As Dubai's Glitter Fades, Foreigners See Dark Side

By Andrew Higgins
Washington Post Foreign Service
Monday, August 10, 2009

DUBAI, United Arab Emirates -- Herve Jaubert, a French spy who left espionage to make leisure submarines for the wealthy, was riding high.

Bankrolled by Dubai World, a government-owned conglomerate, he built a submarine workshop on the Persian Gulf, lived rent-free in a villa with a pool and tooled around town in a red Lamborghini. He had two Hummers. He vacationed with local plutocrats.

Jaubert said he heard whispers about Dubai's darker side -- the abuse of desperate laborers from impoverished Asian lands, the jailing of the occasional Westerner who crossed a sheik -- but "I brushed it all off. I saw glamour. I saw marble columns, mirrors and money."

Today, the former intelligence operative, who fled Dubai last summer in a rubber dinghy, is a wanted man. In June, a Dubai court convicted him in absentia on charges of embezzling $3.8 million and handed down a five-year sentence, plus a big fine. Jaubert, speaking recently at his new home near West Palm Beach, Fla., said he stole nothing and vowed never to set foot in Dubai again. He said he fled because of gruesome threats by interrogators to stick needles up his nose and what he described as constantly shifting, and all bogus, accusations relating to bullets, murder and the finances of Dubai World's now-defunct luxury submarine subsidiary.

"If I hadn't escaped, I'd be in the same hell as everyone else," said Jaubert, one of scores of expatriate business people in this gleaming city-state who have been accused of crimes -- and, in some cases, jailed for long periods without being charged.

Jaubert's troubles began two years ago when Dubai's then-booming economy was showing the first faint signs of strain. Local stock and property prices have since swooned, and the tempo of arrests for alleged business misdeeds ranging from a dud check -- a criminal offense here -- to serious fraud has picked up sharply.

Dubai's government declined to comment on Jaubert's allegations of mistreatment. But it has targeted what it sees as dodgy dealmakers and deadbeat debtors, and has declared "no tolerance" of "anybody who makes illegal profits." For many expatriates, however, the crackdown smacks of a hunt for foreign culprits to blame for the sheikdom's sliding economic fortunes.

'It's All a Bit Scary'

A haven of stability in a region of tumult, Dubai is usually a place people flee to, not from. Foreigners, lured by what President Obama in a June speech in Cairo hailed as the "astonishing progress" of this autocratic but vibrant Persian Gulf metropolis, account for more than 90 percent of the population, and 99 percent of private-sector workers.

But a severe economic slump has reversed the flow. Those who came to Dubai seeking fortunes in property, banking and luxury goodies for the rich now face a less alluring prospect -- a prison cell or furtive flight. Only a tiny minority has been picked up by police but, says a longtime foreign resident who runs a company here, "It's all a bit scary. They are looking for people to carry the can." The foreign resident, who requested anonymity in order to speak freely, said a British neighbor was picked up last year.

The turbulence is a blow to a place that promoted itself as the Middle East's answer to Hong Kong or Singapore. It is also a setback for Washington, which has for years touted Dubai as a model of a modern, prosperous Muslim land that, though far from democratic, seemed anchored in the rule of law and committed to basic rights.

Among those who have been locked up are a JPMorgan investment banker; American, British and other foreign property developers; a German yachtmaker; and two Australians who worked as senior executives of what was to be the world's largest waterfront development. The gigantic project had been launched by Nakheel, the crisis-battered property arm of Dubai World and builder of Dubai's signature palm-tree-shaped resort islands.

A few have been convicted, mostly for bouncing checks. Those still awaiting trial often waited many months in jail before being charged: The two Australians, for instance, were arrested in January, held in solitary confinement for seven weeks and then finally charged, with fraud-related offences, last month, said their Melbourne lawyer, Martin Amad.

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