AUTHOR: JAMES BENNETT
James Bennett meets Sheikh Sultan Bin Saud Al Qasimi, managing director of Al Saud Investments.
“Anything I say you’re welcome to print,” says the 29 year-old Sheikh Sultan Bin Saud Al Qasimi, “but I’m not sure you’ll be able to print all of it,” he adds cracking a cheeky smile at me from behind his desk.
“Oh, we’ll see,” I reply.
Sheikh Sultan’s views are notoriously controversial and posted regularly on his blog, however, it isn’t often he speaks to the press, mainly as even the media get a bashing. “I’m sorry if I’m being very blunt but there’s a lot more tabloid than investigative journalism here and everything in the press is positive, positive, positive.
“I want to see something where you have the power to change people’s mindsets, the power to highlight certain defects in the economy that can be changed, but I feel like many people tread a thin line,” he adds.
I understand that in the seventies, eighties and even early nineties there were no measures in place, but business has changed and we are aiming to become international players.
The large majority of Sheikh Sultan’s opinions are equally forthright. As managing director of Al Saud Investments, a predominantly construction and real estate company that builds most of its properties in the UAE emirate of Sharjah and that has stakes in some major players across Europe, India, the Gulf and the Middle East, he doesn’t need to voice these thoughts. But he tells me feels he has to. “I want to tell people what is going on, the truth isn’t often heard.”
In one of his most recent blogs, Sheikh Sultan wrote a 722-word piece on his view of a stereotypical, and what he calls, ‘fictional’, Gulf company.
He labels them contradictory; says that the large majority operate under a cloud of conflict of interests including hiring (ex) government ministers as well as major businessmen and/or their sons who also serve on the boards of several of their competitors; that CEOs rarely, if ever, tell the truth to the media; and that they don’t allow investors access to their financial controller or accounting team as is the case in Europe, Asia and North America. And that’s the just the beginning.
“I was so angry that I was forced to write something. It’s about every company in the Gulf. There’s a degree of truth in every company you look at in the GCC,” he explains.
“Insurance companies have portfolios that go into billions of dirhams, companies that have nothing to do with investment start investing themselves, boards are constituted of people on competing company boards. It’s a big farce, the biggest joke that happened in the world.”
He may over dramatise in some of the words he chooses but there is a clear conflict of interest in some aspects of the Gulf business world.
As Sheikh Sultan explains from his office in Sharjah that contains works from some of the UAE’s best known artists, companies that compete with one another should not that have exactly the same board members, many of them ministers, as one another. “They should have self-respect and they should agree to not be appointed to those positions. I understand that in the seventies, eighties and even early nineties there were no measures in place, but business has changed completely and we are aiming to become international players.
“In those days we had to import our ambassadors from Egypt and Palestine, they weren’t Gulf nationals.
“I understand that 30 years ago but today it isn’t justified and they should take a long, hard look at themselves.”
If you examine the boards of several companies in the GCC there tends to be a degree of ‘executive overlap’ between businesses. “We all know it exists,” claims Sheikh Sultan, but no one does anything about it.
“When you find a good person you shouldn’t inundate them with 10 or 20 positions. Everyone knows who these people are and it’s no secret. There have been so many times when a top local CEO has been in several conflicting positions and no one has had the guts to say so.”
Sheikh Sultan recalls a recent experience whereby a very prominent CEO was leading three companies.
“There was a serious amount of conflict of interest and nobody said anything. He sold part of a company that he was representing to another company that he was managing, that is a complete conflict.”
Fortunately there are an emerging breed of pioneers that are adopting international values. The young businessman picks on Kuwait and Oman, claiming that the rest of the Gulf is 15 to 20 years behind.
“I was a member of several non-conflicting Omani companies not so long ago. In Oman no minister is allowed to serve on a company board. It doesn’t allow you to serve on competing companies and there are many other restrictions. And this was drafted and implemented 10 years ago.
“The other day Abu Dhabi announced that anybody with more than a 5% holding has to be identified.
“Is it going to take another five years to say that if you serve on two competing companies then you should resign from one of them? Why has it taken them so long to do that? It’s not rocket science.”
So is this going to change with the flurry of Arab/European and US takeovers that have been signed, sealed and delivered over the past 18 months? Sheikh Sultan rather gloomily suggests that the GCC will take its record of bad corporate governance to Western companies.
Qatar, however is a different ball game, he adds. “A few weeks ago the Qatari government announced that the Qatar Finance Centre (QFC) is going to regulate the entire economy. That is the way it should be. “You shouldn’t have two competing regulatory authorities.”
One of his biggest bugbears and one that would immediately be condemned in the US or Europe, is when regulatory authorities transform themselves into investment companies.
“Can you imagine the SEC in New York buying Boeing or Airbus shares? There’d be a huge problem,” he says.
“You do not buy when you’re a regulator, but here the regulatory board members are the biggest businessmen who own companies that are being regulated. This is one of the biggest conflicts of interest, if not the biggest.
“People ask why the UAE isn’t advancing in terms of international transparency. We’re never going to advance if you start investing in yourself or if you allow competition that isn’t clear cut.
Everyone knows who these people are and it’s no secret. There have been so many times when a top local CEO has been in several conflicting positions and no one has had the guts to say so.
“But as every good blogger knows, naming names isn’t good form, or very Web 2.0 for that matter,” says Sheikh Sultan, mentioning that he’ll have “Facebooked” me by the time I get back to the office.
I ask him if the alleged conflict of interest and slow pace of change that exists is hindering the country he grew up in and profits from.
Sheikh Sultan says he has far bigger plans – to improve the way the country is viewed and dealt with internally and on an international scale.
“This is my country and I want to better it for the current generation, Generation Y, and the next. HH Sheikh Mohammed bin Rashid Al Maktoum is grooming a second and third generation of leaders and you are starting to see them come through now.
“I just hope they are after the challenge and that when they have been given board representations on two connecting companies that they say something.”
The MD of Al Saud Investments is the son of one of the forefathers of modern day Sharjah and the Gulf business world, Sheikh Saud Al Qasimi, and has been in charge, alongside his brother Sheikh Majid, since he passed away two years ago.
Born in 1939, Sheikh Saud was seen as one of the pillars in the development of the Sharjah emirate along with the Royal family.
From a very poor existence he managed to spot an opportunity in the construction industry and was one of the pioneers in developing the skyline of Sharjah; and with 27 museums seen as the cultural capital of the UAE and by far and away the most traditional.
After spending his formative years in India and Kuwait, Sheikh Saud moved back to Kuwait Education office in the 1960s. Following a strong belief in the idea of ‘Tawajud’, or presence in many areas, he entered the real estate market, moved into the retail sector and became a respected investor in the stock market. In one of his earliest encounters he came upon one of the founders of the National Bank of Kuwait, who, Sheikh Sultan explains, gave his father “shelter” and helped him settle when he was first starting out. “We will never forget what he did for us and my father, we are forever indebted to them,” Sheikh Sultan says graciously.
Al Saud is now a prime investor in NBK, one of the most stable and richest investors in the Gulf, and a company that has its eyes firmly fixed on huge expansion plans in the region and abroad.
A large section of the Al Saud website is dedicated to the life and times of Sheikh Saud, and his youngest son tells me how much he has greatly influenced him and the way he now carries himself and the family business.
“We always strive to uphold the traditions of our founding father by continuing to preserve and grow the company in an ethical, strategic and resourceful manner in order to create sustainable financial success,” he says, and for a 29 year-old that has been ingrained in business from a very early age, this is impressive stuff.
But Gulf family businesses are facing up to the biggest period of upheaval in 35 years. Sheikh Sultan, however, is part of the new breed, the one that wants change, not for the sake of change, but for the better of his own family interests and to introduce clear and transparent international guidelines in order to grow and attract an increasing amount of foreign investment.
One of the most groundbreaking measures he took after his father died was to create a family business charter, a 50-page document that dictates every way in which the business should be run – and something he believes should be implemented in every family company across the region.
“It dictates the way dividends are paid to my shareholders, there is a clause to say exactly how much ‘Zakat’ we should give, a clause that says we will not lend to family members, and that we re-elect our chairman every three years by shareholder vote. This is change.”
At first the charter met resistance from certain family members, he says, but Sheikh Sultan persisted and argued that this would eventually be seen as a major step in the right direction allowing future generations to operate in a dynamic, democratic and transparent fashion.
Despite turning round the way his business functions, Sheikh Sultan says the way local businesses operate with banks is wrong, “they have great relationships with banks but don’t declare anything, while banks always believe there is more where that came from so they stay partners for years. It works both ways.” One of the Sheikh’s favourite mottos is that, until now, the UAE and the rest of the Gulf has only prepared for the best and never for the worst.
However, with talk of at least one company collapsing in the next two to three years, he confidently predicts that one of the local banks could soon suffer financially or even go under completely. Once again, without naming names, Sheikh Sultan suggests that a certain local UAE bank that is offering very high loan-to-valuation ratio property financing could be the first to feel a major profit downturn.
Then his attention suddenly shifts to bad debt, moving from one subject to another in the space of a few milliseconds is just his style.
“The UAE must do something about bad debt. How can 40% of people in jail be there because they can’t pay their debts, most of this is in real estate.
“On top of that 8% of people abscond from the UAE and all because we have a credit bureau that has only nine banks to its name. There are 53 banks in the Emirates and it should be obligatory for them to join Emcredit. Why isn’t this the case,” Sheikh Sultan asks.
“Banks should be held responsible, if you can’t afford to buy such an expensive property, you can’t afford it, buy smaller.
“Buying higher than your income levels is allowing the banks to take advantage.”
I ask him that with all these views why he hasn’t attempted to climb the ladder to officialdom, where his voice would be heard everyday and opinions immediately acted upon.
For now, he says, he is happy to maintain and grow the family business and weblog his thoughts online.
“Did you get all that?” he concludes. I nod approvingly in the knowledge that Sheikh Sultan’s views will strike a chord with many, but equally be thought of as unfair by others.
Either way, nobody can accuse Sheikh Sultan of not starting the debate.
This article originally appeared in Arabian Business on August 9, 2007. A screenshot of this article can be downloaded here.
