The Institute of Chartered
Accountants in England and Wales (ICAEW) is receiving positive
attention in the Middle East for public policy work on the United
Arab Emirates’ (UAE) dysfunctional insolvency practices.
The institute, which set up office
in the Middle East late last year, has also had success with its
Professional services institutes
the world over increasingly view public policy work as a vital way
to demonstrate their expertise and become more visible to potential
members, students and employers.
The ICAEW has identified a
particularly good public policy opportunity in the UAE’s
post-financial crisis examination of its financial structures and
ICAEW Middle East regional director
Amanda Line said the systems are not fit for purpose.
One example is the insolvency
framework and Dubai’s related system of post-dated cheques (PDCs),
which Line calls “very alarming”.
PDCs are used as security in
business transactions. For example, rent is paid quarterly, but at
the beginning of the year the tenant must provide the landlord with
four post dated cheques.
If the tenant gets into financial
difficulty and cannot pay rent, the post dated cheque is presented
to the bank. If it bounces, it is a criminal offence.
One example of this system in action occurred this month when
British businessman Safi Qurashi was jailed for seven years for
bouncing cheques and withholding payments.
“Frequently when businesses get
into trouble, the people who have written the cheques, who are
often expats – because 90% of the working population are expats –
flee [to escape a prison sentence],” Line explained.
“You are left with a big mess
because the directors of the company have gone and there is no
proper mechanism for liquidating the assets and distributing those
to the creditors in an appropriate way.”
The ICAEW believes it is well
placed to help fix the system as it is the largest licensor of
insolvency practitioners in the UK, with 120 years of experience in
The institute produced a White
Paper in partnership with the Dubai International Arbitration
Centre that was submitted to the Minister of State for the
The paper suggested ways the
insolvency framework could be strengthened through methods such as
forming a body of licensed insolvency practitioners and reforming
the law to make it more transparent.
“At the end of the day, if you want
security in doing business, clear transparent insolvency laws are
part of that,” Line explained.
The White Paper has been well
received, with Line appearing on local television to discuss it.
There has also been coverage in newspapers and online.
“I hope the document has now been
published widely enough that the decision makers will take note of
some of it, or perhaps involve us again in the debate, because we
have established some credibility and a willingness to contribute
in a positive way,” Line explained.
Another ICAEW Middle East initiative in the UAE attracting
significant attention is an Emiratisation scholarship scheme.
Native Emiraties make up a small
percentage of the population and typically work in the public
sector. Only about 3% of employees in the private sector are
Emiraties, Line said.
The government wants future
business leaders to be Emiraties and is therefore encouraging the
private sector to hire and train locals.
The ICAEW is contributing through a
scholarship scheme that will place native Emiraties in Big Four
accounting firms, provide them with a first class training package,
first class salary, six months secondment in a London Big Four
office and mentoring.
There are just five positions in
the programme this year, but Line hopes that by 2012 or 2013 there
will be 20 people entering the programme each year.
There are also plans for the
Emiratisation scheme to be mirrored by similar schemes in Bahrain,
Qatar and Saudi Arabia, which all rely heavily on expats.
Line says Emiratisation is a real
buzz word in all Middle East countries at present: “You just say
Emiratisation and everybody leaps at you. It is so important.”
Middle East feature: ICAEW cements Middle