A Queue in the Sand

Wall Street bigwigs and top corporate chieftains are scurrying to the Mideast petro states to curry favor and pitch megadeals

by Stanley Reed, Emily Thornton and Eamon Javers

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(Top to bottom) Wu Jun/ChinaFotoPress/Zuma Press; Tamara Abdul Hadl/Reuters Photo Archive; DanIel Acker/Bloomberg News; Jennifer Graylock/AP Photo; (Right top) Tim Graham/ AP Photo

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When Morgan Stanley (MS) Chief Executive John J. Mack took his board of directors to Dubai last March, an unusual visitor stopped in to pay his respects: Sheik Mohammed bin Rashid Al Maktoum, Dubai's ruler. Mack had planned to visit the emir in his palace, but the ruler informed bank officials that he preferred to meet at Morgan's Dubai offices, just a short walk from his own office. Within 20 minutes, a conference room was cleared and the furniture moved into a semicircle, the time-honored arrangement for a majlis, or royal council. The sheik, clad in a traditional white robe, was accompanied by a retinue that included three of his sons. While one man wafted incense, the sheik entertained questions and held forth in English for more than an hour about his vision for Dubai.

It was just another moment in the great Mideast money dance. The region, after all, is swimming in trillions of petrodollars, which are now funding a slew of megadeals. In November, for instance, the state-owned Abu Dhabi Investment Authority bought a $7.5 billion stake in ailing Citigroup (C), and in September, Abu Dhabi investment fund Mubadala Development paid $1.35 billion for 7.5% of private equity heavyweight The Carlyle Group. "You're starting to see as many power brokers here as you see in financial hubs like London or New York," says Nabil Lahham, a top Dubai-based investment banker for Lehman Brothers (LEH). They're sounding out moneymen on everything from taking minority stakes in their companies to co-investing in distressed mortgage assets. "You will see many familiar faces in the halls here," says Farouk A. Bastaki, an executive at the Kuwait Investment Authority, which manages an estimated $250 billion of the emirate's wealth.

Sheik Mo, as expats like to call the fit, 58-year-old ruler of Dubai, keeps a gallery of those faces on his Web site for all to see (and while you're there, check out his love poetry). There's a snap of the sheik with Mack, two with Lloyd Blankfein of Goldman Sachs (GS) (who visited in February and June), another of General Electric (GE) CEO Jeffrey Immelt, and a video of his chat with Stephen Green of HSBC (HSBC). The sheik has been known to squire chief executives around town; he once got behind the wheel of a white BMW stretch limo to show Viacom (VIA) boss Sumner Redstone one of Dubai's sprawling construction sites. He likes to pick up intelligence on the global economy from his visitors as they seek his blessing on initiatives in the region—though he doesn't cut many deals himself, preferring instead to steer foreigners to the right locals.

CONFABS AND CAMEL RIDES

Just about all the big names are trying to leave their footprints in the sand. Three months after Morgan's board had its Dubai meeting, Goldman did the same. And on Dec. 10, Carlyle co-founder David Rubenstein, Texas Pacific Group founder David Bonderman, Ripplewood Holdings CEO Tim Collins, and other private equity grandees will attend a conference called SuperReturn in Dubai. As part of the confab, they'll retire to the Bab Al Shams resort in the desert for camel rides on the red sand dunes, mezzes such as tabouleh and babaghanoush, and a performance by a Lebanese belly dancer.

While it helps to be a corporate titan, there are other ways to get in the door. Bankers earn points by going to black-tie shindigs thrown by Omar bin Sulaiman, who oversees Dubai's new 110-acre financial district. Members of the royal family also host majlises at their homes, for both locals and foreigners, where the head of the household sits in a large room lined with cushions, offering dates, coffee, and tea and listening to visitors' concerns.