DUBAI -- Amid the movers and shakers of this glittering city, Shahram Abdullah Zadeh cut a wide swathe. He cruised around town in a white Bentley and dined with royalty as his company developed one of the emirate's premier office complexes.
But last February, a phone call from Dubai's state security effectively ended it all
Hauled in and locked up for 60 days, Mr. Zadeh says he was interrogated about his role in Dubai's freewheeling real-estate sector and his business relationship with the brother-in-law of Dubai's ruler, Sheikh Mohammed bin Rashid Al Maktoum. When released, Mr. Zadeh says he had been frozen out of the real-estate company he had helped start.
Mr. Zadeh's experience, compiled though court and company documents, offers a rare window into the murky business world that helped transform this city from an empty coastline into a metropolis. It also may offer a cautionary tale for investors lured to the city, which bills itself as the modern face of a new Middle East. Dubai is one of seven semi-autonomous emirates that make up the United Arab Emirates.
The U.S. government and human-rights groups have long criticized the judicial system in the U.A.E for a lack of independence and oversight. In the good times, investors didn't fret much about these shortcomings. Now, some of the same deals that helped build Dubai are coming undone -- in particular, a tradition of off-the-book business partnerships between Emirati citizens and elite expatriates like Mr. Zadeh, who was born in Iran.
Mr. Zadeh claims his detention came after a business dispute with his partner at Al Fajer Properties, Sheikh Hasher bin Juma'a Al Maktoum and his son, Sheikh Maktoum bin Hasher al Maktoum. Both men are members of the extended family of Dubai's ruler, Sheikh Mohammed bin Rashid Al Maktoum. Mr. Zadeh alleges the two men took control of the firm while he was in custody, according to a lawsuit he filed with Dubai's public prosecution office last year.
Mr. Zadeh has not been charged with a crime. But for the past year, authorities have held onto his passport, making it impossible for him to travel or find work.
"I used to believe in the miracle of Dubai. But now I see it all as a mirage," said Mr. Zadeh, 37.
"I don't need to defend my reputation. He does," Sheikh Hasher said in a telephone interview. "This man is crazy. He is a crook with a sweet tongue."
Some of Mr. Zadeh's claims are impossible to verify independently.
Mr. Zadeh grew up in Dubai, attending school with the children of some of the city's top families. He managed his family's hotel and retail holdings and decided to go into business himself in 2000. Real-estate development was off limits to foreigners, even longtime residents like himself. So, he turned to a common practice -- a silent partnership with a U.A.E. citizen.
Typically, such partnerships involve an Emirati acquiring a business license and then granting his foreign partner management control. The foreigner either pays an annual fee to the Emirati or the two share profits. The terms are set forth in a parallel set of documents, separate from those submitted to the government. Such contracts are so common that courts here have upheld them in disputes, according to commercial lawyers here.
In 2004, an old friend of Mr. Zadeh's father brokered an introduction with Sheikh Hasher.
Mr. Zadeh provided $335,000 in start-up capital, and he invested another approximately $30 million in the company, according to bank documents reviewed by The Wall Street Journal.
Business took off quickly.
But by late 2007, the contractors were behind schedule, according to company documents and former employees. Al Fajer Properties was facing fines for the delays, and buyers were starting to complain.
On Feb. 21, 2008, Mr. Zadeh claims, he received an unusual phone call from State Security, asking him to come in that evening for a talk. When he arrived, , he claims that police blindfolded him, put him into a sport-utility vehicle and drove him to a detention center.
In the eight weeks he was jailed, Mr. Zadeh says he was never accused of a specific crime or shown an arrest warrant. Instead, he says, he was repeatedly interrogated about his personal life and Al Fajer's operations, and gave his interrogators the combination to the company's safe after they asked for it. "They told me that if I did not cooperate that they would ruin me," Mr. Zadeh said.
Mr. Zadeh contends the only copy of his partnership agreement with Sheikh Hasher was in the safe. Former employees of Al Fajer say the company safe was emptied while Mr. Zadeh was jailed.
On March 6, Sheikh Hasher's son, Sheikh Maktoum, was named the new chief executive of Al Fajer Properties.
Sheikh Hasher hired international accountants to audit Al Fajer's books, according to former employees.
He then presented the findings to employees and select clients, accusing Mr. Zadeh of embezzling funds.
Phone calls and emails sent to lawyers and accountants of Al Fajer Properties were not returned.
Sheikh Hasher says Mr. Zadeh stole money from him, but did not provide evidence, or the audit, to back his claim. Mr. Zadeh denies it.
Prosecutors refused to investigate the case, citing an order from Dubai's attorney general, an official appointed by the ruler.
In November, Mr. Zadeh tried one last option. He approached the ruler's diwan, or court administration, and asked for mediation from Sheikh Mohammed himself.
So far, there has been no reply.
Write to Margaret Coker at firstname.lastname@example.org
ARTICLE COURTESY OF DUBAI7STARS