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How the Port Sellout Was Financed
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A tipster e-mailed me last night:

I work as a corporate lawyer at a large law firm that has a speciality in Islamic finance. The real reason Dubai Ports World is undergoing the transaction is because of an Islamic finance vehicle called the sukuk. The sukuk is essentially a commerical paper type of Islamic financle vehicle–it is essentially a “fake” bond to work around the Muslim prohibition on interest.

Now comes the interesting part.

As you might know, Dubai has recently christened (my word) its stock exchange. It hasn’t been very successful thus far–so they’ve been looking to

acquire really high profile items to trade on it. (Note: they also tried to buy the Refco assets after Refco collapsed). If the Dubai Ports World sukuk goes through, it becomes the largest publicly traded sukuk in the world.

As a result, Dubai instantly becomes the place to go for Islamic finance in the world–and folks specializing in Islamic finance stand to make a great deal of money.

Here’s some background on how the bidding war between Dubai Ports World and the other competitor to buy out British-based P& O’s port operations, Singapore’s PSA (the more experienced and established of the two bidders), shook out via ITP News, Jan. 26, 2006:

The multi-billion dollar bidding war between Dubai and Singapore over the British ports and ferries operator P&O could be settled this week.

Dubai Ports World (DPW), owned by the emirate’s government, fired the first shot when it made a bid of US$5.91 billion in November 2005. However, Singapore’s PSA has hit back, approaching P&O with a conditional counter offer of US$6.21 billion. A formal offer could be submitted within the next few days.

PSA’s conditions were that it be allowed to complete satisfactory due diligence, that its board give final approval, that P&O’s directors withdraw their recommendation of the DPW offer, and that P&O’s pension trustees approve the offer.

PSA has operations in 11 countries and is the world’s second-largest ports group. By contrast, DPW was formed as recently as September with the amalgamation of the Dubai Ports Authority and DPI Terminals.

The company’s container throughput is roughly a third of what PSA handles. However, if DPW were to acquire P&O — currently the world’s fourth-largest ports group — the industry landscape would shift dramatically. Not only would DPW immediately become the second-largest player in the marketplace, it would also have secured key ports in India and Australia — markets in which fast traffic growth is anticipated…

…In order to help fund the massive bid, Dubai Ports, Customs & Free Zone Corporation (PCFC) have launched the world’s largest sukuk, or Sharia-compliant bond. What was intended as a US $2.8 billion issue has instead rocketed to US $3.5 billion, after an overwhelming response from investors. Lead-managed by Dubai Islamic Bank (DIB) and Barclays Capital, the distinctive sukuk is also the first convertible instrument in the Islamic finance market.

The issue is just one of a series of initiatives designed to boost the PCFC’s corporate activities, ongoing business development needs and expansion plans. Its unique convertible structure allows partial redemption of up to 30% in the form of equity shares of the PCFC entities as and when they go for a Public Equity Offering within the next three years. If no Public Equity Offering takes place prior to the final redemption date, investors will be compensated with a higher yield.

The Dubai International Financial Exchange (DIFX) listed the world’s largest Sukuk, worth US $3.5 billion, from Dubai Ports, Customs and Free Zone Corporation (PCFC) on Jan. 26th, 2006. PSA withdrew last week.

Alex Alexiev, of the Center for Security Policy, points out:

Washington claims that the United Arab Emirates is a reliable friend and ally of the United States in the war on terror. To the extent that Dubai Ports World is a UAE state-owned company, this may in fact be the key question to ask. The answer is not hard to find if you start looking at the role played by the UAE as an eager financier of the huge worldwide infrastructure of radical Islam built over the past three decades by Saudi Arabia. An infrastructure that’s the main breeding ground of extremism and terrorism.

From the very beginning in the 1970s, the UAE has been a key source of financial support for Saudi-controlled organizations like the Islamic Solidarity Fund, the Islamic Development Bank (IDB), World Council of Mosques, and the Muslim World League (MWL) as documented in The Muslim World League Journal, an English-language monthly. The IDB alone, for instance, spent $10 billion between 1977 and 1990 for “Islamic activities” and at least $1 billion more recently to support terrorist activities by the Palestinian Al Aqsa and Intifada Funds.

One of the most successful Islamist operations in the U.S. early on involved the Wahhabi ideological takeover of the Nation of Islam after the death of its founder Elijah Muhammad. Of the $4.8 million “presented” to W. D. Muhammad, Elijah’s son and successor, in 1980 alone, one million came from UAE’s president Sheikh Zayad, according to the August 1980 issue of the MWL Journal. Zayad continued his “philanthropic” activities by donating $2.5 million for a Zayad Islamic Center at Harvard University’s divinity school of all places. The donation had to be returned after it became known that a similar Zayad Center in the UAE was closed because it had become a hotbed of Islamic extremism. And this is likely just the tip of the iceberg. A reliable friend and ally? Perhaps, but hardly one of ours.

Dubai media outlets are calling critics and skeptics of the port sellout “Islamophobes.”

ORDER IT NOW

If demanding that our government put American security interests above foreign business interests makes me an “Islamophobe,” and if wanting to know the full details of the who, what, when, where, and why of this UAE government deal, secretly approved by the Treasury Dept.-led Committee on Foreign Investments in the US, makes me an “Islamophobe,” I plead guilty.

***

Joe Gandelman has a big news round-up and analysis.

The spoofing is underway at Scrappleface and Six Meat Buffet.

(Republished from MichelleMalkin.com by permission of author or representative)
 
• Category: Ideology • Tags: Sharia, Wikipedia