NYT--Dubai even has a school that promises to turn students into trademarked “C.D.F.E.’s,” or “Certified Camel Dung Finance Executives' licensed to create CDBs or Camel Dung Bonds.
The uncertainty hanging over Dubai's CDBs is exacerbated by the fact that Dubai’s courts have never handled a major bankruptcy of one of the government’s own companies.
Unlike most of the other seven emirates, Dubai maintains a judiciary system that is separate from the United Arab Emirates Federal Judiciary Authority. The decisions of the Dubai courts, which are controlled by the emirate’s ruling family, can be fickle, say lawyers in the region.
Most important, in order to bring a court case against a government-owned or government-run entity, a corporation or individual needs to get permission — from the government.
The risk section of the Nakheel CDB prospectus offers scant guidance here, as well. “Judicial precedents in Dubai have no binding effect on subsequent decisions,” it says, and court decision in Dubai are “generally not recorded.”
Perhaps unnecessarily, the document adds, “These factors create greater judicial uncertainty for CDB enforceability.”
WB7: Here's what you do, structure a pile of (DDD) Dubious Dubai Dung, then offload it to some hedge fund and charge a fat commission. Next arrange a credit default swap to hedge the DDD risk (which is minimal due to the implicit, illicit or inexistent government guarantee) and charge another fat fee.
Presto! Camel dung turns to gold.
According to the WSJ, investment banks raised $1.6 billion in fees from clients in the United Arab Emirates over the past three years.
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