In general, there are three kinds of accepted corruption that are standard in the world today: organized corruption, which includes gangs and criminals; petty corruption, which involves small amounts of money and business or political corruption, which, in the GCC, is yet to be officially recognized as a crime. Some GCC countries have ranked quite well in the 2008 Transparency International survey, achieving scores that are not too far behind established democracies. In the latest report, Qatar is 32nd, the UAE is 34th, Bahrain is 46th, Oman is 53rd, Kuwait is 60th and Saudi Arabia, the least corrupt country in the GCC, is 79th.
It is no surprise that Qatar and the UAE are ranked higher on the list than the other GCC countries. What is surprising, though, is that both countries rank just after Israel, which is 31st. What’s wrong with that, you may ask? Well, quite a bit. Israel is a country that is currently investigating its head of government for the purchase of a house at a price below market value. In the GCC, buying a house which favorable terms is, quite frankly, an advantage, if not a reason in itself to enter the government.
Bahrain and Kuwait, the two countries with the only active parliaments in the GCC, have stood out recently in terms of fighting corruption. Not many countries in the GCC are willing or able to do what Bahrain’s daring Crown Prince Sheikh Salman did recently.
In the autumn of 2007, Sheikh Salman launched an anti-corruption campaign that shook the Kingdom. Officials from Aluminum Bahrain, Gulf Air and Arab Ship Building have been questioned or referred to public persecution for crimes ranging from pocketing commissions to misappropriation of funds. The Kingdom’s pioneering telecom company, Batelco, also came under scrutiny after it was accused of paying US$ 30 million to secure a telecom firm in Jordon. Batelco is not the first Bahraini firm to be accused of corruption there.
Such incidents have irked the Crown Prince so much so that he deliberately, and uncharacteristically for the GCC, took the route of an open exchange of letters with his father the King in order to secure the necessary power to root out corruption from the highest echelons of government. The Crown Prince vowed that the campaign would “not spare any minister implicated in corruption.”
Not too long after the letters were exchanged, the Prime Minister’s son, a close cousin of the Crown Prince, was ousted from his position as head of Bahrain’s airport author. Subsequently, a new law was introduced obliging most ministers in Bahrain to report directly to the Crown Prince’s economic development board, thereby bypassing the office of the of the Prime Minister.
Kuwait has also shown courage in the field of fighting graft. In September 2007, a court slapped a life sentence on a former undersecretary of defense and fined him a staggering US $72 million for corruption.
The Saudi press has not been able to publish some of the more important scandals in the Kingdom; instead, there were reports of 500 petty bribery cases in Riyadh in 2007.
In the UAE, a professor of administration at Emirates University has stated that if such international surveys were being carried out across the entire country and not only in Dubai, then the UAE would not have ranked so well because “corruption in the other emirates is higher”, in addition to other unprintable allegations.
In Qatar, two agriculture ministry officials were charged with embezzlement of funds totaling US$ 270 million in 2005 to build private villas and a residential complex. Since then, however, not much has been heard about the matter.
So why is all of this important? According to Dr. Ahmad Belhasa, chairman of the UAE Contractors Association, the real estate industry is most prone to corruption in the GCC, as there is “no accountability and no punishments to companies or individuals involved in corruption.”
As the GCC countries proudly announce that they have hit the trillion dollar mark in terms of construction deals, is it not surprising that In the GCC’s largest economies, no one is brought to account, charged or even investigated. I wonder what Transparency International has to say to that.
This article originally appeared in the May 2008 issue of MONEYworks.