DUBAI, 25 December 2004 -- A controversial executive at the heart of Dubai's bid to establish itself as a global financial hub is leaving amid a continuing house clearing by officials seeking to attract big firms to the region.

Naser Nabulsi, chief executive of the Dubai International Financial Center, will leave his post in January, DIFC Director-General Omar ibn Sulaiman told Dow Jones Newswires.

Nabulsi's departure is the latest measure taken by the DIFC to resolve questions about corporate governance at the fledgling financial center, and to reassure investors about regulatory independence after the dismissal of the center's two senior regulators in June.

"The government is serious about what has to be done at DIFC," bin Sulaiman said. "We have taken all the corrective measures needed to do that and you can see the success now."

The DIFC, at the forefront of Dubai's attempts to diversify its economy, is aiming to become a regional hub for financial firms offering corporate and Islamic banking services. Scheduled for completion in 2008, the center also plans to launch a stock exchange next year.

In the three months since the DIFC opened for business, six financial firms, including Standard Chartered and Credit Suisse Group, have received licenses.

Sulaiman said international names are lining up to enter the center and the regulator is considering license applications from at least 20 financial firms.

But one of the Dubai's key selling points for foreign firms -- regulatory independence -- was undermined when Nabulsi and DIFC Chairman Anis Al-Jallaf fired the two top officials at the Dubai Financial Services Authority, the DIFC's regulatory board.

DFSA Chairman Ian Hay Davison and Chief Executive Phillip Thorpe were fired a week after the regulators complained that the DIFC had, without a tender, awarded land to companies linked to Al-Jallaf and another board member, Majid Radpay.

The government didn't provide an official explanation for the dismissals. Habib Al-Mulla, a member of the DFSA board and a lawyer, was named to replace Hay Davison while David King, Thorpe's deputy, became acting chief executive.

Sulaiman said he has tightened up internal regulations and introduced new corporate governance procedures, making sure they are implemented across the organization.

To remove potential conflicts of interest, the DIFC's land company has been folded into the government's newly formed real estate arm, Dubai Properties, a unit of state-owned Dubai Holding.

Dubai Properties is reviewing the land deals questioned by the regulators to ensure that the DIFC received full value from the land sales, said Sulaiman.

While there was no evidence of wrongdoing in the land awards, Sulaiman acknowledged that the way they were perceived hurt the reputation of the center, whose signature Gate Building is scheduled to open in January.

The DIFC earlier this year hired PricewaterhouseCoopers to consult on corporate governance procedures. The firm has issued recommendations on where Chinese walls had to be strengthened and where strategic cooperation between the various arms of the DIFC Authority -- the operating company, the regulator and the exchange -- are permissible.

Sulaiman has also brought fresh blood into the organization, with checks and balances reinforced to stop decision-making falling into the hands of a few select individuals.

"A single person can't make decisions on his own any more," said Sulaiman.

Sulaiman, appointed director-general of the DIFC by the government on the eve of the center's formal launch in September, said Nabulsi is expected to pursue private business interests.

Nabulsi told Dow Jones Newswires he was proud of his contribution to the DIFC's creation and that internal investigations had cleared him of any wrongdoing regarding land deals and contracts.

"For a long time I've been planning to set up a regional investment company -- this is a project for Dubai," the former Merrill Lynch employee said.

He said the much-needed firm, which would compete with local players such as Shuaa Capital and The National Investor, would one day apply for a license to operate at the DIFC. The investment company, which has hired Ernst & Young to carry out market studies, will need three to four months to gain necessary start-up approvals, Nabulsi said.

The director-general said the DIFC has been informally looking for a chief executive to replace Nabulsi and will hire a recruitment agency early in 2005 to speed up the search. Nabulsi's replacement will probably be an experienced employee at a western financial services company, he said.

People familiar with the situation also say the DIFC is likely to appoint a new board in the first half of next year, with al-Jallaf probably vacating the chairman's post.

© Arab News 2004