“You’ll be glad to know that there is logic behind the perceived madness,” CEO Badr Jafr explains two minutes into our conversation.
Two hours later, it’s clear why he says this. From the outside, even the most cursory glance gives the impression that Crescent Enterprises is all things to all people. Look closer, and you see a highly integrated, structured business that employs thousands of people, is highly profitable, and is challenging the norm of the way Arab companies do business. Transparency, social awareness and emotional ownership are just as important to Jafar as a decent P&L sheet. Welcome to Badr Jafar’s world; welcome to the new way of running an enterprise.
“The non-trodden path is always the exciting unknown path. I truly believe in the value gains behind adopting these corporate governance principles,” says Jafar, adding: “Some of the reasons why a lot of companies in the region have not moved towards international standards is because they feel ‘if I’m the first mover, I’m going to be the one most disadvantaged,’ so it becomes a chicken-and-egg scenario: who’s going to move first? But, I believe in everything you do, you must lead by example... it’s not just about good practice for the sake of good practice, it’s because you think you are actually going to do better and be more profitable and successful as a business or a group by adopting those standards.”
That may all sound very idealistic, but Jafar is talking from a position of strength and experience. He may only be 33 years old, but has already run and done more than most entrepreneurs twice his age. As managing director of the Sharjah-based family business Crescent Group, he is best known for being the president of Crescent Petroleum.
Established over 40 years ago, Crescent Petroleum was the first regional, independent, privately-owned petroleum company to engage in the acquisition, exploration and development of petroleum concessions, and the production and sale of crude oil, petroleum products and natural gas. Today, Crescent Petroleum has operations and offices worldwide and is a world beater in its field.
But if you think the Group is all about the energy industry, think again: Crescent Enterprises (of which he is CEO) is another wholly-owned subsidiary of the group. Formed only six years ago, it is where all the family’s non-energy businesses are parked. There is aviation, real estate, media, private equity and, of course, the highly successful shipping and logistics outfit Gulftainer. During the last six years — through the worst recession in living memory — Gulftainer has grown by 15 percent year-on-year.
According to its annual report, by 2016, it will be turning over $1bn of revenues. Add to that the other 13 companies under the Crescent Enterprises umbrella, and you are talking huge potential for success.
“My father who founded the businesses is an entrepreneur, and I always say that he taught me everything I know, but he hasn’t yet taught me everything that he knows! One very important thing he taught me is never to accept things for what they seem. Always question and use your common sense and initiative to try and see where the opportunity lies,” he says.
But for Jafar, building such a huge and successful enterprise is just part of the story. While Crescent Enterprises is “very profitable”, Jafar says he is now looking to develop what he calls “integrated reporting”.
He explains: “I would not consider any entity to be successful just based on its annual financial returns. Profitability is, of course, a key aspect of success, but beyond that an integrated report goes into social returns and, wherever possible, environmental returns. Integrated reporting doesn’t exist widely in this part of the world yet. Some companies are leading the way, like Abraaj Group and Aramex, and we are making significant efforts to create an integrated reporting structure ourselves. Yes, we are profitable today but we want to ensure that we are self-critical about our social returns and our environmental returns. We are looking at the best integrated reports worldwide, like Unilever and Walmart, and will bring that best practice here.”
In other words, what Jafar will produce in terms of an annual report for his privately owned company will be even beyond that produced by most FTSE 100 companies.
“We want to try and demonstrate what the real net impact of Crescent Enterprises is on its tens of millions of stakeholders and beyond what it might generate just for its few shareholders,” he says, adding: “I hope it happens because there is a concerted belief that it is in the best interests of their individual companies, not just because it is best practice. That’s the only way that you are going to propagate action on a wide scale, and at the speed needed.”
All this leads rather neatly to the Pearl Initiative — founded separately by Jafar — which is a private-sector-led, not-for-profit initiative set up to improve transparency, accountability and business practices in the Arab world. It has a growing regional membership network of business leaders committed to driving joint action and sharing knowledge and experience.
Article continued on next page