by Lee, M
On 20 September I received a letter from Brown headed ‘Purchase of Land Plot D-17’. The letter opened:
Following our negotiations with Prudentia Investments Pty Ltd regarding Plot D-17 at Dubai Waterfront we confirm that both Sunland and Prudentia have signed an Agreement on 19th September 2007, allowing Sunland to Purchase in its own right.
It then detailed the proposed payment schedule, followed by this paragraph (in which Ft2 means square foot):
Sunland will pay a ‘Consultant Fee’ to Prudentia of AED20,000,000, plus an additional Fee of AED24,105,780 which is equal to the difference between AED135/Ft2 (AED216,952,020) and the Land Price of AED120/Ft2 based on a Built up Area of 1,607,052Ft2. The total Fee is therefore AED44,105,780.
Why the letter included mention of a price of AED135 per square foot I had no idea at the time. Apparently this was the price Prudentia had guessed the land would be sold for.
Brown’s letter went on:
The payment of the Consultancy Fee is subject to the finalization of a Sale and Purchase Agreement between Sunland and Dubai Waterfront LLC (DWF). On Sunday 23rd September 2007, Sunland will confirm to Prudentia that a cheque for the Fee is in Trust with our Lawyers, and Prudentia will then issue a letter to DWF confirming Sunland will be purchasing the Plot in its own right.
Despite the fact that this document included the proposed payment schedule for the land it wasn’t a purchase offer, but rather a letter to inform Dubai Waterfront that the joint venture Brown had referred to on 13 September was off and Sunland now wanted to be the sole purchaser and developer of the plot. I took the letter to the head of Dubai Waterfront’s legal department, Anthony Brearley, who said he was on top of the situation, and that the ‘Consultant Fee’ payment to Prudentia outlined in the letter was a ‘premium’.
Premiums were common enough in Dubai but usually you would see them when a property was flipped or on-sold. Premiums were negotiated between the parties themselves and had nothing to do with Nakheel or the original seller. Why a premium was being paid here, on land no-one had actually bought, was unclear to me, but then again it wasn’t any of my business.
I was aware that when Sunland contracted to buy plot D5B from Nakheel in 2007, they had paid a premium to a local real-estate company called Al Burj. If it wanted to make those arrangements separate to its purchase from Nakheel, that was entirely up to Sunland. It was an Australian publicly listed company and obliged to abide by Australian corporations laws and regulations, which required due diligence before making any deals, including private side-deals with companies like Al Burj or Prudentia.
Brearley said I could leave the rest to him, usual practice at this point in a sale. I did so. At that stage I had no reason to give any of this further thought. I had no way of knowing that Sunland’s actions and its inaction would come back to haunt me.
Late that year Sunland organised a dinner for some of the Nakheel executives. It wasn’t uncommon to get invited to functions or dinners by developers and other companies who did business with Nakheel. Julie and I had attended one previous work-related dinner, with Multiplex, but usually I politely declined these invitations. Work was work and evenings were for Julie and me to spend time together. However, Matt told me that I really needed to go to this one.
The dinner was held at an Indian restaurant in the lavish Grosvenor Hotel at the newly completed Dubai Marina. Sunland’s CEO, Soheil Abedian, and his wife, Anne Jamieson, were seated at one end of the long narrow table for fourteen or so people, and Julie and I were down at the other, so after the initial greetings we didn’t speak to him. The other Nakheel guests were Matt Joyce and Anthony Brearley and their wives, seated near the Abedians, along with an Iranian man who was one of Sunland’s joint-venture partners.
Brearley had started at Nakheel not long after me, in 2006. Back in Australia, he had been a partner at the well-known international legal firm Baker & McKenzie, based at the Melbourne office. Now as well as overseeing legal transactions on paper, his department had grown to include admin staff to manage customer relations with purchasers. Apparently Matt and Brearley had known each other before coming to Dubai; they certainly socialised outside of Nakheel.
A couple of other Sunland employees and investors were there, including COO David Brown, who was seated near us. Brown was originally an architect who had enjoyed a meteoric rise within Sunland. Before being tapped to run the Dubai operation he had been the company’s National Design Director. In 2005 and 2006, Sunland’s annual report showed he had been paid just under AUD235,000 a year. His new position was bringing him half as much again, along with a much higher profile.
Brown had met Abedian in the early 1990s while working for a design firm on the Gold Coast. He recalled that period once in a newspaper interview: ‘At that stage I think his [Abedian’s] office was at the back of the Retravision shop up the road at Southport,’ he said. ‘Soheil would pop in and steal our sandwiches at lunch time. He just about lived there and was always in a suit and tie because he would be continually going round to banks convincing them that he could pull things off.’
Sunland had come a long way since then, but the core of their operation was still convincing people they could pull things off. Brown spent the evening painting a glowing picture of what Sunland hoped to achieve in the emirate. It was a big step up from creating a couple of locally well-known Gold Coast buildings to developing multi-billion-dollar international projects and privately I thought maybe they were biting off more than they could chew. But after the evening was over I really didn’t give it any further thought.
(I had a bit more contact with David Brown and Sunland that year but, as their projects were in the planning phases, they mostly dealt with Jeff Austin or Anthony Brearley. At one point I must have mentioned to Brown that Julie and I were planning a brief visit to Australia and would be staying part of the time on the Gold Coast. Sunland had built and co-owned the Palazzo Versace Hotel there and Brown emailed both me and Matt, offering to ‘roll out the red carpet’ with a free stay there for each of us anytime we cared to take it up. That didn’t seem appropriate to me so I just politely declined and told him the truth, which was that Julie and I had already booked a hotel.)
Sunland certainly wasn’t alone in having grandiose plans. As a story in the Guardian newspaper put it, in 2007 ‘Dubai’s hubris was at its peak’. The Sheikh made a stream of pronouncements about the place Dubai would soon occupy on the world stage, which were eagerly lapped up by companies operating in the emirate and by overseas investors keen to get in on the action.
Towards the end of 2007 I was promoted to Director of Commercial Operations and Building Projects in the development division and given a 30 per cent pay rise; voicing my concerns about Nakheel’s valuation process certainly hadn’t harmed my career. The pay rise wasn’t just about added responsibilities. Inflation in Dubai was spiralling out of control, leading to rent doubling every twelve months and massive cost increases for other goods and services, including basics such as food. Just to keep employees from sliding backwards financially, companies across the emirates had to increase pay.
By that time the pressure to get some actual construction underway was mounting inside Nakheel. Matt Joyce asked me and a couple of other development directors to identify possible sites, submit concepts for what could be built on them, then to prepare relevant business case reports to put to the Nakheel board. In our report, we proposed that the Dubai Waterfront team construct six mixed-use towers in what would be called the Palm Canal Towers development. As part of my new role, I was asked to put together a team that could get this project built, and oversee its completion.
There was one more notable event before the year was out, which brought into our lives someone who would stand by us as we went through our darkest times; steadfast and loyal to the point where she became like family to us. On 31 December 2007 we were at a party given by Matt Joyce and his wife, Angela, or Ange as she was known. Unlike Chris O’Donnell, Matt wasn’t
someone we socialised with, and we would very happily have stayed home and skipped the whole New Year’s Eve frenzy. But he was my boss and they had asked us, so we felt it would have been rude to refuse. I had never been to Matt’s place before. It was in the upmarket area of Jumeirah, a palatial property complete with sprawling gardens and a large pool. I couldn’t help mentally calculating that if our rent was more than AUD1200 per week, his place must have cost at least triple that.
At one point during the evening Ange spoke to us about a Sri Lankan woman called Indrani Meepage, a maid/housekeeper she said was very nice and who was staying temporarily in their house. Indrani was sharing a room with their maid Imelda, but needed somewhere more permanent to live. The villa we were living in had some spare room but we explained to Ange that we didn’t need any household staff. She and Matt had nannies and maids, gardeners, and even a full-time driver courtesy of Nakheel, so the thought that we’d rather just take care of ourselves was no doubt a bit strange to her.
She persisted, explaining that while Indrani had a job with a British expat who had been in Dubai for years, he was single. That meant that, even though he had plenty of space in his villa, Indrani couldn’t stay there because in Dubai simply being under the same roof with a ‘bachelor’, as the authorities deemed him, was regarded as sex outside of marriage, which is illegal. The fact that in reality the arrangement was purely employer–employee would not have mattered; in the UAE an unmarried man simply is not allowed to have a live-in maid.
Indrani had nowhere else to go so we agreed to meet her and, if we got along, let her move in. We did and she did. In exchange for the rent-free accommodation she did some basic household chores such as laundry, mopping the floor, preparing a meal Julie and I could share if we were going to be late home from work, and taking Dudley out. (In the desert heat this meant going out with him very early in the morning, often before sunrise, and not staying out long.)
Indrani has a heart of gold, and we settled into something approaching a share-house relationship. We would cook for her, for instance, as well as the other way round. But as close as we became over the following months and years, there was one habit we could never get Indrani to shake. No matter how many times we asked, she wouldn’t call us by our names. To this day she still addresses us as ‘Sir’ and ‘Madam’.
Like so many of the non-western foreign workers who came to Dubai, Indrani had a family of her own she’d had to leave at home. We learned she had a teenage son called Melinde who she had barely seen while he was growing up, having left him in Sri Lanka to be raised by her mother from a very young age. We ended up bringing Melinde over to Dubai for a number of visits, having him stay with us for up to a month at a time. It was such a simple thing for us to do, yet it meant the world to Indrani and Melinde.
JULIE
When Indrani came to live with us it was a strange experience, like having your first flatmate — a little bit uncomfortable to start with. But she was so polite and so honest, and she looked on Dudley the way we did, as part of our family, so she quickly became part of our lives. She was such a hard worker, too. If we asked her to do something she’d do it without complaining. And she knew I hated making beds, so each day she would say, ‘Good morning, Madam’ and rush to make our bed before getting ready to go off to her job with the British expat.
It was so amazing to me that a person who had left her young son to work in another country which, by our standards, did not treat her or her countrymen well, had no trace of bitterness or anger but happily worked six days a week from early mornings to late at night.
When Melinde visited it was so beautiful to see tiny Indrani beside her handsome six-foot-tall son. She was so proud of him and doted on him (although she wasn’t afraid to berate him if she thought he needed it!). It was sad to realise how little time the two of them had spent together. But each time he visited they were inseparable and it brought us great pleasure to see them together.
Chapter 6
THE BUBBLE BURSTS
JULIE
In early 2008 we squeezed in another little break between very busy periods at work. We spent a few days wandering around Paris eating baguettes and drinking wine, enjoyed a one-day hire car drive around the Marne Valley and Champagne, then it was time to fly back to the ‘sand-pit’ of Dubai. It was over so quickly. Oh well, we were working towards our goal and that was the most important thing.
MARCUS
For Nakheel, 2008 started with a bang. The executive staff, minus partners as usual, were required to attend what was pitched as a very grand event. Staff made up only a small portion of the guest list, vastly outnumbered by people the company was trying to impress. We knew it was going to be a big affair as there were to be two presentations, the first to the all-important media and dignitaries, the second a little later in the evening to senior staff, which included me. The invitations, only emailed to staff by the marketing team on the afternoon of the event, featured an ocean background and read, ‘In the presence of His Excellency Sultan Ahmed Bin Sulayem, Nakheel has exclusively selected you to be the first to witness our newest announcements. Be prepared to experience an unbelievable event like never before seen in the world.’
In case that was too subtle, the ‘what’ from the what/where/ when event information section read, ‘What: A once in a lifetime event, with breathtaking announcements’. At the bottom was the rather premature, ‘Thank you for your contribution to making this an astounding success’. In Dubai, over the top was a starting position.
A huge temporary structure had been created just for the event. Not just a marquee, this was a large glasshouse connected to a geodesic dome. Inside harpists and circus performers entertained guests, and waiters circulated with finger food and soft drinks.
After a pre-event meet and greet, mostly with people we worked with and saw every day, we were moved through to the dome and seated for the presentation. From a spot-lit podium in the darkened space Manal Shaheen welcomed the guests and invited us to ‘take a step into the future’. The entire dome ceiling then filled with digital images of sweeping coastlines and ocean vistas accompanied by a Hollywood-trailer style voice-over telling us we must ‘think blue’ and introducing a ‘new initiative called Blue Communities’. The visuals and voice-over were woven through with environmental concern. Nakheel would be committing AED100 million a year for the next five years to Blue Communities, but how this money would be spent and what the aims were remained unanswered questions.
Two major projects were then announced. The first seemed to be an environmental scheme which would, we were told, ‘embrace the Blue Communities standards being developed’. Whatever that meant. The second was ‘The Universe’, a reclamation project even bigger than ‘The World’. In fact, it would be the fifth largest land-reclamation project ever undertaken. The created islands would form the shape of the planets of the solar system.
If there was shared cynicism among the company employees in the room that night, it was because of the gap between the environmental concern in the ‘Blue Communities’ initiative and the reality of Nakheel’s ecological footprint. Dubai’s natural, unaltered coastline had originally been just 65 kilometres long. Nakheel’s plans for artificial islands, including Palm Jumeirah, Palm Jebel Ali and Palm Deira, The World and now The Universe, would create a man-made coastline of nearly 1000 kilometres, destroying vast amounts of aquatic environment in the process.
Geographical, the magazine of Britain’s Royal Geographical Society, put it best: ‘These projects may be driven by vanity, but there is also an underlying element of hard economics.’ The story went on to point out that waterfront apartments, which could sell for up to ten times the price of an equivalent apartment one block back from the shore, played havoc with what lay beneath them. Nakheel’s first reclamation ‘mega project’, Palm Jumeirah, had required sucking up 91 million cubic metres of sand and five million cubic metres of rock. Not to mention the damage done to coastal ecosystems and migrating birds.
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When I first came to Dubai almost two years before I used to walk along the beach to get a little break from the dust and construction. It wasn’t uncommon to see quite large, seemingly healthy-looking fish washed up dead on the beach. Oddly, the birds that were around just left the fish alone. One day in the canteen at work I asked one of the Nakheel marine engineers about it. He said that so much lime was leaching from the reclamation projects that it was basically poisoning the marine environment, killing the fish and any remaining reef as well.
Even some of the truest believers were having trouble getting with the program this time. For a start, none of us had heard a word about these plans. They were supposed to fit on a slate already crowded with a dozen massive developments that had been announced but not completed — in many cases, not actually started. Chris O’Donnell really earned his money that night, telling one interviewer, ‘To actually be working in secret developing up these projects, then to unveil it and see people’s reactions, it’s sensational.’ Knowing Chris as I did, I wondered if this was as much of a surprise to him as it was to the rest of us.
On the way out I said to him, sarcastically, ‘Well done, Chris, that’s going to go over well.’ He replied, straight-faced, ‘Yes, it is, Marcus’, nodded and walked over to schmooze someone else.
No further real detail ever appeared about these initiatives; in fact they seemed to disappear. It was not unlike another ‘good works’ project: in the previous year, Nakheel had announced to great approval that it was going to build ‘state of the art’ accommodation for 10,000 of the labourers working on its developments. In the end, about 500 beds eventuated, in demountable cabins in the middle of the desert. This was supposed to be the first stage of the project, but the rest was never created and in time even the existing cabins were quietly closed down.