Business | General
Middle East companies improve performance in fighting corruption
Enforcement of anti-corruption regulations has strengthened in the Middle East in the past five years, a new report shows.
- By Gureni Lukwaro, Staff Reporter
- Published: 23:33 June 23, 2008
Dubai: Enforcement of anti-corruption regulations has strengthened in the Middle East in the past five years, a new report shows.
Findings by Ernst & Young's 10th Global Fraud Survey: Corruption or Compliance - Weighing the Costs, for which a sample of the largest companies by turnover in the Middle East and around the globe was interviewed, also suggested that 72 per cent of the companies in the Middle East view anti-corruption laws and regulations as being strongly enforced.
In this survey, where researchers conducted 1,186 telephone interviews with senior executives in large organisations in 33 countries, 76 per cent of senior executives identified training and awareness as a successful measure in minimising the risk of bribery and corruption and they are also more confident that internal audits are successfully detecting fraud or bribery.
Due diligence
Tareq Haddad, partner and head of fraud investigation and disputes services at Ernst & Young in the Middle East, said: "Non-Middle-Eastern companies need to consider more robust due diligence measures, particularly when they are active here in the region. They should consider potential regulatory liabilities in their jurisdictions and in the Middle East relative to bribery and corruption. It is not just about avoiding penalties, it is about improving business."
Commenting on the survey, Raju Menon, managing partner of Morison and Menon chartered accountants, said the survey does not take into account the cultural and financial aspects of the issue.
Menon said even though anti-corruption laws are there, it is the culture and the government commitment that do more to reduce corruption than regulations.
"Middle Eastern cultures are better anti-corruption enforcement measures than laws. Plus, people in the Middle East, especially business executives, are well-compensated financially, so they can afford luxuries and many other good things in life and therefore are not tempted to engage in corruption," said Menon.
Additionally, survey findings revealed that Middle East respondents do not see a whistleblower hotline or communication channel as effective in minimising the risk of bribery and corruption.
Companies in the Middle East are less knowledgeable about the Foreign Corrupt Practices Act (FCPA) regulations. They are also less likely to consider bribery or corruption-related risks post-acquisition.
Ernst and Young Middle East audited Dubai Islamic Bank, whose real estate subsidiary, Deyaar's former CEO, Zack Shahin, was jailed on corruption charges.
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