Companies in the GCC are expected to step up transparency and accountability, a report from Standard & Ratings Agency said yesterday
Dubai leads the transparency drive
Dubai has "set the pace" on boosting transparency and accountability among companies in the region as regulators target fraud and corruption, says a report from the ratings agency Standard & Poor's.
The emirate has issued rules in the past two years that could become a blueprint for a legal regime dealing with insolvency proceedings, the report said.
"Corporate governance, long considered the Achilles' heel of companies in the Gulf region, is beginning to feature strongly on policymakers' radar," said Amra Balic, an analyst at S&P.
She said various measures taken by Dubai and other GCC nations point to the growing importance of corporate governance in the region.
The S&P report also drew attention to the "willingness of stock exchanges in the region to punish fraud and illegal activity and defend the rights of minority shareholders".
But it added the markets still "lack depth" and so most economic transactions occurred among unlisted, and therefore unregulated, entities.
Bahrain's new corporate code, which came into effect on January 1, was also praised for promoting transparency and accountability across all sectors, particularly the state's banks.
Banks in Bahrain "stand out" in respect of their corporate governance disclosures, Ms Balic said.
But Maali Qasem, the chief executive of Schema, which advises companies on corporate governance issues, said there was still work to be done in the Middle East, particularly as political unrest gripped parts of the region.
"[The turmoil is] driving people to be more aware not only of their own businesses but the national economy," she said, as investigations into companies with links to former regimes in Egypt and Tunisia uncovered a wave of corruption. "But we are here because there is a shortage of corporate governance in the region."
Ms Qasem said several firms had been in touch with Schema as events unfolded and companies came under fire because of alleged links to the former regimes in North Africa.
"Companies are calling me post-investigation for advice on corporate governance," she said.
She said she expected two companies from the IT and industrial sectors in the UAE to this month report cases of alleged bribery among some employees.
"They are big companies with small issues and I am hoping they will report something this month," she said, without disclosing details.
The cases involve the alleged payment of bribes of up to Dh10,000 (US$2,720) for preferential treatment of companies tendering for contracts.