Lack of corporate governance holds Gulf states back

* username: rupertbu

Over the past two years, the Gulf has witnessed a number of major scandals in public corporations which have come to light despite the secretive nature of the region’s business world. Even in the 1990s, it was not uncommon for rulers to get involved to resolve problems, regardless of a company’s transgressions. Not surprisingly, some remember that period as the “good old days”.

Today, corporate governance must be taken more seriously. The growing economies of the Gulf states are becoming a centre of attention in financial circles. Unfortunately, despite many people’s efforts to reform corporate governance laws and stamp out corruption, very few changes have actually been made and collective action has been largely absent.

The issue of the Saudi Arabian Al Gosaibi and Saad groups, which are in debt to the tune of $20 billion (Dh73.5 billion), much of which is owed to Gulf and Emirati banks, highlights the importance of collective reform and responsibility. Ideally, the collective leadership of the GCC would function as a board of directors, with citizens as shareholders and expatriate residents as stakeholders in the establishment. In the business world, a board of directors represents the interests of both the shareholders and the stakeholders – the latter need not own shares in a firm to still be affected by its decisions.