Region needs to guard against fraud

Talks to develop rules and company policies that protect employees who name names

ABU DHABI // New "whistle-blower" regulations could help to protect employees that report fraud in the region, a top investigator says, after a series of high-profile corruption cases have emerged in the past two years. Whistle-blower laws, which protect government and business employees from retaliation if they report misconduct or fraud at their organisation, would be a major development in corporate governance for the country.

The Dubai International Financial Centre (DIFC) has a law that requires companies registered in its free zone to have a whistle-blower protection policy. "There are increasing discussions about the framework of whistle-blower legal policies and company policies," said Tania Fabiani, the new head of the UAE chapter of the Association of Certified Fraud Examiners (ACFE). "We need that protection to control and prevent fraud in the UAE."

On Thursday, the ACFE is hosting its first event with investigators and auditors to discuss how to reduce fraud and money laundering in the region. Ms Fabiani, a career financial investigator in the US and the UAE, is the head of anti-fraud programmes at the Abu Dhabi Accountability Authority. "A lot of companies in the Middle East went through a very rapid growth," she said. "When you go through that, you end up with situations that make it easier for fraud because the policies and procedures don't keep up."

Ms Fabiani said the ACFE chapter would increase training with professionals and work with regional companies to create a business culture that prevented incidents of fraud, rather than responding to problems as they arise. "Fraud is something that happens everywhere," she said. "A lot of attention to it has been reactive but we can prevent it in many situations. "There are ways to understand your vulnerabilities."

Ms Fabiani said the most important step was for companies to create a code of conduct that acted as a "stop sign" for people tempted to skim money from companies or accept bribes. "This is fundamental," she said. "If you have a code of conduct, then you can set up the policies and protocols that slow down attempts to defraud companies." In the past 18 months, the authorities in the region have started investigations into fraud allegations involving billions of dirhams.

Dubai has seen some top executives at private and public companies charged with embezzlement and abuse of public funds. Many of the investigations and prosecutions of these cases are continuing. Muneef Tarmoom, the president of the financial and management advisory company ISAT Consulting, said there was not yet a culture of whistle-blowing in the Emirates. "Quite often, whether it's a lack of education about corporate governance or a cultural thing, people prefer not to go out of their way," Mr Tarmoom said. "They stay quiet instead of coming forward."

New laws and policies would help build confidence for employees to speak out if they observed a violation of laws or misappropriation of funds, he said. "The key thing is to make people aware that such channels are available," Mr Tarmoom said. "And ultimately one would want to make sure that confidentiality and so on are adhered to to protect them ? it's really a management issue. "It's about creating a culture within your entity where management interacts with staff and not necessarily in a hierarchical way."

The new chapter of the ACFE includes board members from some of the UAE's largest companies, such as Simon Padgett, the group risk and internal audit manager of the Al Fahim Group; and Ahmed al Ansari, the director of audit and risk assessment at Dubai Aviation City. [e-mail]