Claims of Biz Swindle in Dubai's Ruling Family

Shahram Abdullah Zadeh poses in front of Jumeira Lake Towers in Dubai, United Arab Emirates, Sunday,...

Shahram Abdullah Zadeh poses in front of Jumeira Lake Towers in Dubai, United Arab Emirates, Sunday, April 5, 2009. In this Gulf city-state, two things have long been untouchable: business interests and the ruling family. An attempt to sue a member of the family over a financial swindle is a sign of how much the economic crisis has rattled business as usual there.

(Kamran Jebreili/AP Photo)

In this Gulf city-state, two things have long been untouchable: business interests and the ruling family. However, an attempt to sue a member of the family over an alleged financial swindle is a sign of how much the economic crisis has rattled business as usual here.

Shahram Abdullah Zadeh accuses the brother-in-law of Dubai's emir illegally of taking over his real-estate firm and having him detained by police to help the swindle.

Zadeh, a 37-year-old Iranian national who has lived in Dubai all his life, brought a civil case against the brother-in-law to get his firm back, a rare move. Even more surprising, Zadeh tried to raise criminal charges, but that step went nowhere because prosecutors rejected it.

The case has raised questions about whether Dubai really is what it claims to be: A boomtown where international businessmen can safely invest and turn a profit; or rather, a nest of cronyism and connections where royal blood can still trump entrepreneurial effort.

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Such questions were largely ignored by everyone — businessmen and politicians alike — as long as the cash was rolling in during Dubai's stunning expansion over the past decade. But now the emirate has hit the skids in the world financial crisis.

"During the boom, Dubai's shortcomings were glossed over, but now that the economy is struggling, it's becoming a different story," said Christopher Davidson, an author of two books on the United Arab Emirates and a lecturer at Durham University in Britain.

Dubai's emir, Sheik Mohammed bin Rashid Al Maktoum, led the emirate's vast financial ambitions. But business ran far ahead of the effort to modernize legislation in what remains a traditional Arab monarchy, where the ruler and his family hold final say.

Now the government has been trying to rein in some fast-and-loose business practices. About a dozen former executives are in custody for various investigations. Some have close ties to the government, but none of those in custody are related to the ruling family.