The need for anti-corruption measures in the Middle East
The Middle East is very much alive to corruption risks posed by factors such as significant investments in infrastructure and innovative technologies and the developing nature of the region’s economies.
To counter these risks, a number of anti-corruption tactics have been deployed, including tighter collaboration between local and international regulators.
We explore below some key trends that have emerged in light of this increasing interconnectedness of regulatory bodies and the enhanced efforts to strengthen the legal framework governing anti-corruption strategies in the Middle East.
The reach of anti-corruption legislation is expanding
There has been a significant broadening in the legislative reach of anti-bribery legislation across a number of Middle East jurisdictions. Previously, most legislative frameworks only criminalized bribery in the public sector. Criminal liability now applies to the private sector in a number of jurisdictions across the region, including the United Arab Emirates (UAE), Saudi Arabia, Bahrain and Qatar.
Additionally, a number of the domestic anti-bribery laws in the region, such as in Qatar and the UAE, have been expanded to cover offenses committed outside the borders of the relevant state.
The Middle East continues to be a source of scrutiny for foreign regulators
Foreign regulators, such as the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) in the US and the Serious Fraud Office (SFO) in the UK, continue to enforce their domestic legislation against companies in connection with their operations in the Middle East using the extra-territorial jurisdiction provisions of the US Foreign Corrupt Practices Act 1977 and the UK Bribery Act 2010.
From a Middle East perspective, it is therefore imperative to consider the legal and economic implications of foreign legislation on businesses that operate in the region.
International cooperation and best practices are a key focus for reform
Governments across the Middle East have demonstrated a greater openness to international cooperation and a desire to use international best practices for shaping national anti-corruption strategies.
Saudi Arabia’s anti-corruption program, for example, places significant emphasis on the benefits of cooperation with international bodies tasked with fighting corruption around the world.[1]
Further, in 2020, the UN Office on Drugs and Crime (UNODC) and Saudi Arabia's Oversight and Anti-Corruption Authority (Nazaha) signed a US$10 million funding agreement to establish a global network of anti-corruption law enforcement authorities, based in Vienna.[2]
Similarly, the Kuwait Anti-Corruption Authority collaborated with the UN Development Program[3] and UNODC to develop a "clear, coordinated and effective" strategy, drawing on best practices globally (including those implemented in other GCC countries) and specifically tailored to Kuwait's legal and institutional systems.
Domestic enforcement action is on the rise
We have seen an increase in the number of investigations and prosecutions in the region. There has also been an increase in publication of information regarding high-profile investigations, arrests and prosecutions for corrupt activities in the region.
The most high profile example of this is probably the “corruption purge” in Saudi Arabia, which in 2017 involved the detention of more than 150 individuals at the Ritz-Carlton Hotel in Riyadh on alleged corruption offenses.
In further examples, Nazaha publicized its arrests of over 200 people on criminal corruption charges in November 2020 and, in September 2021, announced arrests in 20 new corruption cases.
Whistleblower protection is becoming more of a priority
Traditionally, not many laws have offered active whistleblower protections in the Middle East. However, there have been some recent positive changes in this regard.
The Dubai International Finance Centre Operating Law[4] provides employees with whistleblower protection from any contractual or civil liability or when facing dismissal or any “detriment” at the hands of their employer.[5] Where any detriment is suffered by a whistleblower, the employer may be subject to a fine of US$30,000.[6]
In conjunction with the rise in investigatory and enforcement activity by regulatory agencies across the region, governments are increasingly implementing such measures as direct outreach programs designed to encourage reporting of misconduct and compliance violations.
Conclusion
There is real momentum in the Middle East to drive forward national anti-corruption strategies and encourage enhanced transparency and integrity. Companies operating in the region must continue to invest in and expand their compliance programs and tailor them to vagaries of local markets to mitigate risks associated with the region’s evolving regulatory frameworks.
[1] Government of the Kingdom of Saudi Arabia, 'National strategy to protect the integrity and combatting corruption' (1 March 2021), available at: https://www.my.gov.sa/wps/portal/snp/aboutksa/nationalDevelopmentPlans/download/National%20strategy%20to%20protect%20the%20integrity%20and%20combating%20corruption/!ut/p/z0/fY3NCsIwEIRfZV9AtqnVFygaEdr4c7DmIrHGNKibEFehb28Ez95mhvlmUGOHmszbO8M-kLlnf9TzUysWxUpUQqndsiy2TSFFpTZTWc9wbwnXqP-8kqZmrpxqKPhYeLpGrBrfyfw5GTYuhE4QEyBbc_AgwVPOU2eRzB0gT48zpkgl1VKr_iFMd7k4QPDC4mC/.
[2] United Nations Office on Drugs and Crime, 'UNODC, Saudi Arabia's Nazaha Sign $10M Funding Agreement for Global Anti-Corruption Law Enforcement Network' (26 November 2020), available at: https://www.unodc.org/unodc/press/releases/2020/November/unodc-saudi-arabias-nazaha-sign-10m-funding-agreement-for-global-anti-corruption-law-enforcement-network.html.
[3] The UN Development Programme works in about 170 countries and territories. It aims to help to eradicate poverty, reduce inequalities and exclusion and build resilience to countries can sustain progress.
[4] Dubai International Finance Centre Law No. 7 of 2018.
[5] Article 64 of the Dubai International Finance Centre Law No. 7 of 2018.
[6] Ibid.
