QATAR CONVICTS TWO EXECUTIVES OF INSIDER TRADING

UNCLAS SECTION 01 OF 02 DOHA 001733

SIPDIS

STATE PLEASE PASS TO USTR - J. BUNTIN

E.O. 12958: N/A
TAGS: ECON ETRD QA
SUBJECT: QATAR CONVICTS TWO EXECUTIVES OF INSIDER TRADING



1. (SBU) Summary. The State of Qatar recently convicted
two senior corporate executives on charges of insider trading
on the Doha Stock Exchange. One of the executives convicted,
Saeed Abdullah Al-Misnad, is an uncle to the Amir's wife, the
powerful Sheikha Mozah Bin Nasser Al-Misnad. When the
Attorney General met with Sheikha Mozah to inform her about
her uncle's case, and seek her guidance on how to handle it,
Sheikha Mozah reportedly told the Attorney General to perform
his duties as required, regardless of the parties involved.
These convictions suggest that Qatari leadership is making
genuine efforts to improve transparency, rule of law, and
respectable corporate governance. End Summary.


2. (U) The State of Qatar has convicted two senior corporate
executives on charges of insider trading on the Doha Stock
Exchange. Saeed Abdullah Al-Misnad, then chief executive of
Qatar National Bank (QNB),and Nasser Saeed Al-Rumaihi,
general manager of Qatar Shipping, were each sentenced to
three months in jail. Mr. Al-Misnad is appealing his case.
Ali Sherif Al-Emadi, a former Risk Manager at QNB, was also
implicated in the insider trading but was not charged.


3. (U) The case centers on claims that Al-Misnad,
Al-Rumaihi, Ali Al-Emadi, and others bought shares in Qatar
Shipping in late 2003 and 2004 knowing that the company was
planning to acquire a small private firm called MECON, a
subsidiary of Mannai Corporation. The accused made large
profits from Qatar Shipping shares, which shot up
significantly after the acquisition was announced. Qatar
Shipping bought MECON in April 2004 in a deal worth about USD
$6.87 million. Upon selling their shares, both QNB
executives allegedly earned approximately $1,500,000 on the
transaction.


4. (SBU) On September 29, 2005, Econoff and Commercial
Assistant met with Fahad Bin Faisal Al-Thani, Deputy Governor
of the Qatar Central Bank. According to Sheikh Fahad, since
the people involved were prominent members of Qatari society,
the Attorney General took cautious steps before going public
with details of the case. Al-Misnad is an uncle to the
Amir's wife, Sheikha Mozah. Sheikh Fahad stated that the
Attorney General had met with Sheikha Mozah to inform her
about her uncle's case, and sought her guidance on how to
handle it. Sheikha Mozah reportedly told the Attorney
General to perform his duties as required, regardless of the
parties involved.


5. (SBU) Sheikh Fahad also noted that the Attorney General
gave both QNB executives the opportunity to admit their
illegal activities. According to reports, Al-Misnad
persisted in claiming that he did nothing wrong, that the
money he made on the stock transaction was absolutely
legitimate, and that he was confident the Qatari judicial
system would absolve him of any wrongdoing. Conversely, Ali
Al-Emadi offered to return all money he made on the deal to
stop any prosecution from going forward against him. The
Attorney General accepted Ali Al-Emadi's offer, and proceeded
to prosecute Al-Misnad.


6. (SBU) Sheikh Fahad also noted that after the conviction,
QNB would not keep Al-Misnad on as CEO, as that would violate
Central Bank regulations, and that Al-Misnad would never
again be allowed to work in an executive position at any bank
in Qatar. Although Ali Al-Emadi turned in the money he
gained from the transaction, Sheikh Fahad stated that he and
Central Bank Governor Abdallah Bin Khalid Al-Attiyah agreed
that Ali Al-Emadi should be treated the same as Al-Misnad.
He noted that Ali Al-Emadi is supported by Yousef Hussain
Kamal, Minister of Finance and Chairman of QNB, who believes
that since Ali Al-Emadi was neither convicted nor sentenced
he should not be removed from his duties at the bank.
Minister Yousef Kamal's support for Ali Al-Emadi is not
surprising, as both are members of Al-Emadad, a tribe of
Iranian extraction.


7. (SBU) Ali Al-Emadi is currently acting as CEO of QNB;
however, according to Sheikh Fahad, he is likely not be
confirmed as official CEO as long as the Central Bank
Governor and Deputy Governor are, respectively, Abdallah Bin
Khalid Al-Attiyah and himself.


8. (SBU) This is not the first case of stock manipulation
that has grabbed the public's attention in Qatar. The first
case involved Ali Hussain Ibrahim Al-Fardan and two Egyptian
expatriates. Initially, Qatar Airway's CEO Akbar Al Baker
was also implicated in the case; however, First Deputy Prime
Minister and Minister of Foreign Affairs Sheikh Hamad Bin
Jassim Bin Jaber Al-Thani used his leverage to help get Al
Baker out of trouble. The second case resulted in the
dismissal of three high-level ministers of government:
Mohammad Bin Eisa Al Muhannadi, Minister of Cabinet Affairs;
Mohammad Bin Abdul Latif Al Mana, Minister of Endowments and
Islamic Affairs, and Sheikh Abdullah Bin Mohammad Al-Thani,
Chief of the Emiri Diwan, who were alleged to have been
involved in the illegal trading of Qatar Natural Gas
Transport Company shares.


9. (U) Comment. These convictions suggest that Qatari
leadership is making genuine efforts to improve transparency,
rule of law, and respectable corporate governance. Although
there has been progress, there is still some resistance in
both high and lower levels of government. The control body
of the Doha Securities Market and other government agencies
are also striving to preserve the interest of small investors
and make transparency the norm in all financial transactions.
End Comment.


UNTERMEYER