The Galfar corruption case is just the tip of the iceberg

An Omani government official and two Galfar Engineering executives were handed hefty fines and jail terms last week

Just two weeks ago, on 9 January, Oman was officially signed up to the UN Convention against Corruption. By doing so, it had left a small group of countries, including North Korea, Somalia, Chad, Equatorial Guinea, South Sudan and Eritrea, which have neither ratified nor signed the treaty. Most of the other Gulf states signed up shortly after the convention was adopted by the UN in 2003, although it took Saudi Arabia until the middle of last year to complete the process.

So why has it taken Oman so long? I’m not sure we’ll ever know the answer to that one. But one thing we do know is that the topic is a particularly hot one in Muscat right now. To recap, one government official, Juma Al Hinai, and two Galfar Engineering executives — managing director P Mohamed Ali and business development manager Abdullmajeed Nushad — were handed hefty fines and jail terms last week.

Last September, Omani authorities raided Al Hinai’s house, where they located just under $2.3m in cash. Prosecutors claimed that Al Hinai, who was the head of the tenders committee at Petroleum Development Oman, had been bribed by Ali in a bid to extend a money-spinning contract for Galfar, with Nushad acting as the middle man. Nushad ended up pleading guilty, whereas both Al Hinai and Ali said they were both innocent. Both men will be deported at the end of their jail sentences.

It’s a spectacular fall from grace for both Galfar and Ali, who effectively founded the company back in 1972. Since then, Ali had built the contracting firm into Oman’s biggest private-sector employer, as well as starting up education, transport and infrastructure ventures in the Gulf and India. The Galfar brand is plastered across hoardings all over Oman, where it has built much of the country’s road network, as well as hospitals, palaces, ports and airports. Along the way, he has become one of the richest non-resident Indians in the world.

But the Galfar case is just the most high profile of a series of graft hearings taking place in Oman at the moment. The companies in the spotlight include Oman Oil Company, Larsen & Toubro Oman, Consolidated Contractors Company Oman and Oman Gas Company.

The worrying number of big-name firms facing prosecution does seem to indicate that corruption is, or has been, fairly systemic in the country’s contracting environment. British consultancy Maplecroft warns that “processes across the main branches of government [in Oman] are not transparent, creating an environment conducive to corrupt practices”.

Back in 2011, when Oman experienced a shockwave of protests in several major cities, corruption seemed to be the unifying factor that drove many of the demonstrations. Thousands signed a memo calling for corrupt ministers to be investigated. In response, Sultan Qaboos Bin Said, the country’s ruler, removed ten government ministers and dissolved the ministry overseeing economic affairs.

While the current probes taking place at Oman’s biggest corporates may well be embarrassing for the country right now, lifting the veil over some of the worst practices will help to remove the perception that the sultanate’s business environment is opaque.

“Truth is the sharpest edge. There is tremendous strength in honesty,” runs the headline quote on P Mohamed Ali’s own personal website. It’s a phrase that is no doubt haunting him right now, but it should also serve as a useful motto for Oman’s future corporate leaders.

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Posted by: charles

PDO is a good isnstitution but corruption is not unknown. you need to even take the particular officers out to the bars in each PDO facility so that your project runs smoothly.
PDO rules for construction and other activity like ARAMCO is rigid and if necessary can be used to stall the progress.

coming to tenders the rates of PDO are way ahead of the general rates contractors get anywhere else.So getting job by crooked method is the method for survival and sustainance in PDO to rake in profits which you will not get outside.

So it is natural to go with the system rather than with principles to be part of the projects.

Mohd Ali could have done well without bribes as his proximity to the highest places would have helped him to get projects awarded.
Alas greed and more greed overtook his better senses.I can only pity to a small extent naushad who acted as a middle man to serve his employer,with again greed for added renumeration for being accomplice has now seen him count the bars

Posted by: Naushad Abdul Hameed

Oman is one of the gifted countries in the world and in general Omani's are very friendly and helping people. They do not have any ego to deal with any nationality. Like the people of the country, they are blessed with a visionary leader. I am deeply sadden by the recent news in the industrial sector of Oman and praying that every thing will be alright soon.

Posted by: Abdel Basit

One thing that must be said is that bribery is endemic in that environment. If you do not bribe, the client and consultant will make your life hell. So if you want the project, especially the ones that have the best margins and in which your price is not the lowest (or if your bid is not fully compliant with specs), then you have to grease the wheels.

So don't just blame the money givers; also blame those who demand it.

Posted by: Matt Williams

Yes and thats why properties often end up falling to pieces because inferior products have been used because the spec has been changed & cheap & nasty rubbish is installed instead. I blame both supplier and consultant, laws should be in place to make sure that these companies are stripped and banned or even their personel imprisoned.

Posted by: Akopolip

Everything is known by everyone. PDO and its directors are part of this. Gas Department and Longterm Contracts like a good start to discover the iceberg.

Posted by: hilalta

What happened to the chairman Salim and CEO Hans, They might have known everything that was happening. The revenue from this project ( Bribing has happened) was shown in company's filings. Why no action is taken against Salim and CEO Hans. Price water coopers were the auditors. they must have known all these. Why no action is taken against Chairman Salim and CEO Hans

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