UAE

Security that appeals to BlackBerry users is heart of the problem

Authorities are increasingly citing security and social concerns over the communication device.

David George Cosh

July 26, 2010

ABU DHABI // The unique encryption code that gives the BlackBerry phone one of its most appealing features to users - security of information - has made it a concern for many governments, analysts say. Following Saudi Arabia, Kuwait and Bahrain, the UAE is only the latest GCC country to voice concerns over state authorities' inability to access data passed between the devices.

According to Matthew Reed, a senior research analyst with Informa Telecoms and Media, it is the growing popularity of the BlackBerry that has prompted growing calls from governments for control over messages passed among its users. "There is a clash between the local authorities to have some control of the information for social, cultural or fiscal reasons and the fact that technologies like BlackBerry work in a different way," Mr Reed said.

"This comes as the BlackBerry has become essential to commerce in the region. There's a mismatch there." In many Gulf countries, the BlackBerry Messenger service has been increasingly used for social purposes such as dating, which has raised the ire of local authorities, he said. "The discussion expanded to a national security issue saying that the BlackBerry service could harm the country," he said.

The BlackBerry encryption used by Research In Motion (RIM) has been one of the device's main selling points, helping it gain a loyal following since its introduction in 1999. The security features behind the BlackBerry were originally designed to provide corporate users with the ability to transmit their information wirelessly with the knowledge that not even RIM could access their data. According to documents RIM provided to a US computer security agency, each BlackBerry device generates its own "master key" that is used to encrypt outgoing messages.

The data is then sent to a "network operating centre" located in either Canada or the UK. From there, the messages are relayed to the recipient's wireless provider, which in turn delivers them to their BlackBerry device and decrypts them. The "master key" is kept on the device for 30 days, after which a new key is generated. The old key is kept on the device for seven days before it is deleted.

In a statement released in 2008 following requests from the Indian government to obtain the BlackBerry security codes, RIM said it does not possess a "master key", nor is there any "back door" in the system that would allow the company or any third party to gain unauthorised access to the key or corporate data. "RIM would simply be unable to accommodate any request for a copy of a customer's encryption key since at no time does RIM, or any wireless network operator, ever possess a copy of the key," it said.

* with additional reporting by Tom Gara

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”