Sunday, March 18, 2007

Dubai likely to witness a corporate collapse

According to experts, the corporate firms in Dubai are likely to crumple over the coming three years in case they do not abide by the regulations of proper corporate governance and play games against the management procedures.

The Vice President of Internal Audit of the Emirates Group, Neeraj Kumar, while speaking during the eighth annual Gulf Regional Audit Conference, is believed to have mentioned that the rate at which the current transactions are taking place, Dubai is bound to see a failure in the forthcoming three years. He added that such a situation could happen anywhere, and Dubai certainly cannot be an exception.

Experts say that the Government has plans to set up a regulatory body in the next two years to monitor the risk management and corporate governance issues. This will improve background of the corporate governance in the emirate and the requirements for the same will be regulated.
The Chief of Audit Group at Dubai Holding, Abdulrahman Al Hareb, agreed that there are possibilities of a probable corporate failure in the Gulf region. These things are inevitable over a certain period, as corporate failures have been happening, and are likely to happen in future.

When it comes to regulatory environment, Dubai has the necessary infrastructure in place. But corporate failure depends on the manner in which the companies conduct their business. Corporate failures were a part of the business world, and companies go up and down. However, according to experts, Dubai’s economy being strong, will not collapse or hit the markets, or affect the image of the emirate.

According to David Cafferty, Total Solutions Director for Forensic and Compliance Service, though the companies are ready to develop a culture of international corporate governance, it will take time for such a culture to flow through the corporate structure down to the bottom, so that people could perform to the same levels of governance.

Cafferty added that this being more of a cultural issue, the companies will not be interested in publishing any matter that could create damage to their credibility on the world financial stage. However, he agrees with the fact that financial frauds are happening.

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