Wednesday, March 30, 2011

Corruption in Oman: Redux

It was, truth be told, the topic of my first actual post way back in Sept 2007 (that does seem an age ago...)

It is that aspect of Omani society that is driving the continued polically inspired protests in Oman: the commonly held view that there is significant high-level corruption in this country. A few quotes:

Arabian Business, 18th January
"Oman protestors call for fight against corruption"
...Protesters chanted slogans calling for an end to corruption and carried banners saying “Rising prices have destroyed the dreams of ordinary citizens”...

Financial Times March 15th:
"Oman protesters demand corruption investigation"
In spite of a series of concessions made by Sultan Qaboos bin Said al-Said, the ruler, protesters in Oman are demanding that former ministers be investigated for alleged corruption, according to reports.
Despite these concessions, protesters have gathered outside the Majlis al-Shoura building in Muscat, the capital, demanding that a new police chief investigate some of the ministers sacked since unrest started to grip the country.

“The new inspector general must immediately do his job and investigate the sacked ministers for corruption when they were in power,” one demonstrator told Reuters on Tuesday.

Several of the former ministers are members of prominent business families.

And perhaps most tellingly, as it was printed in Muscat Confidential's favourite throbbing organ of the local 4th Estate Times of Oman (normally fully aligned with the position of the Omani Government establishment), on March 22nd:
"7,000 sign memo to seek trial"
MUSCAT: Seven thousand protestors from all over the Sultanate signed a memorandum seeking the trial of ousted corrupt ministers and submitted it to Attorney General of Oman Hussain Bin Ali Al Hilali, yesterday.

“Ousting the corrupt ministers and officials will not resolve the prevailing issues in the Sultanate. For the last two decades, these corrupt bigwigs have plundered our country’s wealth. So, they should not be allowed to walk scot-free. They should face the court and stand trial,” Khalil Al Saidi, a protestor, told Times of Oman.

On March 7, His Majesty Sultan Qaboos bin Said responded to unprecedented demonstrations in the Sultanate by conducting a radical cabinet reshuffle and sacking a total of 12 ministers.

“All the financial dealings of the former ministers must be investigated. Their bank accounts, their trips to foreign countries and their investments in various fields should be probed in detail,” Salima Al Rajhi, a protester at the Majlis Al Shura Council headquarters in Muscat, said.

Protestors have put up tents and are staging a sit-in in front of the Majlis Al Shura Council headquarters in Muscat demanding certain social reforms and end to corruption since February 28.

“Ousting the corrupt ministers and reshuffling the cabinet is a positive move. But it is a cosmetic change. Now, we want trial of these corrupt ministers. If His Majesty the Sultan has sacked the corrupt ministers then it shows that we were correct.

Those corrupt ministers should be taken to court. His Majesty the Sultan should not let those corrupt ministers go scot-free. All the murky dealings should be investigated. They should stand trial for misusing public funds. Let them face the court. If they are innocent then they can go and if they are not, they should face the trial. They have plundered our nation a lot,” Khalil added.

In the memorandum, the protestors have demanded that the trial should be open. The proceedings should be made public and those who are found guilty should be given moral punishment.

“The funds of ousted ministers, advisors and officials should be frozen until the probe is completed. The real estate dealings of these bigwigs should also be probed. We know that most of these corrupt people own property in prime locations.

Such lands’ ownership should be considered as leased property in lieu of which rents have to be paid to the state treasury,” Khalil said.

The protestors signing the authorisation urged the Public Prosecution to act as an attorney on their behalf.

“We have urged the release of all developments related to these issues including trials in the presence of the media,” Khalil added.

The memorandum relies on the economic principles stated in the State Basic Law issued by Royal Decree No. 101/1996, which states that “all natural resources are considered property of the state” and stipulated preservation and optimal utilisation of natural resources for the interest of the national economy.

“The petition is based on Article 52 of the State Basic Law, which states that each member of the Council of Ministers is answerable to His Majesty the Sultan.

Article 53 of the same law stipulates that any of the members of the Council of Ministers should not hold chairmanship or membership of a board of a joint stock company and that the government units they run or supervise on should not deal with any company or establishment wherein they have direct or indirect interests. But we can some see violations here. So this should be probed,” said a protestor.

“Future actions will be decided on the outcome of the decision taken by the public prosecution,” protestors added.

You get the idea. Some of it is perhaps pure jealousy. There are some rich people in Oman. Some of them got rich because of hard work, often via trading and generally being good at business. Hey, afterall, Oman is a capitalist system, with no personal income tax or wealth tax and a very low tax on corporate profits at just 12.5%.

Some have gotten rich by doing very little except being the local 'sponsor' of a foreign company, as until recently pure foreign companies would pay 30% income tax, or they could form a local LLC and pay 12.5% but then had to have an Omani sponsor to be able to register a local company. And they tended to pick Omanis who were 'well connected' to be their sponsor, as the sponsor could therefore earn their 5% or 10% commission by 'helping' get Government contracts, and smoothing the planning and permitting processes via their contacts in the Ministries, especially the Ministry of Manpower.

So far I haven't seen any real evidence of this 'corruption' presented in the protesters' arguments. It has all seemed to be based on rumour and scuttlebutt, and the fact that, indeed, many (ex)Ministers are apparently pretty wealthy and own some sweet real estate.

Yet, tales do abound of corrupt Government officials in Oman being occasionally removed from office for corruption, and that they are not punished in the courts to avoid letting ordinary people know that it happened and/or to avoid blaming the Government people tasked with stopping that sort of thing, and/or to avoid bringing shame to their family. This last 'reason' is also used to justify the weird Omani practice of not allowing people convicted of crimes to be identified in the newspapers (in fact, as far as I'm aware, it would be illegal to publish the name or photo of an Omani even after they have been found guilty and sentenced in a public court!)

The very public demolition of the new building next to the airport owned by ex-Minister HE Dr Juma Al Juma was never reported in the traditional Omani media, despite being the talk of the chattering classes. The ex-Head of Muscat Municipality, Eng. Abbas was fired in part over that incident (he authorised the permits for the height despite it being in breach of FIA regulations) and his own alledged misuse of power to get his own building development in Shatti, among many other tales of similar abuses.

There are other obviously suspicious situations. The purchase of WorldCall by Omantel at super inflated prices from a single Omani businessman always raised eyebrows, as blogged here at the time. Result? (after a colossal 95% loss on the US$185mill investment) The CEO later 'resigned for personal reasons' and was then made an undersecretary at the telecoms regulator! So clearly nothing wrong there at all.

Other rumours I've heard. The inflated (200%) prices Gulf Air apparently paid for airplanes in the 90s was never investigated. The extremely low prices (I'm told at a price is equal to just $5/bbl oil equivalent) Oman's scarce natural gas has been sold on fixed long term contracts with no link to either oil price nor inflation to makers of methanol. The rumoured dismissal (but again, no trial) of a Government tenderboard member a couple of months ago for taking 30k rial (US$75,000) payments for assigning contracts to the payers. All just rumours.

But we all know, wasta is wasta. Who gets given nice valuable pieces of free land? Who gets their kids educated overseas at the state's expense? Whose pieces of land in the middle of no-where happen to get roads built and infrastructure laid that dramatically increase the land's value? Whose houses get built slowly by contractors working on big contracts for your Ministry/Municipality? Answer: Those who are connected to the royal family, Ministers, and the powerful. Those with 'wasta'.

We can all see the wastafarian kids of the Ministers and Oligarchs driving around in their Porsches, Lambos and Ferraris. We can see the palaces of the wealthy families along the coast and their private yachts parked in the jetty. The natural question is: where is that money coming from?

Overseas companies tendering for contracts in Oman are continually approached by people who claim - in exchange for an appropriately sized fee - to be able to guarantee their tender will win the contract.

Here is a wonderful 15 min talk by Peter Eigen, founder of excellent NGO Transparency International, on the impact of corruption and what people can do about it.

Video: How to expose the corrupt, talk by Peter Eigen, Founder of anti-corruption NGO Transparency International

Of major concern is that the Sultanate is still not a signatory to The UN Convention against Corruption. Why is this?
The UN Convention against Corruption provides a clear framework of laws and actions required to prevent and punish abuse of power for private gain. It addresses the cross-border nature of corruption, includes provisions on the return of ill-gotten assets, and it mandates the participation of citizens and civil society organizations in accountability processes. In the region, only Oman, Syria and Saudi Arabia have not ratified it.

This might be a good question for the coordinator for the Arabic Countries at the International Association of Anti-Corruption Authorities (IAACA) Sh. Ali Nasser Al-Bualy, formerly the first Omani Attorney General for the Sultanate of Oman and local legal big wig.

In fact, I'm hoping The ex-Public Prosecutor and Attorney General will help us unravel this problem....


  1. An investigation is overdue I have heard stories of billions in bank accounts as common knowledge and sources cited such as the BBC.

    The only thing I can trace on the net is the Sultan's land holdings so an investigation is the only thins that will put this to rest. That, and changing the sponsorship system.

    UD - any comments on this?

  2. I have no proof, but wish to draw the following 'corruption' or 'appearance of corruption' to your attention: 1) Two separate individuals here have individually mentioned to me that the HUGE residential/retail complex: Bareeq al Shatti was built FAR bigger than the space should really have allowed -- i.e. crowding road ways and limiting parking. Was someone paid off in the municipality 'planning' office to allow this???? 2) Ref the massive PDO project Harweel that is far behind schedule and far over budget -- word from a project management observer is: Harweel ran into problems mostly because the project was awarded to Petrofac and it should have been awarded to a bidder able to handle such a massive project. But no other company bid on Harweel!!! Why??? My source says it was because the other possible bidders realized early on that no matter what, the project would go to Petrofac. So, since these bids cost lots of time and money to prepare, the other possible bidders just opted NOT to bid at all. Thus Petrofac ended up with the contract. But now it's costing lots more $ than anticipated. Corruption???? What do you think???

  3. Curious,

    thanks for the link - what a complete mess, and as predicted a long time ago, the Government has ended up paying the bill.

    I'll be getting back to Blue City in detail very soon!

    The distortion of the tendering process is indeed one of the side effects of corruption, as explained by Mr Eigen.

    In Harweel, note the other big subcontractor was Galfar...


  4. You know the sad thing is that the Sultan seems a decent and honourable man.

    He must be overwhelmed by this mess but it's a chance for a clear out and some very public trials to signal the direction of the future.

    Wouldn't it be great if companies like Gulfar were disbanded and made to compensate the Indians they have cheated.

  5. If we were intended to eradicate and trace corruption from the beginning, we would root it out,yet we could reduce its economical impact on the country.

    Thank you so this crucial news....

  6. Was indeed wondering why Blue City was not mentioned in this post; without doubt the absolute pinnacle of corruption and wasta in Oman, nicely combined with the infamous home-grown incompetence. The (economic) impact of this particular case can actually be quantified relatively easily. It's massive!!

  7. Interesting coincidence that the Video is through TED and there is an associated event in Oman which looks as if it will be well attended by the chattering classes of Oman

    eager to put the Asian Beach Games location to more cerebral use

  8. Now I have listened to the Eigen video re: corruption / bribery and what Civil Society might do to stop it. So perhaps European countries for the most part have agreed to stop going along with corruption in other countries -- e.g. Kenya. But I figure that China, Russia, Khazakhstan et al have NOT agreed. So, how effective can Eigen's plan be to stop corruption???
    My guess is that Euro businesses will lose out on a lot of business / jobs; but businesses based outside of Europe (China?) will gain hugely from this new - found antipathy in Europe against corruption.

  9. Re Blue City
    Government of Oman buys back Blue City bonds back from Essdar


  10. Interesting. On the matter of the Blue City it seems that the once popular Blog 'Newsbriefsoman' also seems to have foundered on that very topic with no new entries since its BC one. At times the Blog seemed to offer itself up as an apologist of sorts for BC, and the 'Paper-boy' and his tag-alongs. But then maybe such is just due to embarrassment at the shuddering realisation that corruption in Oman is as snow is to Eskimos. Its also most certainly very well known in Oil and Gas bizz circles that the most corrupt duo in Oman (and within that WORLD-wide Industry sector) were Maki and Maqbool, and so on that count does Oman have any chance of going forward and upward into the future? Any thoughts? How to break the mould? Executions like China? Get the cash back? Exile them?

  11. Interesting fact on Blue City - Janahi has not received the settlement from the Omani courts yet! More corruption I guess.

  12. Breaking news:

    Police shoot one dead in Oman protest: witnesses

    (AFP) – 1 hour ago

    MUSCAT — Omani police shot dead a protester on Friday in the port of Sohar, north of Muscat when they opened fire to disperse demonstrators demanding the release of prisoners, witnesses told AFP.

    It was the second death in the port during the current wave of unrest sweeping across the region, after police killed a protester at the end of February in Sohar, an industrial area some 200 kilometres (124 miles) north of the capital Muscat, particularly badly hit by unemployment.

  13. Things are becoming unpredicatable. I thought the period of protests is finally over, but no. It seems Sohar guys are tough nuts.

  14. Trust me man, they want Omani ppl to be placed in the positions that are being occupied by expats especially Indians, because Indians once get in the companies never let other ppl get in, they only get recruit INDIANS,

    Let me mention some of the companies again:

  15. A glimmer of sense in the mayhem

  16. Anonymous, you are truly one of the greatest idiots to sadly occupy this planet and are a waste of good oxygen.

    Get a decent education, work hard and then prosper and you will all do well and have jobs. Sit around, bitch, whine, hold your hands out and expect the government to give you everything will get you no-where.

  17. There should be a systematic audit of ALL ITC developments in Oman, related Government Departments (e.g. Minsitry of Toursim), Bank Investment Funds (e.g. Bank Muscat) and companies e.g. estate agents trading in ITC properties.

    Investigating the financial dealings of ITC employees, stakeholders and contacts (bank accounts, foreign trips, investments, purchases) would soon flush out those engaged in insider trading, backhanders etc.

  18. @ Anon and all the ignorant expats (non-ignorant are not meant)
    Your notion: Omanies are lazy and not meant to work thats why you are here to solve this problem because they are uneducated and you are better !!

    I would say the same excuse if i was a part of the problem occupying jobs that has excess educated unemployment in these particular job so its pointless to say go educate yourself and Omanis do but when they are ready to get employed an indian fresh graduate from india is there for the job and this is what actually happened recently in a leading audit company in oman.
    what do we call that corruption or unequal opportunities ?


  19. just a note to Willie Dryer. I am still here, I still observe what goes on in Oman, but I have other things to do these days.

  20. What did you mean about the former attorney general helping to unravel the problem? Elaborate please.


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