It is now commonplace for corporate entities to conduct investigations or risk assessments in multiple territories and jurisdictions at the same time. This type of work is, in part, a direct consequence of increasingly global world markets. It is also driven by the policies adopted by supra-national organisations and international governments to tackle corruption across borders and around the world. In line with this, the past few years have seen considerable growth in the number of corporate investigations and risk assessments being undertaken in the Middle East.
Should your organisation undertake an investigation in this region, there are a significant number of specific considerations to be borne in mind. This article outlines 10.
The Middle East is made up of numerous distinct and different countries with their own legal systems, laws, procedures and cultures. Accordingly, it is risky to adopt a standard approach across each jurisdiction. It is also dangerous to simply adopt the approach to an investigation that you would take in your home jurisdiction.
Here are ten basic considerations − legal, governmental and practical − to keep in mind when you are contemplating an investigation anywhere in the Middle East.
- Whistleblowers have little or no protection: The majority of countries in the region have little or no protection for whistleblowers, and, in fact, it is possible for whistleblowers to be sued in certain situations for damaging the reputation of those against whom they have made complaints. For example, the United Arab Emirates Civil Code permits accused persons in whistleblower reports to bring claims against their accusers for compensation to make good any harm that they have suffered as a result. That said, as this region increases its focus on implementing anti-corruption measures, there are signs that whistleblower policies are changing. Countries such as Kuwait have ratified the United Nations Convention Against Corruption (UNCAC) and are implementing robust whistleblower protections, including a state-operated protection program, under new anti-corruption legislation.
- The right to privacy is overarching: The UAE Penal Code prohibits publishing any information relating to the "secrets" of the private or family life of individuals, even if they are true. A general overarching right to privacy in respect of personal communications sent by postal, telegraphic or telephonic means is enshrined in the constitutions of many Middle East countries, such as Kuwait and the UAE. Kuwait also recently introduced an e-transactions law which contains specific data protection and privacy provisions. This law provides that governmental departments and private companies (and their employees) must not disclose personal data without consent. Moreover, individuals in the UAE who, by reason of their profession, are entrusted with confidential information and disclose it (in cases other than those permitted by the law or with consent) face imprisonment of up to a year and a fine.
- Covert recording is a crime: It is a criminal offence in the UAE to record or copy any conversation conducted in a private place without prior consent. The UAE Penal Code regards this as an invasion of private or family life. Any evidence obtained through covert recordings will not be admissible in court, and the person recording such evidence will be committing a criminal offence. Although employees may believe they are assisting an investigation by recording conversations, they should be made aware of the risks of doing so.
- Saudi Arabia’s anti-corruption commission is busy: In 2014, Saudi Arabia set up a National Anti-Corruption National Commission, an independent government authority to promote transparency and combat financial and administrative corruption within the Kingdom’s public sector. The Commission reports solely to the King. The Commission reportedly handled 3,900 cases in 2014 and has conducted investigations into hospitals, construction projects and ex-officials from the public sector. The President of the National Anti-Corruption Commission confirmed that financial rewards will be offered to whistleblowers who make reports which can be verified as accurate.
- New Iraqi reforms are moving forward: In August 2015, the Iraqi parliament approved Prime Minister Haider al-Abadi's reform programme aimed at curbing corruption. Measures which have been approved include no-confidence votes for negligent and corrupt ministers; legal mechanisms to remove excessively absent MPs; and limits of terms for the President, Premier and Parliamentary speaker. There are also plans for higher oversight to prevent corrupt practices. It is unknown when these measures will be implemented, as legal and political challenges are expected.
- Kuwait is acting: In 2012, Kuwait established an Anti-Corruption Commission (KACC), an independent authority under the auspices of the Ministry of Justice. Misuse of public funds, crimes relating to the operation of justice, violations of competition law, customs smuggling, money laundering and tax evasion are among the actions deemed crimes of corruption under the enabling legislation. The KACC has broad investigative and seizure powers. Senior public officials and the State Audit Bureau's employees are required to deliver periodic financial disclosure reports in the form detailed under executive regulations published in 2015. Kuwait’s Capital Markets Authority has also enhanced transparency and anti-corruption requirements against regulated market stakeholders and issuers of securities in the Kuwait Stock Exchange.
- UAE has established a new anti-corruption unit: In May 2015, the UAE established a new anti-corruption unit within the Abu Dhabi Accountability Authority. Its primary objectives include ensuring public entities' resources and funds are managed, collected and spent efficiently, effectively, economically and ethically. The new unit will investigate financial irregularities and corruption, identify gaps in legislation and audit the government’s or department's consolidated financial statements. It reflects the UAE's commitment to UNCAC (to which all Middle Eastern states, bar Syria, are signatories) and the Arab Convention to Fight Corruption.
- Be cautious on social media: The increase of social media presents further risks for employers in the region. Defamation is a criminal offence in the UAE, and includes both oral and published statements. Punishments are severe; individuals can face up to two years in prison or a large fine. Accordingly, employers ought to explain the risks and implications to their employees of posting defamatory remarks on social media platforms. The truthfulness of the statement is irrelevant and cannot be used as a defence. It is an offence to cause harm to an individual's reputation.
- Individuals may be hesitant: One difficulty in conducting investigations in the Middle East is that individuals are reluctant to cooperate. Those who cooperate often feel more vulnerable because of the strict penalties for defamation and the risks of losing their employment and visa. Consequently, individuals can be hesitant in reporting or discussing allegations. On the other hand, individuals who have been dismissed following allegations will often challenge the decision in order to gain time to find alternative employment, thus avoiding the need to leave the jurisdiction because of the absence of a sponsor.
- In the UAE, reporting allegations is a balancing act: Failure by individuals to notify the competent authorities about a crime of which they have knowledge is a criminal offence under the UAE Penal Code – the same goes for companies. However, this obligation should be balanced against other articles of the Penal Code which make it an offence to make false allegations to competent authorities. Similarly, the Qatar Penal Code requires individuals/companies to report crimes that have been, or are planned to be, committed, with a maximum sentence of three years and/or a fine not exceeding QR 10,000 for those who fail to report a crime. The same punishment can be given to those who knowingly make a false accusation.
Clearly, attempting to conduct an investigation without experienced local assistance is fraught with danger.