The Dubai debt trap

Ryan Cornelius has completed a sentence for fraud but he’s lost hope of ever leaving prison

Rhys Davies quoted in The Economist on 15 December 2021

Below are excerpts from the original article by Matthew Valencia published in The Economist on 15 December 2021 which can be accessed in full here.

Ryan Cornelius hadn’t even intended to set foot outside Dubai airport. When he boarded a flight from Karachi on May 21st 2008, he planned only on changing planes to travel on to his home in Bahrain. At the last moment, the 54-year-old British businessman decided to stop over in Dubai to meet his business partner.

Three plain-clothes policemen arrested Cornelius as he left the airport. Even in his shock he was struck by how young they were. The police seized his phone and locked him in a windowless room. Customs officers searched him, saying that they believed he was carrying drugs. They found nothing.

At first he thought the authorities had simply made a mistake. Cornelius became more alarmed later that day when he was taken in an unmarked car, hands bound with zip ties, to Dubai’s police headquarters. No one spoke to him en route. As he entered the building, a compact structure with a façade of dark glass squatting between two steel pillars, a hood was placed over his head. After an hour it was taken off, and officers said he’d soon be released. He wasn’t told why he’d been arrested.

Cornelius was interrogated for hours in a padded, windowless room, without a lawyer present, then thrown into a bare cell. For ten days he was held incommunicado, with no access to his family, embassy officials or legal advisers. He didn’t even have a mattress to sleep on. He later learned that his two British business partners had been arrested around the same time.

A second interrogation was conducted by two police officers. Cornelius found it hard to follow their train of questioning. They had a file with them of what looked like invoices, though they referred to them only generally. The senior officer brandished a letter from a Dubai bank and kept asking whether the invoices were faked.

Most questions were about Dubai Islamic Bank (dib), the emirate’s second largest lender. Cornelius’s property business had taken out a large loan from a German financial firm, which had itself borrowed money from dib for the purpose. From the officer’s rather confused questioning, Cornelius surmised that he stood accused of fraud.

He explained to the officials that, though dib had recently accused him and his partners of misusing the loan, everyone involved had agreed a new plan to repay the debt.

Eventually, after grilling him for hours, the officers told Cornelius to make a statement laying out his version of events. Around 30 minutes after he did so, an officer reappeared with a typed document in Arabic, a language that Cornelius neither speaks nor reads. The man said he could leave for Bahrain once he’d signed it. When Cornelius asked for a lawyer, he was told that there wouldn’t be one available for days – by then, the officers ominously asserted, it would be “too late”. Confused and increasingly panicked, Cornelius signed the statement (he later insisted that it bore little resemblance to the interview). Instead of being released, he was returned to his bare cell.

[ … ]

The UAE’s legal system is based on civil-law principles and sharia law. Each Emirate has its own court, with a supreme court in Abu Dhabi. Dubai is one of only two emirates that do not take part in the UAE’s federal court structure.

Instead it touts its modern judicial system. The Dubai International Financial Centre, a special economic zone that contains more than 2,000 banks and companies, has its own courts, which operate according to common-law principles and hear cases in English. Applications to this special economic zone are closely scrutinised; those from financial and technology firms are most likely to be successful. But Cornelius’s businesses, like most companies in Dubai, were registered outside this zone and instead fell under the jurisdiction of the national courts, which apply the national law.

In these courts, capital trials can begin and end in a day. It is rare for prosecutors to lose. Indeed, the prosecuting lawyer often sits next to the judge on the bench.

Foreigners on trial have observed discussions between prosecutor and judge in which the former appeared to be giving instructions to the latter. Defendants are often blocked from giving evidence. Cornelius has not once been allowed to address the judge during the more than 100 court sessions he attended in over ten years of hearings and appeals since his arrest. He often struggled to understand what was going on because of poor translation. The system is run on patronage. “For a foreigner, the only way to get acquitted is to have enough influence to win a pardon,” said one foreign lawyer.

As Cornelius has discovered to his cost, the law can be particularly cruel in disputes over money. In most Western countries, debt is considered a civil matter. Charles Dickens’s father was sent to a debtors’ prison and Dickens’s

depictions of these prisons’ horrific conditions in his novels bolstered a campaign that led to their eventual abolition in Britain in 1869. The UAE, by contrast, still treats debt as a crime.

Dubai’s courts mete out eye-watering sentences for property crimes. Late payment, even a single bounced cheque, can land you in jail for up to three years. This helps unscrupulous claimants to “exploit the criminal system in matters relating to debt recovery”, says Rhys Davies, a barrister working on Cornelius’s case.

The article was first published by The Economist on 15 December 2021 , read it in full here.