No relation between Dubai financial woes and Smart City, Gatt insists

The Investments Minister has stood by the distinction he drew between debt-defaulter Dubai World and Smart City owner Dubai Holding, despite no such difference being made by international credit rating agencies.

"The correctness of the declaration has not changed as far as I am aware," Austin Gatt told The Sunday Times, when asked whether he was still confident about the distinction he drew in Parliament recently to support his contention there was no connection between Dubai World's financial woes and Smart City.

Dr Gatt had said Dubai World was the property of the Dubai government while Dubai Holding was the personal property of the emirate's sheikh.

However, credit rating agencies are not making this distinction, describing Dubai Holding as a State-related company since Sheikh Mohammed bin Rashid al-Maktoum is the ultimate owner of both holding companies.

Dubai Holding's credit rating was lowered by Moody's, Standards and Poor and Fitch over concerns it would be the next Dubai company to default on its debt.

The financial turmoil in Dubai has raised serious concerns about Dubai-related investment in Malta, particularly the Smart City project at Ricasoli, for which the investors are seeking bank funds to finance the next phases of development.

Asked whether the government sought guarantees from Smart City Malta about the Ricasoli investment, particularly after the credit downgrading of Dubai Holding, Dr Gatt insisted the guarantees were provided for in the deed and all other documentation related to the contract entered into in 2007.

The minister was unperturbed by the fact that Smart City Malta was seeking bank finance, insisting the investors were never required to finance the multi-million project without resorting to loans.

"I would, of course, be concerned if Smart City did not manage to secure financing for the project, but I do not have this information," Dr Gatt said.

Smart City chief executive Fareed Abdulrahman was quoted in The Times yesterday confirming talks with domestic and foreign banks.

However, he dismissed media reports that HSBC had refused to extend credit and declined to respond when asked whether the bank's refusal to extend credit facilities was a sign of lack of confidence in the Malta project.

Speaking in Parliament on Wednesday, Finance Minister Tonio Fenech expressed concern about the financial turmoil in Dubai, adding that the government was looking closely at developments in the region.

The government has a nine per cent stake in Smart City Malta, while Dubai Holding is also the majority shareholder in Go plc.

ksansone@timesofmalta.com