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Wed 10 Mar 2010 09:09 PM

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Non payment of UK firms a serious issue - minister

UK minister advocates transparency as the most important way to deal with problems.

Dubai has made progress in handling its debt crisis more openly, Britain's trade minister said on Wednesday, but delays in the payment of contractors by government linked entities was a "serious issue".

Mervyn Davies, minister of trade, investment and business, on a visit to the UAE, was due to meet top Dubai finance officials later on Wednesday, although he declined to say what would be discussed.

Davies' trip to the UAE comes nearly a month after British Business Secretary Peter Mandelson, himself on a visit to the UAE, said Dubai's handling of the debt crisis, as it negotiates with creditors on repaying $26 billion in debt, would affect its ability to attract future investment.

Speaking to a British business group in the Gulf Arab emirate, Davies said: "When you have a problem, the most important thing is to lay it all out in a transparent way and then tackle it."

He added: "Some progress has been made in that regard in Dubai."

Dubai World met with major creditors in London this week, including HSBC and Standard Chartered, and a debt proposal is expected to come soon.

The conglomerate asked for a six month standstill in November for repaying debts, linked mainly to its property units Limitless World and Nakheel, builder of Dubai's palm shaped islands.

The company is in talks with a seven member unofficial creditor committee made up of HSBC, Standard Chartered, Royal Bank of Scotland, Lloyds, as well as Japan's Bank of Tokyo Mitsubishi, a unit of Japan's Mitsubishi UFJ Financial Group.

Two local banks are also on the panel, whose members are believed to represent about two thirds of total exposure to the conglomerate.

Speaking to reporters, Davies, former head of London based Standard Chartered bank, said: "HSBC, Standard Chartered have been here for a long time and they are here for the long term."

He added: "Has their resolve been tested in the short term? Yes ... but they have been here a long time."

Among the top officials Davies was slated to meet were Sheikh Ahmed bin Saeed al Maktoum, head of Dubai's Supreme Fiscal Committee, and Mohammed al Shaibani, deputy head of the committee.

He was also due to meet the UAE Economy Minister Sultan bin Saeed al Mansouri.

Davies declined to say whether British contractors, who along with other firms are owed billions of dollars by government linked entities, had been repaid.

He said: "This is a very serious issue. We have consistently said that it's very important that progress is made in paying the British construction companies and in coming to some kind of deal."

The British ambassador to the UAE, Edward Oakden, told reporters British authorities in Dubai were in close contact with the companies involved and with Dubai.

Oakden said: "Over the past few months or so there's been a taking stock by the Dubai authorities and that process is moving forward rather than backwards." (Reuters)

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