x Abu Dhabi, UAEFriday 19 January 2018

Corruption lingers in vacuum of toppled regimes

Companies looking to do business in countries where revolutions ousted governments during the Arab Spring have to pick carefully about how to deal with.

Successfully doing business in Libya means making a frank assessment of people and their previous affiliations, says Adel Saudi, the chairman and chief executive of Tuareg Capital, a private equity firm that invests in the country.

The key question to ask of potential partners, he says, is are they "businessmen" or "facilitators", or both?

"You need to team up with the right people," he said. "Foreign companies should know where is their moral and ethical standing."

Two years from the start of the Arab Spring, businesses seeking to avoid the perceptions of corruption that inflamed anger and unrest have few options.

Most companies have been forced to take matters into their own hands, but advocacy groups say the playing field remains uneven.

Many new governments have become entangled in political crises and have lacked the time and resources to tackle the issue head on, said Arwa Hassan, the regional outreach manager at Transparency International.

The advocacy organisation says government efforts to recover stolen assets from ousted dictators and implement reforms in the name of public sector accountability have been sidetracked.

The overthrow of regimes in several Arab countries left a vacuum in institutions and put political priorities into a constant state of flux, Ms Hassan added.

"This creates a space for corruption and an insufficient focus on governance issues," she said.

Many companies felt compelled to work with the current system for "existential reasons" to ensure the survival of their business rather than advocate for reform, Ms Hassan added.

"I don't think in most Arab countries the private sector sees that as its responsibility," she said. "The private sector hasn't been rising to the challenge as much as it could be."

But companies in the Middle East were realising the need to ensure their businesses were not tarnished by perceptions of corruption, said Imelda Dunlop, the executive director of Pearl Initiative, a non-profit organisation that advocates for increased transparency, accountability and improved business practices in the Arab world.

"There's definitely increased attention in the corporate world on making sure that they implement rigorous anti-corruption and bribery practices as well as codes of conduct and codes of ethics," she said.

"There's definitely a need for the private sector to proactively get their house in order."

For the time being, companies looking towards Libya had to approach with caution, Mr Saudi said.

"If you're looking to Libya as a potential market, it's the time to seed it but not aggressively," he said.

After last year's civil war and the focus on holding elections since, the creation of laws to codify many essential business procedures is still many months off.

Many laws are still unclear, such as visa procedures for guest workers, Mr Saudi added.

"There are still ways and means of getting things done, but I hope that this will quickly be structured so that everybody knows what are the proper procedures," he said.

"As a Libyan and as a businessman I hope in the future we'll be more transparent and more professional."