Dubai has a hard-earned reputation as a land of superlatives - home of the world's tallest tower, biggest shopping mall and fastest-growing airline.
But a series of corruption scandals at state-owned property and financial firms is casting a growing shadow on the United Arab Emirates's economic miracle.
Seven executives at state-linked companies have been arrested since April. Dozens more have been questioned on suspicions of bribe taking, including officials from Nakheel Corp., the Dubai developer that last summer snapped up a 20-per-cent stake in Canada's Cirque Du Soleil.
Last week, the government launched yet another task force to crack down on corruption in the financial sector, and sources in the prosecutor's office said there are more arrests to come.
The crackdown is being touted by the state-owned press as proof that Sheik Mohammed bin Rashid al-Maktoum, Dubai's ruler, is committed to transparency.
But critics have said the anti-corruption drive merely addresses the tip of the iceberg, ignoring some of the underlying problems of doing business in Dubai, where state-owned companies rarely issue economic data and regulations are sometimes applied unevenly.
"The authorities are having to bring these cases to light because if they did nothing, they were bound to emerge on their own," said Christian Koch, director of international studies at the Gulf Research Center.
"They have to build confidence in the economy and investor trust."
Fighting corruption may be painful in the short term, but it is absolutely necessary for sustained economic growth, he added.
Dubai's ambition to become a global hub for business and tourism has translated into double-digit economic growth for the emirate over the past five years. However, oversight agencies have struggled to keep pace.
The anti-corruption drive serves a dual purpose, Mr. Koch noted: Reining in rogue business practices at home while sending the message to overseas investors that it is a safe place to do business.
However, some observers have said the campaign has had the opposite effect, drawing attention to corruption and shaking investor confidence.
Critics also have begun to quietly question whether the graft-related arrests will result in any actual convictions. None of the suspects being detained have appeared in court.
The prosecutor's office has said the unprecedented scale of its corruption investigations means it will take time to gather evidence.
But critics have said the delays could indicate the suspects might avoid trial altogether.
"A lot of the people implicated are Emirati nationals with close links to the authorities. Arresting these people is one thing, making them actually do time is another," said one local analyst who did not want his name published because his views could be considered controversial by the authorities.
He cited the case of Obaid Busit, who in 2001, while Dubai's Customs chief, was tried and convicted of taking millions in bribes, but served only a fraction of his 27-year sentence.
The government, meanwhile, has said it would continue its crackdown on white-collar crime in the coming months.
"Any employee exploiting his position to make illegal profits will not have immunity," said a rare statement from Sheik al-Maktoum's office.
The campaign is gathering momentum as economic uncertainty grows, with analysts forecasting a slowdown in Dubai's property boom in the wake of market jitters and a credit squeeze.
The arrests themselves have sent stocks once considered safe into freefall. Shares of Tamwheel PJSC, in which Istithmar World, Nakheel's investment company, holds a 21.6-per-cent stake, shed a quarter of their value when its chief executive officer was jailed last April.
However, for Dubai's rulers, such a plunge in equity markets is viewed as less damaging than what the economy would suffer in the long run if the graft went unchallenged: "It's all about confidence and restoring capital flow in difficult times. If investors aren't confident, the money won't flow here like it used to," said Jason Goff, head of treasury sales at Emirates Bank.
Of all of the Gulf countries, only Qatar ranks higher than the UAE in Transparency International's latest Corruption Perception Index.
Ahmed Shehada, chairman of the Canadian Business Council in Dubai, said he was "surprised at the scale of the crackdown," but added, in some ways, that it was irrelevant: "In a different world, there should be more transparency, but at the moment, it is like any other emerging market - the rewards still outweigh the risks."
