing a fresh charge sheet. This time, he, his ex-partners and managers at dib were accused of colluding to defraud and steal from a governmental body. This required some sleight of hand, since the bank hadn’t previously been regarded as a state entity. Though the state held 28% of its shares, both government and bank officials had long portrayed dib as a vibrant market-oriented institution. Nevertheless, prosecutors alleged that the unpaid balance of the loan was a fraud on the state.
Cornelius has argued that neither the government nor anyone else had been left short-changed. At the time of its confiscation, the seized property had been valued at around three times the disputed loan, according to Cornelius. A letter sent from dib to the uae’s central bank in September 2008 stated that “the bank after the acquisition of Plantation is in an excellent position”, without the need for “other safeguards”. dib’s chief financial officer would later confirm in court that “everything is over-covered” and “there is no loss [to the bank]”.
None of this helped Cornelius. In Dubai, the maximum sentence for defrauding the state is ten years. The new judge convicted Cornelius and his co-defendants in 2012, sentencing them to the full ten-year term. The trial was in Arabic so Cornelius couldn’t understand it. His lawyer didn’t speak English. He was told through an interpreter that the judge insisted that Cornelius and his partners still owed dib around $500m from the original fraud, and imposed an additional fine of $500m.
dib tenaciously pursued this debt in Britain and Bahrain, where Cornelius owned other assets. The bank convinced an English court to hand over all three of Cornelius’s properties in London – flats in Pimlico and Tower Bridge, and a house in Maida Vale – which had a combined value of $7m. Cornelius’s defence was hamstrung when the authorities in Dubai refused to let him testify via video link; he was allowed only to submit written statements. The ruling left his wife Heather and their three children without a home. When they appealed to hold on to one of the flats on humanitarian grounds, dib’s lawyers made short work of them.
By May 2016, Cornelius had served the full ten years less the standard 25% reduction for good behaviour, and qualified for possible release. Instead he was kept behind bars with no official explanation for his ongoing imprisonment. He stayed incarcerated for another two years. At that point Cornelius and his business partner were taken without notice or legal representation to a judge’s office, where a lawyer for dib requested an additional 20 years in jail, under the right available to creditors in Dubai to keep a debtor imprisoned for failing to repay the money owed. The judge quickly acceded.
Cornelius later stated that the judge declared that “it was a matter between us and the bank, and that the courts no longer played a part”. In effect, “dib had become our jailer.”
The new sentence was imposed in accordance with Dubai’s Law 37, which was modelled on Britain’s Proceeds of Crime Act, which aims to counter money laundering. Yet Dubai passed this law only two years after Cornelius’s alleged fraud. Retroactivity is proscribed by international law and, says Lord Clement-Jones, “offends every basic principle of the rule of law”. It is also specifically prohibited by the uae’s own constitution.
Cornelius tried to appeal against this new 20-year sentence, but was stonewalled by the prison authorities. He applied five times to appoint a lawyer to file the appeal on his behalf. Each time the prison rejected his request: officials insisted that the law didn’t allow anyone serving a sentence such as his to issue a power of attorney.
With no alternative, Cornelius decided to represent himself and managed to lodge an appeal. But on the day scheduled for the hearing, he was told that his name wasn’t on the passenger manifest for the prison bus. In May 2018 a judge dismissed the appeal because Cornelius had missed the hearing, and denied him permission to lodge another one.
It still isn’t clear why Cornelius has been harried so tenaciously for his debt and held in prison indefinitely. Lord Clement-Jones said in the House of Lords that he believes this to be a consequence of Shaibani’s “personal determination”. He alleged that Shaibani had “intervened personally” with the authorities in Bahrain to reverse the dismissal of dib’s claim against Cornelius. The Bahrain Chamber for Dispute Resolution had dismissed as “groundless” the bank’s claim that Cornelius and his partners still owed it money. The chamber’s judgments are supposed to be final. Four months later, however, this one was overturned. (Shaibani’s representatives were offered the opportunity to comment by 1843 magazine but did not respond.)
Cornelius’s family and supporters believe that Shaibani wanted to wrest back control of the Plantation, a prized jewel of Dubai’s real estate, and that he is trying to prevent Cornelius from seeking recompense through the courts if he ever leaves prison. His relatives reckon that these two objectives have led dib into legal contortions. Perhaps as a way to justify hounding Cornelius, the bank told courts in Dubai and Britain that the Plantation, valued at around $1bn at the time of the arrest, is “essentially worthless and unsaleable”. At different times dib has provided various arguments as to why this is the case: either because of the property crash of 2008, or because the development belonged not to the bank but to the state, since it was classified as the proceeds of crime.
But the picture of itself that dib presented to auditors, regulators and shareholders doesn’t contain a gaping financial hole. A firm of forensic accountants hired by one of Cornelius’s business partners couldn’t find any mention of a loss related to the cch loans in dib’s accounts for 2008 or 2009. Under cross-examination, an official from DIB testified to a court in London that the bank had the right to sell the property.
Cornelius was not once allowed to address the judge during the more than 100 court sessions he attended
dib did not reply on the record to a detailed set of questions regarding Cornelius’s story. But Hugh Lyons of Baker McKenzie, the law firm representing dib in the civil cases against Cornelius, told 1843 magazine that Cornelius is a fraudster, whose conviction has been upheld by both Dubai’s court of appeal and court of cassation, the highest judicial body in the emirate. He also pointed out that courts in Britain and Bahrain ordered Cornelius to pay considerable sums of money, which he has so far failed to deliver. He is, he says, “not aware of any miscarriage of justice”.
Prisoners report that they rarely see the jailers. Every night at 9pm cells are locked and the phone line to the guards is switched off. If an inmate has a problem, there’s no way to get assistance. Sometimes prisoners can be heard screaming for help. Cornelius has told his family he finds it “scary” to be so isolated. The block used to have magnetic fire doors that opened automatically if the fire alarm went off. Several years ago this system was disconnected. These days the doors are padlocked.
Medical care is almost non-existent: a single doctor covers all the inmates. Under the rota system prisoners may be given an appointment six months down the line. Racial discrimination is evident, too. Pakistani inmates are kept waiting longer than white ones, and black inmates longer still.
Since his imprisonment, Cornelius has suffered from high blood pressure and raised cholesterol. In late 2019 he was diagnosed with tuberculosis after a prisoner in an adjacent cell collapsed with the disease. Despite regular pleas, he waited 18 months to receive treatment and medication. Mercifully, his tuberculosis is latent. He was sent to a government hospital more than once during that period, but each time was returned to prison without being examined, either because doctors claimed not to know who he was or because the paperwork wasn’t in order.
The pandemic put an end to prisoners’ brief allowance of outdoor recreation. For months, Cornelius was kept indoors all day. His only exercise was an occasional jog up and down the corridor that runs alongside the cells. Previously he’d helped organise games of touch rugby. He told his family that it was the only thing he had to look forward to each week.
Cornelius and other inmates have been double-jabbed with the Sinopharm vaccine. That didn’t stop covid from running rampant through the overcrowded prison. His block is reportedly being used as a dumping ground for anyone who might be infected. In the summer, Cornelius came down with covid symptoms. Medical staff were absent, and prisoners couldn’t even get paracetamol. A prisoner in the cell next to Cornelius died of coronavirus and his body lay there for eight hours before being removed in a plastic bag. Cornelius worries that catching covid again might trigger his tuberculosis to become active.
Doing business in autocracies is fraught with peril. Without an independent legal system, judges arbitrating commercial disputes can feel under pressure from individuals who have political clout. Only the most naive investor would operate in China or Russia without considering the risk of expropriation at the hands of the government or well-connected rivals. Dubai is supposed to be different: a business-friendly oasis with a Western outlook in a region fraught with danger.
Dubai lacks the oil wealth of its neighbours. To compensate, it has turned itself into a commercial hub where service industries such as finance, property and tourism flourish. It promotes itself as a low-tax, free-trading haven to foreign investors. In early 2020, the uae announced that foreign doctors, scientists and inventors would, for the first time, be able to apply for citizenship. It attracts Westerners looking to build businesses in a place with a frontier mentality, as well as “appealing to anyone who’d made it from Karachi, Beirut or wherever and wanted somewhere safer, more middle class”, as one banker puts it.
Hotels with large conference centres have helped to turn the emirate into the Middle East’s undisputed hub for corporate events. It markets itself as a luxury destination for suits and shoppers alike. And it has shrewdly encouraged social-media influencers to move there – and post pictures of their glamorous lifestyles – to draw younger visitors, too.
By and large, Western governments consider Dubai to be a reliable partner and safe place to operate. The latest guidance from Britain’s Foreign and Commonwealth Office (fco) on business risks in the uae states that its “society is multicultural, and characterised by greater tolerance and openness than many other countries in the region”.
Yet the emirate has long been a haven for dirty money and shady middlemen. Regulators mostly turned a blind eye to such activity in the heady years before the financial crisis. But the events of 2008-09 left Dubai’s debt exposed and the emirate came close to defaulting – it was saved from this fate only by a bail-out from Abu Dhabi, another emirate. This near-death experience forced Dubai to make a show of cleaning house, especially as the government came under increasing pressure from other countries and global regulators.
“For a foreigner, the only way to get acquitted is to have enough influence to win a pardon”
Nonetheless Dubai remains popular with kleptocrats, arms-smugglers, sanctions-busters and money-launderers. Fugitives, fraudsters and disgraced public figures flock there (British newspapers call Dubai “the new Costa del Sol”, a reference to the stretch of southern Spain where foreign criminals used to lie low). Crime rings and crypto scammers operate within its borders. Dubai’s half-heartedness in combating illicit finance is “a feature, not a bug” of its economy, according to a report last year by the Carnegie Endowment, a think-tank. This offers it a competitive advantage over stricter jurisdictions. But powerful people in Dubai can seize assets under the guise of combating corruption, just as Crown Prince Muhammad bin Salman did in Saudi Arabia in 2017 when he arrested numerous royals and businessmen, and drained their bank accounts.
The uae’s legal system is based on civil-law principles and sharia law. Each emirate has its own court, with a supreme court in Abu Dhabi. Dubai is one of only two emirates that do not take part in the uae’s federal court structure. Instead it touts its modern judicial system. The Dubai International Financial Centre, a special economic zone that contains more than 2,000 banks and companies, has its own courts, which operate according to common-law principles and hear cases in English. Applications to this special economic zone are closely scrutinised; those from financial and technology firms are most likely to be successful. But Cornelius’s businesses, like most companies in Dubai, were registered outside this zone and instead fell under the jurisdiction of the national courts, which apply the national law.
In these courts, capital trials can begin and end in a day. It is rare for prosecutors to lose. Indeed, the prosecuting lawyer often sits next to the judge on the bench. Foreigners on trial have observed discussions between prosecutor and judge in which the former appeared to be giving instructions to the latter. Defendants are often blocked from giving evidence. Cornelius has not once been allowed to address the judge during the more than 100 court sessions he attended in over ten years of hearings and appeals since his arrest. He often struggled to understand what was going on because of poor translation. The system is run on patronage. “For a foreigner, the only way to get acquitted is to have enough influence to win a pardon,” said one foreign lawyer.
As Cornelius has discovered to his cost, the law can be particularly cruel in disputes over money. In most Western countries, debt is considered a civil matter. Charles Dickens’s father was sent to a debtors’ prison and Dickens’s depictions of these prisons’ horrific conditions in his novels bolstered a campaign that led to their eventual abolition in Britain in 1869. The uae, by contrast, still treats debt as a crime.
Dubai’s courts mete out eye-watering sentences for property crimes. Late payment, even a single bounced cheque, can land you in jail for up to three years. This helps unscrupulous claimants to “exploit the criminal system in matters relating to debt recovery”, says Rhys Davies, a barrister working on Cornelius’s case.
A prison sentence does not clear the debt. If the debtor cannot repay the money when the initial sentence ends, the creditor can ask the court to keep the person incarcerated indefinitely, until the debt is settled. Debtors can be locked in a Catch-22 situation: if they can’t leave prison, how can they ever earn money to pay off the debt? Some Indian labourers have been languishing in jail in the uae for over a decade with debts as small as $1,000.
Companies, banks, public figures and even private individuals work the system to become long-term jailers. A mere accusation can be all that the authorities require to arrest someone and bar them from leaving the country, even in the absence of evidence.
Radha Stirling of Detained in Dubai, a group that provides assistance to foreigners ensnared by the emirate’s legal system, has many clients who are, or have been, “debt hostages”. Even those who aren’t locked up may find their freedom limited. The accused typically loses their job and the local bank will freeze their account. “That can lead to previously written cheques bouncing, compounding their problems,” says Stirling. “They can’t get another job to pay off the debt as no one with a police case against them is entitled to a work visa. And a travel ban ensures they can never leave Dubai until the impossible debt is paid.”
Relatives of debtors aren’t safe either. Albert Douglas has been in prison in Dubai for two years since cheques issued by his son’s flooring business bounced: his son had left Dubai, so the creditors went after Douglas because he was a signatory on the company’s accounts. Fully aware of the emirate’s ruthless treatment of debtors, Douglas tried to escape to Oman. He was caught climbing a border fence. Now, at 60 years old, he fears he will die in prison.
Even those who do get out of the country may encounter the uae’s abuse of the Interpol “red notice” system. Though chasing debts isn’t part of Interpol’s mandate, the uae sometimes circumvents this by redesignating debt as “fraud”: Interpol doesn’t verify charges listed by national crime bureaus on their databases. The target of the notice then risks detention abroad and possible extradition to the uae. Even a frivolous case may take up to nine months to be struck out, says Stirling.
A report earlier this year, written by Sir David Calvert-Smith, former director of public prosecutions in Britain, flagged uae’s abuse of red notices and its “undue influence” over Interpol. In late November, Major-general Ahmed Naser al-Raisi, inspector-general of the Emirati interior ministry, was elected as the organisation’s next president. Foreigners who had previously been locked up in Dubai campaigned to stop him getting the job, arguing that he had overseen arbitrary arrests and torture in his previous role.
The uae’s misuse of red notices ranges from petty extortion to attacks “for political gain against those seen as a threat to the regime”, according to Calvert-Smith’s report. One British woman was surrounded at a restaurant in Rome and taken into custody over an alleged credit-card debt of a few thousand dollars.
Some Indian labourers have been in jail in the UAE for over a decade with debts as small as $1,000
Stirling of Detained in Dubai says that “Dubai’s financial firms have used Interpol as their own personal debt collectors.” She reckons that sometimes the alleged debts don’t even exist. “The uae has essentially perfected the debt shakedown,” she says. “In some cases they get people who owe nothing listed to extort from them. When the target is arrested overseas, the sheikh, bank or whoever else is behind the case will say ‘give me assets or money to drop it, or I’ll make more accusations’.”
The uae also uses more violent means. Zack Shahin is a former executive at PepsiCo who went on to run the property arm of dib. In 2008 he was accused of stealing $30m – though no money could be traced to him – and held for four years in prison. He was freed on a bail of $1.4m in 2012 after the American authorities expressed concern about his health. Immediately he fled to Yemen, where the American embassy arranged for him to fly home. According to some accounts, at the last minute the Yemeni government agreed to send him back to the uae. Campaigners for Shahin’s release say he was picked up at the airport by security agents from Dubai, who appeared to operate with free rein in Yemen. With a gun pressed to his back, he was marched onto a plane back to Dubai. He is still in jail there.
Dubai’s approach to debtors seems at odds with its own economic model. Some of its biggest industries, from property to tourism, have been fuelled by debt. In 2020 Dubai’s gross government debt was a manageable 77% of gdp. That doesn’t include borrowings by major state-owned groups, however. Add these in and the ratio was a heady 150%, according to s&p, a credit-rating agency. Since flirting with default in 2008-09, Dubai has relied on the willingness of international banks to restructure loans. “It’s an economy largely propped up by Western banks and dependent on their forgiving nature,” says a former banker who was involved in the bail-out negotiations. “To treat its own debtors so cruelly is monumental hypocrisy.”
The conditions in which Cornelius has been kept over the years have improved in certain small respects. As a long-serving inmate, he is entitled to one of the coveted lower bunks (he happens to share his cell with one of the dib bankers who ran his account). Most prisoners aren’t allowed anything in their cells beyond their mattress and blanket – even family photos are prohibited. Cornelius has been given a couple of round tubs to hold books and case files, a few items of clothing, cutlery, crockery and a small radio that can pick up local stations. He listens to the business news on Dubai Eye and another station that plays songs from the Eighties and Nineties. “The playlist is limited. He jokes that he can usually predict which song is coming next,” says Pagett, his brother-in-law.
A combination of covid and penury mean that no family member has visited Cornelius since February 2019. Between covid lockdowns, Cornelius was offered a rare Skype call with his wife, Heather: when he returned to his cell, he curled up on his mattress and wept for several hours. Heather’s voice cracks when she speaks about her conversations with her husband; she seems constantly to be on the verge of tears. She used to find the visits incredibly stressful, she says, because the authorities would sometimes make excuses at the last minute and postpone the meeting. Now she can’t even afford to make the trip from Britain.
Heather worries that her daughter, who was a young adult when Cornelius was arrested, has “internalised” her father’s absence more than their two sons, who were 17 and six. “[The boys] find it easier to share the emotional difficulties of dealing with it.”
The couple speak by phone most days. “I can hear when he’s close to giving up, but he’s always trying to protect me from having to worry about him. He focuses on me and the kids. He puts in a huge effort. In the early days we would speak about the case, about lawyers. Not any more.” She gets extremely anxious if he doesn’t call at the allotted time, worrying that he may have collapsed during the night, when he can’t reach the guards.
“Every morning I wake up and think ‘Oh God he’s still in jail. How are we going to keep going?’ But I’ll cling onto any hope. It’s how I’ve survived the past 13 years. Ryan still has hope too, I know it, despite everything.”
The British government has offered Cornelius minimal assistance since he was arrested and imprisoned. After numerous pleas by the family, a consular assistant – a Dubai national – eventually helped him to see a doctor for his tuberculosis. But the family reports that the assistant is often hard to reach: calls go straight to voicemail and her mailbox is sometimes full. “Typically, British consular staff just provide people with a list of local lawyers, visit inmates with inconsistent frequency and help relay communication with their families,” says Stirling.
The diplomatic service has shown little interest in the case. After many requests, an official from the Foreign Office visited him two years ago, and Cornelius talked him through documents relating to Dubai’s unlawful retrospective use of Law 37 to keep him in prison. The official said he would look into it, but the family has heard nothing since.
“Every morning I wake up and think ‘Oh God he’s still in jail. How are we going to keep going?’”
British ministers have refused to condemn Cornelius’s treatment publicly, or ask for clemency. Government ministers do “very little” in such cases, says Davies, the barrister. He describes a “comedic process” in case after case, where “the Foreign Office says, ‘Abide by the local legal processes and we’ll deal with it later.’ But then after you’ve been found guilty they say, ‘Ah, but you’re a convicted criminal.’ ” Lord Clement-Jones reckons that the Foreign Office will support a plea for a pardon only if a local lawyer files a claim for miscarriage of justice. In a place like Dubai, such an act would be “career suicide, and possibly worse”. He called the government’s response “spineless”. The Foreign Office did not respond to a request for comment.
The Foreign Office has intervened in legal cases in Dubai in the past. Matthew Hedges, a British phD student, was falsely accused of spying in May 2018 when he was on a research trip to the uae, and sentenced to life imprisonment. He received a pardon later that year after belated lobbying by the British government as public outrage grew. Even the head of mI6, who rarely speaks out, criticised the detention. Hedges has since lambasted the Foreign Office for not acting more decisively on his behalf.
Other countries take firmer action. America, Australia, Canada, Ireland, Italy and Nigeria have all done far more to help citizens with legal troubles in Dubai. Lonergan, the former prisoner, says Irish diplomats played a crucial role in ensuring he was released after nine months: his contact at the Irish embassy gave him her mobile number and was available round the clock. The Irish government kept up pressure on officials in Dubai until he was freed.
Why would Britain turn a blind eye to such legal abuses? The answer may partly lie in its economic and security ties to the uae. The country is Britain’s largest trading partner in the Middle East and its 12th-largest export market globally. It is also an important security partner in a hostile region – the two countries share much intelligence. Yet America and France enjoy similar links with the uae and still help their citizens far more extensively when they encounter legal difficulties there.
Britain’s departure from the eu has done little to change matters. The government had said it would toughen its stance on human-rights abuses abroad. Instead, it has sought to strengthen commercial and military relationships with a host of non-eu partners in order to show that it can thrive outside the bloc.
Dubai’s elite is also deeply enmeshed within Britain’s economy and society. Sheikh Maktoum was once a guest in the Queen’s carriage at Royal Ascot. An analysis by the Guardian in April concluded that the ruler of Dubai is one of Britain’s biggest landowners, with more than 40,000 hectares (the exact scale is hard to determine because some properties linked to him are held by offshore companies with opaque ownership). Maktoum’s property empire includes mansions in Belgravia, Kensington and Knightsbridge, a country house in Surrey and an estate in the Scottish Highlands. His stables at Newmarket are part of Godolphin, the Maktoum family’s global thoroughbred horse-racing business, which also has operations in Dubai and Australia. Godolphin’s British arm runs the country’s largest flat-racing stable and has strong links to the Jockey Club, which owns some of Britain’s best-known racecourses, including Epsom Downs and Cheltenham.
The British government could use these ties as leverage. Britain is one of a number of countries that have added Magnitsky laws to their arsenal of sanctions in recent years. Named after Sergei Magnitsky, a lawyer who died in a Russian prison after attempting to expose tax fraud by public officials, these laws empower governments to impose travel bans and freeze assets belonging to people responsible for severe human-rights violations. Cornelius’s barristers will soon submit requests to the British government, as well as America, Canada and eu countries, to impose Magnitsky sanctions on Shaibani and the two judges who imprisoned Cornelius. In light of the British government’s indifference, however, it’s hard to imagine it taking action against a powerful figure from a country with which Britain seeks to maintain close ties.
The very least Britain should do, says Stirling, is warn people more forcefully about the dangers of doing business in Dubai. The Foreign Office still advises that the uae is safe so long as you respect the laws and culture, she says. “It does not warn citizens that the legal system there is systemically rigged against foreigners, that there is no evidentiary standard for prosecution, no due process, no respect for human rights.”
Cornelius’s best hope is embarrassing the Dubai government into freeing him. “The uae is not like Russia. It is very pr-conscious. It really hates this sort of publicity,” says one lawyer involved. Dubai is particularly sensitive to criticism during the delayed Expo 2020, which began on October 1st and runs until March 2022. This is the first world fair exhibiting innovations since the one held in Milan in 2015. The emirate’s government sees it as a golden opportunity to promote Dubai as an investment and tourism destination. (The opening week of the expo was marred by revelations of state-sponsored skulduggery: a British court ruled that agents working on behalf of Sheikh Maktoum had probably hacked the phone of his estranged wife, Princess Haya.)
Cornelius’s family say he is naturally positive and has never lost hope of being freed. He is kept going by the thought that “someday someone just wants to be rid of Cornelius & Co” and will let him out. British courts have begun to look more sceptically on dib’s claims in a civil case brought by Cornelius’s business partner. But Cornelius appears to have given up hope of winning the legal argument in Dubai.
In 2014, a new rule in the uae outlawed imprisoning debt defaulters over the age of 70. Cornelius will reach that landmark in April 2024. Given his protracted suffering within Dubai’s legal system, he isn’t confident of being let out even then. A pardon remains unlikely without concerted international pressure on the emirate. “Ryan was born with entrepreneurial genes, and even today doesn’t regret dreaming all that time ago that the Plantation could be a good bet,” says his wife, Heather. “But he bitterly regrets believing that Dubai was a safe place to do business.”■
Matthew Valencia is the deputy business-affairs editor of The Economist
Detained in Dubai的Stirling说，"迪拜的金融公司把国际刑警组织当作他们自己的私人收债人"。她估计，有时所谓的债务甚至不存在。她说："阿拉伯联合酋长国基本上已经完善了债务敲诈，"她说。"在某些情况下，他们让那些不欠债的人列出来向他们勒索。当目标人物在海外被逮捕时，酋长、银行或其他支持此案的人就会说'给我资产或钱让我放弃，否则我会提出更多指控'。"
