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
By Ed Attwood
Sat 18 Jan 2014 12:19 PM

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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