Corruption in Gulf declines, but threat to economy still high
Corruption and mismanagement in a number of Gulf countries have declined, but the threat to investments in those countries and other Arab states is still high, according to a report in the September issue of Saudi Al-Majallah magazine.
The financial difficulties faced by some Gulf States after a drop in oil prices caused a decline in petroleum revenues, lading a to a government crackdown on mismanagement and loopholes that had allowed some officials to siphon off bribes or commissions. The magazine said the crackdown resulted in a drop in corruption and commission taking this year.
Al-Majallah said the practice of commission taking appeared during 1960's and 1970's when oil prices were high. The use of middle-men or brokers to conclude deals on petroleum projects, urban projects, and even weapon sales the norm for doing business in most Gulf countries. But governments began feeling the pinch of projects given unqualified but commission-paying companies, as well as of non-essential projects that merely added to the financial burden of governments.
As the number of brokers increased, governments were forced to act against the practice. Several administrative and accounting supervision committees were created in companies and government departments. Project contracts were announced and submitted through public bids and were awarded by a committee, not by an individual.
According to international institutes, commission taking and corruption cost several countries in lost investments. A 1998 study by Standard & Boris D.R.I found that the practice of commission taking is highest in Kuwait, Iraq, Libya, Algeria, Egypt, Syria, Jordan, Morocco and Tunisia.
The study also found that corruption in the banking systems of Syria, Libya, and Yemen were as high as in Russia, Panama, Nicaragua, and Ukraine.
The World Bank and International Monetary Fund rank the Middle East "medium" on the world scale of corruption and mismanagement. “Corruption in the Middle East can be found in different forms and on various levels, and the spread of corruption differs in one Middle Eastern country to another," Daniel Hoffman, corruption expert in the World Bank told Al-Majallah.
The most common form of corruption in Gulf States is the abuse of power for personal gain, Hoffman said. Insider trading on the stock exchange is another common practice in the Gulf.
As a result, many officials have been fired and prosecuted, and observers say this should deter others and eventually lead to a decline in corruption. –(Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)