One in six companies in the Emirates and Jordan are willing to pay bribes to win or retain business, an Ernst & Young report released last week revealed. Joseph B McDonough, a partner in Abu Dhabi at the international law firm Holland & Knight, has trained judges, public prosecutors and law students in Oman, Bahrain, Yemen and the Emirates in anti-corruption measures. Here, he talks about fighting corruption.
What needs to be done to weed out corruption?
Anytime you have a burst of growth, you need to accommodate that with [a] strong accounting mechanism and education. Everyone [in a company] who approves, checks or handles expenditures [must undergo training]. For banks, that means all their employees. There should be constant training on tracking money, updating employees on new scams and money laundering. For instance, people looking at large transactions [but who have] no previous relationship with the bank or the region [should raise a red flag].
What are the checks against corruption?
In the West, as a mechanism against corruption, there is a much larger independent media … [There are also] reporting agencies and independent auditing agencies. In the US and UK, companies have set up [a] mechanism in record-keeping to track all their transactions, so it is easy to spot misuse of money, and it is an obligation for everybody in the organisation to be proactive. The biggest offenders in misuse of money have been … the middlemen or the third parties.
Where do you think the regional companies are falling short?
There's a lot of work to do. Some large [foreign] entities seeking contract[s] are paying something called service fees, without more detailed accounting. In 80 per cent of these cases, it is going to some third party or the middlemen that are engaging in the illegal activity. Procedures should be there [to check] where the money is going … Companies themselves should have [their] officials dig deeper to affirm where the money is going, including the third party, and ask if any of this money is going to influence the winning of the contract.
Have you dealt with corruption cases in the Middle East and North Africa region?
We usually do not do litigation as primary counsel in the region, but have local litigators handle it with our attorneys playing a supporting role. Many of the jurisdictions require local counsel.
What do you think of the progress of local corruption cases in the courts, such as in the property sector?
While corruption is identified internally here by audit and whistle-blowers, it is a rarity that they become publicly litigated. We do not see, or may just not be aware of, corruption cases that go to trial at the [Dubai International Financial Centre] or in other courts.
* Sananda Sahoo
