DIFC under pressure after senior management head for Qatar

THE DUBAI International Financial Centre (DIFC) has been rocked by the sudden resignation of five senior regulators, less than a year after its two chief regulators, Phillip Thorpe and Ian Hay Davison were sacked.

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By  Anil Bhoyrul Published  May 1, 2005

THE DUBAI International Financial Centre (DIFC) has been rocked by the sudden resignation of five senior regulators, less than a year after its two chief regulators, Phillip Thorpe and Ian Hay Davison were sacked. The five departing staff are Jamie Orchard, managing director for enforcement; Jay Perumal, the chief financial officer; Steve Lilley and Steve Cemm, the two top managers at the authorisation department; and Vanessa Read, a senior manager in the supervision department. All five are joining their former boss Phillip Thorpe, who was last month appointed as the chief regulator to the Qatar Financial Centre (QFC). Thorpe told Arabian Business: “I have not poached anyone, they have all chosen to move across and of course, I am delighted to have them.” He refused to be drawn on whether the five had quit the DIFC because of continued squabbles over its independence. “All I can say is that here in Qatar things are done very professionally and behind the scenes rather than through the media, so I don’t want to be drawn on that,” he added. Nevertheless, the resignations will be a huge blow to the DIFC. Last June Thorpe and Davison were fired after allegations that some DIFC board members had been handing lucrative land contracts to their own companies. The sackings provoked an international outcry and Sheikh Mohammed Bin Rashid Al Maktoum, Dubai’s crown prince was so concerned that he personally intervened to guarantee the DFSA’s regulatory independence. Today, the regulators report to Sheikh Mohammed’s executive office rather than the DIFC Authority, the centre’s management body. However, the DIFC has insisted its plans are on schedule, and that its new stock market DIFX will go live as planned on September 26 this year. A source close to Thorpe explained: “Phillip had a very big following when he worked in Dubai, and most people at the DIFC are still livid he was fired. As soon as news got out that he had surfaced in Qatar, it was obvious a few of his old team would join him. The law can be in place and regulators can be in place, but the political system hasn’t changed. It’s still a case of jobs for the boys.” Thorpe is recruiting a team of 20 senior managers, and next week will begin a global recruitment campaign. It is understood that at least six more senior DIFC staff are likely to seek positions in Qatar alongside Thorpe. The resignations come as a three-way battle between Dubai, Qatar and Bahrain to establish financial centres capable of providing the talent and regulatory framework necessary to service investors hots up. Bahrain, the region’s most established banking hub, is also working to attract more firms to the Bahrain Financial Harbour (BFH). The kingdom’s central bank, stock market and financial system regulator — the Bahrain Monetary Agency — regulates 362 institutions, of which 186 are banks, 163 are insurance companies, and 13 capital markets brokers. Global banks such as Credit Suisse and Merrill Lynch have already signed up to join the DIFC, and Dubai Financial Services Authority chairman Dr. Habib Al Mulla is adamant the resignations will not have any major impact on Dubai. He told Arabian Business: “It’s a fact of life and we have to move on. I was anticipating this. When a new financial centre is launched next door to you, a lot of people will look at it as an opportunity to move there and that is what has happened. But this is not a crisis, we knew this could happen. I don’t think any more people will leave — those who we thought would go have already gone. I’m confident we will get through this.” Nevertheless, a sense of crisis does now appear to be engulfing the DIFC. Privately, senior DIFC officials admit that Dubai can only afford to lose around ten more management staff, after which its own timetable will be in danger of slipping. The DFSA board is expected to meet this week to discuss the departures.

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