(2 of 2)
Some once robust financial institutions have also been hit by questionable dealings involving bank insiders. Dubai's Abdul Wahad Galadari, former chairman of the Union Bank of the Middle East, borrowed heavily from his bank to speculate in gold and silver. When the Dubai government rushed in to rescue the failing UBME in November 1983, officials found that Galadari owed $8.7 million.
In July, Kuwait's Hussain Makki Al Juma, managing director of 15 financial organizations around the world, was found by a London court to have defaulted on a personal loan of nearly $74 million. Yet Al Juma was re-elected in August to the board of the Bahrain-Kuwait Investment Group, which he has headed since 1982.
Despite its difficulties, the Persian Gulf financial community is not about to crash. It has holdings of an estimated $70 billion, and 34 of the world's 500 largest banks are located there. But prospects for future growth are dim. The Iran-Iraq war has made raising funds more difficult. The $94 billion collapse of Kuwait's unofficial stock market in 1982 badly undermined confidence, and repercussions continue to be felt. Finally, Western bankers will be leery about doing business there until legal uncertainties are clarified. A British lawyer working in Bahrain points out that it took the West nearly 300 years to develop a legal framework for banking. Arab bankers are making great progress, but more must be done before they will have a modern financial structure. --By Gordon M. Henry. Reported by Aileen Keating/Bahrain