Global Compliance: United Arab Emirates
If you’ve heard anything of booming global markets in the past few years, chances are that there has been some mention of the United Arab Emirates. This young nation comprised of seven Arabian states has experienced tremendous growth since its founding in 1971, in large part due to abundant natural resources, moderate foreign policy and the dedicated support of innovative business growth plans by the country’s corporations and rulers.
The UAE has undergone a massive reconstruction over the past 40 years, from a collection of small, insolvent states to a dynamic, modern and luxurious country that boasts one of the highest standards of living in the world. Much of that growth can be attributed to the country’s leadership, which has focused spending on the creation of jobs and expansion of infrastructure and has taken great measures to increase the role of the private sector.
One reason the UAE has garnered such significant attention is the striking contrast to its more conservative and traditional Middle Eastern neighbors. The country boasts an easygoing yet highly developed environment—alcohol is permitted (although its use is subject to more rules than most Western countries), women enjoy more freedom in professional and social settings, accommodation is first class and the crime rate is noticeably lower.
Of the seven emirates, Dubai enjoys the most international attention. Its business environment is markedly different from any of its Middle Eastern counterparts—most noticeably in that it is the only meritocracy. In a region where unemployment can be alarmingly high, literacy rates can be regrettably low and the political and business infrastructure can be less than transparent, Dubai is the exception to the rule.
THE ETHICAL CLIMATE FOR FOREIGN ENTERPRISES
The United Arab Emirates seeks to position itself at the forefront of global commerce as a hub for tourism, finance and real estate. However, for this goal to be fully realized, businesses operating in the UAE must take a long, hard look at mounting global pressures for compliance and realize the need to conform to international standards to ensure long-term and sustainable growth.
A 2006 study performed by the Dubai Ethics Resource Center and the Dubai Chamber of Commerce and Industry cited that, while businesses in the region “know what to say regarding awareness, commitment and recognition of the benefits” of corporate compliance, “they are not putting their money, or their actions, where their words are in a sustainable manner.” In essence, the report expressed concern that this rising powerhouse can “talk the talk,” but not much more.
Perhaps the most noticeable way in which the United Arab Emirates is misaligned from its developed, global counterparts is the lack of formal, written policies outlining standards of ethical behavior and practices, such as a Code of Conduct, and/or the public disclosure of these materials. And while there is certainly work to be done through-out the country, it is the private sector that is behind in the development, implementation and sharing of formal policies and procedures related to their own compliance programs. Multinational firms embarking on ventures or expanding into the UAE should be sure to first align their programs and policies with regulations such as the Foreign Corrupt Practices Act and international best practices and then to make adjustments in order to adapt them to the culture to ensure acceptance and compliance.
Samir Khalil, Executive Director of International Policy at Merck, insists that any short-comings in the area of ethics and compliance are an issue of awareness of “what’s acceptable, and what’s not acceptable,” especially on a global scale, and that cultural norms should be considered less of a contributing factor. He predicts that it is only a “matter of time” before a greater number of UAE businesses have formal compliance policies, training procedures and audit mechanisms in place.
Those companies operating in UAE that do have written policies, training and corporate structure tend to be local divisions of multinational firms. But, given the complexity of the regulatory and business environment in the UAE, this is commendable. Multinationals may find it difficult to navigate the legal landscape of the country as a result of legislative overlap from the Federal, Emirate and Free Zone levels. As such, it is advisable to elicit a local consultant or partner to assist in establishing and maintaining a foolproof ethics program.
ETIQUETTE TIPS YOU SHOULD KNOW BEFORE YOU GO
These tips apply to dealing with UAE nationals (“Emiratis”) and most Middle Eastern natives. As UAE is host to a diverse and largely international population, it is likely that you’ll be dealing with other foreigners as well, and it is therefore advisable to do some research into your colleagues’ backgrounds and cultures.
COMMUNICATION
First names carry even less formality than in the West, and therefore it is advisable to use the kunya, an epithet widely used in the Arab world that refers to the subject’s first-born son or daughter, for less familiar business associates.
Typical small talk may eventually lead into more personal conversation and, sometimes, controversial topics. UAE natives value intelligent, reasonable conversation but are turned off by brashness or confrontation—courtesy is paramount.
Again, avoid taking an argumentative approach. Don’t be afraid to disagree, but enlightened conversation is the goal and seen as beneficial to involved parties. Be (genuinely) open to feedback.
Emiratis typically dislike embellishment, and therefore value praise but detest superfluous amounts of it.
Even in casual conversation, you should stay away from the topics of women and disputes among the Emirates.
MEETING CONDUCT
Upon arriving, the standard greeting, “as-salam alaikum” (peace be upon you), should be declared before going past the doorway of the meeting room. It is customary to wait for a reply, usually “wa alaikum as-salam” (and upon you be peace), before entering the room. Repeat the greeting if necessary, but not receiving a reply means that one is unwelcome. If the room is carpeted, you’ll want to remove your shoes to preserve the carpet’s cleanliness that’s needed for prayer. Shake hands with the most senior ranking person first, and then work your way around the room in a counter-clockwise direction. Women should not receive a handshake. Once seated, be sure that the sole of your foot is not directed at anyone—this means “go away.”
While common, business cards are not essential. However, if used, business cards and any other promotional materials should be in Arabic.
DRESS TO IMPRESS
The UAE is unique from its Middle Eastern counterparts in that it is considered unacceptable, and in some areas even punishable by law, for foreigners to don local clothing. So, in this region, men are advised to wear trousers and a nice shirt during the day, and a collared shirt and tie at night. Suits are always an appropriate option, and you’ll find that they are fitting for the climate. Women are less restricted in their attire than in other parts of Arabia, but should still stick to modest clothing.
BUSINESS ENVIRONMENT
Business in the UAE tends to have no middle ground; it operates either at a painfully slow or lightning fast pace, making it difficult to assess projects until you have a final product in front of you.
Take care not to equate gestures of hospitality or entertainment with successful business interactions—actually, over-the-top hospitality is often a measure of mitigating ill-will after an unsuccessful deal.
Emiratis typically entertain at home.
Lefties take note: The left hand is reserved for “unclean” usage. To eat or offer someone something with the left hand is considered offensive.
SETTING APPOINTMENTS
UAE businesses typically operate Saturday though Wednesday, from 9 AM to late evening, closing for most of the afternoon.
When making appointments, it is unlikely you’ll be able to reserve meetings through a colleague’s secretary as administrative positions aren’t usually given the authority to book appointments for their bosses.
Appointments should be loosely made for times of day instead of specific hours—gracious hosting is important in the UAE, which makes it difficult for executives to stick to a rigid schedule. You might even save yourself from making an appointment in the first place; it is often better just to show up and try and slip into someone’s agenda, but you should take a note to leave with the secretary in the event you are unable to see your colleague. By the same token, you should also be prepared for unexpected visitors in your own office. In addition, paying unannounced visits to business counterparts whom you have a relationship with whenever you are in the vicinity of their office is expected.
Be sure to take into account prayer times: There are five daily prayers whose exact times vary throughout the year, but can easily be found in most local newspapers. It is also a good idea to observe the dawn-to-dusk fast during Ramadan as a gesture of consideration.
FIVE COMPLIANCE AND ETHICS ISSUES TO CONSIDER
| 01 // FASSAD AND BAKSHISH Fassad is the Arabic term for corruption (literally, “rot”), and bakshish is money given to win business—depending on how you interpret this, bakshish can be translated to a mere “tip,” “facilitation payment” or a full-blown “bribe.” In any event, these terms should raise red flags for multinationals operating in the region. UAE ranked 34 overall in Transparency International’s 2007 Corruption Perceptions Index, and third highest in the Middle East—an admirable showing by comparison. However, there remains a large disparity among sectors on the attention given to implementing and maintaining antibribery and anti-corruption mechanisms, with private and government entities lagging in development behind public businesses. | DEAL WITH IT Be realistic. A good showing in the region does not mean that the problem is minimal in scale or severity, and therefore it should be top of mind when establishing and communicating anti-bribery policies. Bear in mind that bakshish can take the form of gifts, further complicated by the facts that Emirati culture calls for the giving of the best one can afford and that it is not customary to refuse gifts in the Middle East. Policies should be developed assuming that both giving and receiving gifts will be likely temptations for managers as well as employees. Successful policies that resonate throughout your organization will clearly and effectively dictate zero tolerance, in addition to offering easily accessible reporting mechanisms. |
| 02 // WASTA The local term for favoritism—which may be viewed by outsiders more negatively as nepotism—this ethical hurdle presents a unique challenge in that there is nothing discreet about it—wasta is a part of the regional industry and culture, more often shown off than hidden, as business decisions that include hiring and promotion can strongly be affected by whom you’re related to or whom you know. In addition to workplace advancement, wasta is also used to circumvent legal issues, to avoid lines in government agencies or to hasten administrative processes. | DEAL WITH IT In a relationship-centric culture as the United Arab Emirates, simply putting the kibosh on preferential treatment via an anti-nepotism policy may be ineffective at the very least, and more likely regarded as naïve or desensitized to a culture in which these situations are not only possible but occur frequently. Policies should adequately account for certain realities. A good start would be to implement a training program that emphasizes the importance of employee and prospect qualification and performance, and then takes into consideration wasta. To enhance the cohesiveness of the workforce, it would also be worthwhile to train foreign employees on the local emphasis on relationships and loyalty. |
| 03 // CONFL ICTS OF INTEREST When discussing the ethical landscape in the UAE, Khalil pointed out that there is “zero concept of conflicts of interest.” Admittedly, the reaction to this issue is largely a “matter of awareness,” and that most people engaging in this behavior are not aware of the issues or risks it poses to an organization. | DEAL WITH IT Conflicts of interest are nothing new, and are an unfortunate result of cultural nuances like wasta, which make eradicating conflicts more difficult. The first step is to raise awareness through policies, procedures and training that emphasize the importance of objectivity in organizational decision-making. Create a mechanism for reporting conflicts of interest, and, above all, stick to the same standards and procedures across all levels of the organization so as to not allow exceptions even for senior management. This issue is especially prevalent on corporate boards, where cross-membership is common, at times even between industry rivals. |
| 04 // DISCRIMINATION In the UAE, where a large majority of the population is expatriate, discrimination and employment of Emiratis can be an issue. Currently, Emiratis face almost a 15 percent unemployment rate, and it is important to note that 45 percent of Emiratis are under the age of 15—which makes equal employment opportunities crucial as this generation migrates into the workforce. | DEAL WITH IT Keep apprised of new targets and UAE regulations for hiring. Take steps to ensure that managers stay current on regulations and, more importantly, that their hiring practices are in compliance with the laws. Company policies should also address and plainly discourage the false inflation of Emiratization (the percentage of a firm’s workforce that’s made up of UAE nationals) or undocumented hiring of expatriates, in addition to broader anti-discrimination language related to age, gender, nationality and religion. |
| 05 // INTELL ECTUAL PROPERTY Intellectual property rights (IPR) protection is still in its infancy. The UAE government has recently addressed the need to raise awareness and to pass legislation relating to IPR, citing the damaging effects of forgery and piracy on the economy. | DEAL WITH IT While there are a number of factors contributing to the violation of property rights, it is important to protect your organization’s proprietary information within the region. To that end, create clear internal policies and enforcement mechanisms, and communicate them to employees so that each is aware of his or her own responsibilities. In protecting your own IP, keep in mind the lack of legal protection and injunctions in this area when you decide what to transfer into the region. |
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