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Thu 12 Jan 2012 12:34 PM

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Supply kickbacks ‘rife’ in Dubai hotel industry

Industry experts say kickbacks are way of life to win supply deals for big hotel chains

Supply kickbacks ‘rife’ in Dubai hotel industry
Kitchen staff from Dubais Burj al-Arab hotel are currently on trial accused of taking bribes from suppliers

Hotel staff in Dubai are regularly bribed by suppliers creating a trade in poor-quality food and drink products sold at inflated prices, industry sources have said.

Suppliers complained they had been effectively shut out of the market by companies able to net hotel contracts by offering generous kickbacks to staff.

“It’s getting quite bad; it makes it really difficult to do business. For somebody that doesn’t have deep pockets or is not open to these unethical practices, it is very difficult,” one Dubai-based Halal-food supplier told Arabian Business’ sister title, Hotelier Middle East.

Suppliers were driving the practice of offering kickbacks, he said.

“But these individuals in the hotels shouldn’t buy into such unethical practice, and they’re the ones encouraging it by accepting it,” he added.

A Dubai court heard this week that kitchen staff  at Dubai’s luxury Burj al-Arab hotel had taken nearly $250,000 in bribes in exchange for buying substandard food from suppliers at marked-up prices.

The head chef and butcher in the Jumeirah Group-run property had also allowed frozen fish to be passed off as fresh produce to guests, the Dubai Criminal Court of First Instance was told

In a statement to the court, the chef said he had been approached by two staff members following his promotion to head chef in 2008 and told he would be paid monthly in exchange for only buying vegetables, meat and seafood from four specific suppliers.

A purchase manager at one Dubai hotel said bribes were not specific to food and beverage but spanned all areas of the hotel chain.

 “Kickbacks are… also in engineering, pre-opening projects, purchase of furniture fixture and equipments and operating stocks and equipments,” the manager said. “For example how many financial controllers make it a point to check engineering-related items?”

Smaller scams can be as simple as accepting smaller volumes of food, for the same price.

“Lower-level employees, for example the receiving clerk who is in-charge of receiving goods. He can be bribed by a fruit and vegetable vendor to receive less. If the order was for 35kgs of tomatoes, then he would be receiving only 25kgs physically whereas the invoice would show 35kgs. These are some of the examples and there are more,” the manager said.

Former Taj Hotel Dubai executive chef Joe Vock also claimed that bribery was a "problem" in the market. 

"It affects all hotels here as a lot of them aren't buying the best product that is available because the guys are taking kickbacks, especially in the purchasing departments."

Marcus Dudley, director of food and beverage, Moevenpick Hotel Jumeirah Beach, said he personally hadn’t been offered a bribe.

“We had suspicions about six months ago that one of our employees was involved in that, but no proof and we called in about five different suppliers and asked them directly and of course they said 'no' and were highly offended, whether they were involved in it or not,” he said.

Ibn Battuta Gate executive chef Tunji Oladipo, who has worked in Dubai for 11 years, said that corruption is not specific to Dubai’s hotel market.

“It’s always been the case everywhere. When I worked in London it was the same situation, it’s just become a little more aggressive recently because all the suppliers are going down the same route, supplying the same type of things – there aren’t a lot of specialist items.

“There has always been a lot of supplier buttering up, not so much bribes with money – but gifts and things like that and now they are a little more aggressive,’ added Oladipo.

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Bob the Builder 7 years ago

Believe me, this is not the only industry in Dubai that suffers from the scourge of corruption.....

Citizen 7 years ago

This is true in most industries in Dubai...the media/advertising industry is a prime example...where media managers in large groups accept kickbacks for key advertising locations .....and 'preffered' magazines/sites etc.

gordon 7 years ago

It enriches a few, but we all pay.

we pay with higher prices, lower quality.
We set the wrong example in society about work and rewards.
I teach my children that you work hard, be honest and you will be rewarded.
However if all they see that corruption is the way to grow then we what sort of society will we get.

We all should fight corruption.

elias 7 years ago

totally agree, media/advertising industry recieve kickbacks openly called AVR, which means value added rebate, on top of that media managers recieve kickbacks for preffered spaces. Regulate the advertising agencies like they are worldwide and see the real side of media

Anil 7 years ago

This is not news and it has been going on for many years. It first became accepted practice in the booming airline industry in Dubai. The Hotel/Supplier industry joined soon thereafter. The media/advertising always had this problem but there are a few honest companies in there.

Today, it is very difficult for an honest businessman to make a good living in Dubai. Personally, my business has not grown because i have refused to indulge in such practices. Many times the top management has liked our work but the middle management wants to be kept happy with kickbacks. When we refused to budge on giving bribes to the middle management, they would tell the top management some lies about us and we would lose a potential business.

Only by God's grace we are still doing business with honest clients in Dubai.

Most of the crunching loses the economic downturn has brought Dubai is a direct consequence of 'Management' accepting bribes and permitting low quality services and products to be used.

venkataraman 7 years ago

As ethical standards in every sphere of life is going down, we cannot bring down kick backs. Every industry is offering kick backs in some form or other - Ailines are offering Travel Agency counter staff to issue their tickets, for which they give them kick backs. Hotel Industry marketing people are offering kick backs to their clients to get business for their hotels. Building matierals industry, power projects contractors, Electronic wholesalers, Diagnostic Centres offering Doctors to send patients to their Centers etc.etc. It is impossible to stop kick backs as it is driven by greed of the people, either to get more money or to get more business to earn more profit, etc. etc. This is the practice prevailing throughout the world.

Andy 7 years ago

I honestly can't say I am surprised to hear this. Good thing Arabian Business decided to write an article about this. I doubt much will happen because of this article as this is the norm in Dubai but non the less it was good that this article was written to bring some light to this issue.

Bassam 7 years ago

In the case of Media, these aren't kickbacks; the most prime spots in publications, broadcast media and outdoors are simply premium, just like any other premium good(s)! What you're referring to as 'accepting kickbacks' is actually formulating a bouquet of various media options and vehicles, which you either buy ad-hoc or in bulk, depending on your usage/ campaigns.

Asif 7 years ago

These kick backs are in all most all industries and are worldwide. Lets not forget that even a small favour / or a gesture is also a kind of bribery.

What is the big deal about it ??? Y the fuss ??? Do you seriously think that you could have a world without corruption ??? NEVER

Andy 7 years ago

The other parts of the industry we know about but don't read about because not many editors in the media are willing to risk their jobs by writing an article about it. :)