Transparency is a recurring theme in business, you have to keep on top of those who wish to abide by it and those who like to throw the odd loaded curveball. In the West, when a company unveils its financial figures or delivers its annual report there’s always someone trawling through the data trying to see where the CFO slipped up, handed a few extra million to the auditors or added a couple of zeros where he shouldn’t have. But at least the western world has numbers to examine, applaud or question. The Gulf is a different barrel of crude altogether.
Although transparency is beginning to winch its way up the company elevator towards the boardroom floor there is still a dark cloud looming above certain regulators and companies. Two measures however, must be commended. The publication and release of the Dubai Financial Market’s public companies guide 2006 – a document disclosing all you need to know about the 46 listed companies is a major step forward. Spreading transparency’s 12 letters to one particular sector, property, where it is needed more than most, was equally positive.
The newly formed Dubai Real Estate Authority has been created to oversee property brokers, trust accounts and owners associations. Great news. The next step, however, is to show investors and the wider public what it intends to do about a market where so many are ‘umming and arring’ over whether to buy or head back home for a safer, more regulated market. But let’s face it, there’s still a massive leap to be made. For me the first law of transparency is disclosure, and the majority of public companies should be applauded for the progress they have made. However, the second law, revealing conflicts, appears to have been blatantly ignored by several parties. As Sheikh Sultan Bin Saud Al Qasimi says, there are dozens of cases where conflicts occur.
The fact that a large number of board members serve on more than one competing board has been going on for years, but is at last beginning to be openly discussed and seen by many as unacceptable. Hiring former and current government ministers as well as major businessmen and/or their sons that also serve on competitive boards still goes on day after day, but in 21st century business this is simply seen as conflicting and unethical. If you examine the boards of several companies in the GCC there tends to be a large degree of ‘executive overlap’. We all know it exists, but no one appears to be taking action to eliminate it. It is not uncommon for a CEO to run several businesses and to sell part of a company that he is representing to another that he is managing. This has to stop.
If the Gulf is serious about competing among the experienced, and often ruthless developed international business community, then it will have to drastically address this problem.
The elevator is full of investors, trapped in between floors but with no one willing to press the emergency button. Someone needs to make that leap.
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