You have spent a lot of time honing your business ethics, governance and compliance skills, but time and again you find yourself in difficult situations and realise nobody taught you what to do.
If I just described you, then this article is for you.
Most of what is taught is with regards to how to act if we initiate an action and, possibly, how to react when a client initiates an action. What I have not seen taught is how to react if your manager initiates an action. In this case there are broadly two scenarios: First, it is a legal and ethical instruction; or second, it is an illegal or unethical instruction. In the first case the employee’s proscribed reaction is straightforward – execute. In the second case it is to not execute the instruction. But is that as simple as saying “no”? Of course not.
Even in relatively flat/informal organisational structures, this is difficult. When the hierarchies are formal, prized and inflexible it is next to impossible to refuse an illegal instruction. Without clear wrongful termination and whistleblower laws it becomes extremely difficult for an employee to stick to their values, especially in the current climate, as the consequences can quite easily lead to personal insolvency. For foreigners the risk is greater still; if the employee is fired in retaliation they have three months to find another job or face uprooting their entire lives, family and all. A daunting risk to doing the right thing.
So how does one manage such a situation? For the cases when legal lines are crossed I will defer to those with a legal background. When it is an ethical issue there are alternatives. I will focus on cases of wilful wrongdoing.
The most potent tool for the employee with integrity is documentation. Closely following that is witnesses.
Documentation works in two basic ways. The simplest is requesting that any instruction be given in writing. This rarely works as it is transparent to the dishonest and they will not only avoid it, they will retaliate. There is a workaround via the use of written communications, eg emails, for clarifications or status updates.
For example, if given a verbal unethical instruction one can follow up thereafter with a clarifying question via email. It is important to phrase the email in a way that does not stop the process. So let’s say one is asked verbally to transfer US$152,455 to an external account. Sending an email asking if this is the correct number creates a bind, the unethical manager can ignore the email and simply confirm verbally. Better is to phrase it as follows: “As per your verbal instructions to me today, I will be transferring $152,455 at time 12pm tomorrow unless I hear otherwise from you”. This is a little transparent but it makes the point. Create a scenario whereby the unethical manager has to respond to counter his verbal instruction.
The second documentation method, which combines with it witnesses, is by using meetings and meeting minutes. This requires that formal and informal committees be in place, best done before any decision-making is done and I will discuss in another section the structure of boards. What is important in meeting minutes is that if one person says that a comment was made then it is not a vote on whether it gets included. It gets included and if everybody else disagrees then the only thing that they can do to the minutes is include the statement that they all disagree. Too often boards and committees seem to believe that the contents of the minutes of a meeting are subject to a vote. They are not. Also, everyone present must sign the minutes. If they disagree with what is recorded, they voice it, it is included and then they sign. This is related to the regrettable tactic of people abstaining from votes, of which I shall also speak. This approach also has the benefit of other participants acting as witnesess.
Structuring formal boards and committees
A central pillar of corporate governance is to share authority. At the board level, directors have no individual authority unless the board assigns it to them. It is the board as a body that has authority. This authority is too often circumvented by the creation of an executive committee (exco) of the board. Although the existence of an exco does not mean that there will be corruption, when there is corruption it can usually be traced to the existence of an exco. The reason is that an exco effectively takes over the role of the board and the chairman of the exco becomes the de facto chairman of the board, replacing the elected chairman of the board. This is frightening.
This holds true at the executive level. The board must ensure that long-term strategic decisions are made by competent committees, not solely by the chief executive. A simple example is that you don’t want the chief executive to have sole authority over investments. That’s a one-man hedge fund. There is a balance between efficiency and governance, but that balance clearly isn’t an all-powerful chief executive.
I have seen different attempts at managing these issues. One unfortunate one that I’ve seen in this region is rejecting executives who want to be paid at the higher end of the market. The idea is that this way the executives hired are not greedy and will not commit fraud. This idea has several flaws.
The simplest flaw is that a dishonest executive is not going to care about his formal compensation as he will supplement it via fraud. A more subtle but far more dangerous flaw is the idea that the only alternative to someone who prioritises financial compensation is one whose incentive is to do a good job. In this region I have seen that the much greater percentage are those who prioritise power and those who prioritise publicity. Both of those incentives corrupt as much as, if not more than, financial incentives. I’m not sure people stuffing their friends into jobs or people using their positions to get on the front page are any better than people who think high performance should be rewarded with high pay.
Jawbone lessons
Jawbone, best known for fitness wearable technology, went into liquidation last month in part because of too much funding, according to CNBC. I believe that this is a good case study for some of the companies in the GCC that receive easy funding. Too often, certain investments are deemed strategic and then there is a blind mandate to fund them at any cost. One of the most frequent cases is the legacy business of a family conglomerate. Although other business lines might be doing fine and the commercially rational decision is to liquidate the legacy business, there is too much emotion tied to it. Often there is the belief that the loss of the legacy business would signal an unacceptable loss of face.
Of course if that funding is never-ending, you end up with zombie companies as the negative cash flows from operations and investing are offset by positive cash flows from funding, forever. This is why it is extremely important to look at the cash-flow statement. I have seen actual financial statements of large companies show that new debt funding is not only being used to pay for operations, an unsustainable situation, but to also pay off maturing debt. When you start using debt to pay for debt you’re in trouble.
The way this is explained to boards is that a certain debt is being matched to a certain activity. This is, of course, baloney – a proper analysis looks at the aggregate. If operating plus investment cash flows are negative and there is maturing debt it can only be paid off via more funding, be it equity or debt.
UNB kicks off earnings season
Abu Dhabi lender UNB announced its second-quarter financials. On the face of it things look positive with an increase in net profit of 7.2 per cent relative to the same period last year and that net income from interest and Islamic financing, the core business of a bank, rose 2.6 per cent. However, a quick peek at the underlying fundamentals shows that core revenue from interest and Islamic financing grew 6.4 per cent whilst expenses for interest and Islamic financing grew 13.4 per cent. Core expenses growing much faster than core revenue is unsustainable. When you factor in that operating expenses grew by a whopping 21.1 per cent the picture looks less than sterling. The main driver for the increase in net profit is retail fees and recoveries which grew 43.7 per cent.
Stay tuned as I take a deep dive into reported second-quarter earnings next week and uncover whether the net profit reported is quality or whether the underlying fundamentals are deteriorating.
Sabah al-Binali is an active investor and entrepreneurial leader with a track record of growing companies in the Mena region. You can read more of his thoughts at al-binali.com
Brief scores:
Kashima Antlers 0
River Plate 4
Zuculini 24', Martinez 73', 90 2', Borre 89' (pen)
Thor: Ragnarok
Dir: Taika Waititi
Starring: Chris Hemsworth, Tom Hiddleston, Cate Blanchett, Jeff Goldblum, Mark Ruffalo, Tessa Thompson
Four stars
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
BULKWHIZ PROFILE
Date started: February 2017
Founders: Amira Rashad (CEO), Yusuf Saber (CTO), Mahmoud Sayedahmed (adviser), Reda Bouraoui (adviser)
Based: Dubai, UAE
Sector: E-commerce
Size: 50 employees
Funding: approximately $6m
Investors: Beco Capital, Enabling Future and Wain in the UAE; China's MSA Capital; 500 Startups; Faith Capital and Savour Ventures in Kuwait
The design
The protective shell is covered in solar panels to make use of light and produce energy. This will drastically reduce energy loss.
More than 80 per cent of the energy consumed by the French pavilion will be produced by the sun.
The architecture will control light sources to provide a highly insulated and airtight building.
The forecourt is protected from the sun and the plants will refresh the inner spaces.
A micro water treatment plant will recycle used water to supply the irrigation for the plants and to flush the toilets. This will reduce the pavilion’s need for fresh water by 30 per cent.
Energy-saving equipment will be used for all lighting and projections.
Beyond its use for the expo, the pavilion will be easy to dismantle and reuse the material.
Some elements of the metal frame can be prefabricated in a factory.
From architects to sound technicians and construction companies, a group of experts from 10 companies have created the pavilion.
Work will begin in May; the first stone will be laid in Dubai in the second quarter of 2019.
Construction of the pavilion will take 17 months from May 2019 to September 2020.
The specs
Engine: 2.0-litre 4-cylinder turbo
Power: 240hp at 5,500rpm
Torque: 390Nm at 3,000rpm
Transmission: eight-speed auto
Price: from Dh122,745
On sale: now
Results
5.30pm: Maiden (TB) Dh82,500 (Turf) 1,400m; Winner: Mcmanaman, Sam Hitchcock (jockey), Doug Watson (trainer)
6.05pm: Handicap (TB) Dh87,500 (T) 1,400m; Winner: Bawaasil, Sam Hitchcott, Doug Watson
6.40pm: Handicap (TB) Dh105,000 (Dirt) 1,400m; Winner: Bochart, Fabrice Veron, Satish Seemar
7.15pm: Handicap (TB) Dh105,000 (T) 1,200m; Winner: Mutaraffa, Antonio Fresu, Musabah Al Muhairi
7.50pm: Longines Stakes – Conditions (TB) Dh120,00 (D) 1,900m; Winner: Rare Ninja, Royston Ffrench, Salem bin Ghadayer
8.25pm: Zabeel Trophy – Rated Conditions (TB) Dh120,000 (T) 1,600m; Winner: Alfareeq, Antonio Fresu, Musabah Al Muhairi
9pm: Handicap (TB) Dh105,000 (T) 2,410m; Winner: Good Tidings, Antonio Fresu, Musabah Al Muhairi
9.35pm: Handicap (TB) Dh92,500 (T) 2,000m; Winner: Zorion, Abdul Aziz Al Balushi, Helal Al Alawi
The specs: 2019 Aston Martin DBS Superleggera
Price, base: Dh1.2 million
Engine: 5.2-litre twin-turbo V12
Transmission: Eight-speed automatic
Power: 725hp @ 6,500pm
Torque: 900Nm @ 1,800rpm
Fuel economy, combined: 12.3L / 100km (estimate)
Get Out
Director: Jordan Peele
Stars: Daniel Kaluuya, Allison Williams, Catherine Keener, Bradley Whitford
Four stars
8 UAE companies helping families reduce their carbon footprint
Greenheart Organic Farms
This Dubai company was one of the country’s first organic farms, set up in 2012, and it now delivers a wide array of fruits and vegetables grown regionally or in the UAE, as well as other grocery items, to both Dubai and Abu Dhabi doorsteps.
www.greenheartuae.com
Modibodi
Founded in Australia, Modibodi is now in the UAE with waste-free, reusable underwear that eliminates the litter created by a woman’s monthly cycle, which adds up to approximately 136kgs of sanitary waste over a lifetime.
www.modibodi.ae
The Good Karma Co
From brushes made of plant fibres to eco-friendly storage solutions, this company has planet-friendly alternatives to almost everything we need, including tin foil and toothbrushes.
www.instagram.com/thegoodkarmaco
Re:told
One Dubai boutique, Re:told, is taking second-hand garments and selling them on at a fraction of the price, helping to cut back on the hundreds of thousands of tonnes of clothes thrown into landfills each year.
www.shopretold.com
Lush
Lush provides products such as shampoo and conditioner as package-free bars with reusable tins to store.
www.mena.lush.com
Bubble Bro
Offering filtered, still and sparkling water on tap, Bubble Bro is attempting to ensure we don’t produce plastic or glass waste. Founded in 2017 by Adel Abu-Aysha, the company is on track to exceeding its target of saving one million bottles by the end of the year.
www.bubble-bro.com
Coethical
This company offers refillable, eco-friendly home cleaning and hygiene products that are all biodegradable, free of chemicals and certifiably not tested on animals.
www.instagram.com/coethical
Eggs & Soldiers
This bricks-and-mortar shop and e-store, founded by a Dubai mum-of-four, is the place to go for all manner of family products – from reusable cloth diapers to organic skincare and sustainable toys.
www.eggsnsoldiers.com
'The Last Days of Ptolemy Grey'
Rating: 3/5
Directors: Ramin Bahrani, Debbie Allen, Hanelle Culpepper, Guillermo Navarro
Writers: Walter Mosley
Stars: Samuel L Jackson, Dominique Fishback, Walton Goggins
MATCH RESULT
Al Jazira 3 Persepolis 2
Jazira: Mabkhout (52'), Romarinho (77'), Al Hammadi (90' 6)
Persepolis: Alipour (42'), Mensha (84')
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Essentials
The flights: You can fly from the UAE to Iceland with one stop in Europe with a variety of airlines. Return flights with Emirates from Dubai to Stockholm, then Icelandair to Reykjavik, cost from Dh4,153 return. The whole trip takes 11 hours. British Airways flies from Abu Dhabi and Dubai to Reykjavik, via London, with return flights taking 12 hours and costing from Dh2,490 return, including taxes.
The activities: A half-day Silfra snorkelling trip costs 14,990 Icelandic kronur (Dh544) with Dive.is. Inside the Volcano also takes half a day and costs 42,000 kronur (Dh1,524). The Jokulsarlon small-boat cruise lasts about an hour and costs 9,800 kronur (Dh356). Into the Glacier costs 19,500 kronur (Dh708). It lasts three to four hours.
The tours: It’s often better to book a tailor-made trip through a specialist operator. UK-based Discover the World offers seven nights, self-driving, across the island from £892 (Dh4,505) per person. This includes three nights’ accommodation at Hotel Husafell near Into the Glacier, two nights at Hotel Ranga and two nights at the Icelandair Hotel Klaustur. It includes car rental, plus an iPad with itinerary and tourist information pre-loaded onto it, while activities can be booked as optional extras. More information inspiredbyiceland.com
Florence and the Machine – High as Hope
Three stars
Monster Hunter: World
Capcom
PlayStation 4, Xbox One
MATCH INFO
Final: England v South Africa, Saturday, 1pm
MATCH SCHEDULE
Uefa Champions League semi-final, first leg
Tuesday, April 24 (10.45pm)
Liverpool v Roma
Wednesday, April 25
Bayern Munich v Real Madrid (10.45pm)
Europa League semi-final, first leg
Thursday, April 26
Arsenal v Atletico Madrid (11.05pm)
Marseille v Salzburg (11.05pm)
NBA Finals results
Game 1: Warriors 124, Cavaliers 114
Game 2: Warriors 122, Cavaliers 103
Game 3: Cavaliers 102, Warriors 110
Game 4: In Cleveland, Sunday (Monday morning UAE)
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Sanju
Produced: Vidhu Vinod Chopra, Rajkumar Hirani
Director: Rajkumar Hirani
Cast: Ranbir Kapoor, Vicky Kaushal, Paresh Rawal, Anushka Sharma, Manish’s Koirala, Dia Mirza, Sonam Kapoor, Jim Sarbh, Boman Irani
Rating: 3.5 stars
The Prison Letters of Nelson Mandela
Edited by Sahm Venter
Published by Liveright
THE LIGHT
Director: Tom Tykwer
Starring: Tala Al Deen, Nicolette Krebitz, Lars Eidinger
Rating: 3/5
SPECS
%3Cp%3E%3Cstrong%3EEngine%3A%3C%2Fstrong%3E%201.5-litre%204-cylinder%3Cbr%3E%3Cstrong%3EPower%3A%3C%2Fstrong%3E%20101hp%3Cbr%3E%3Cstrong%3ETorque%3A%3C%2Fstrong%3E%20135Nm%3Cbr%3E%3Cstrong%3ETransmission%3C%2Fstrong%3E%3A%20Six-speed%20auto%3Cbr%3E%3Cstrong%3EPrice%3A%3C%2Fstrong%3E%20From%20Dh79%2C900%3Cbr%3E%3Cstrong%3EOn%20sale%3A%3C%2Fstrong%3E%20Now%3C%2Fp%3E%0A
The specs
Engine: 8.0-litre, quad-turbo 16-cylinder
Transmission: 7-speed auto
0-100kmh 2.3 seconds
0-200kmh 5.5 seconds
0-300kmh 11.6 seconds
Power: 1500hp
Torque: 1600Nm
Price: Dh13,400,000
On sale: now
WORLD CUP SQUAD
Dimuth Karunaratne (Captain), Angelo Mathews, Avishka Fernando, Lahiru Thirimanne, Kusal Mendis (wk), Kusal Perera (wk), Dhananjaya de Silva, Thisara Perera, Isuru Udana, Jeffrey Vandersay, Jeevan Mendis, Milinda Siriwardana, Lasith Malinga, Suranga Lakmal, Nuwan Pradeep
Safety 'top priority' for rival hyperloop company
The chief operating officer of Hyperloop Transportation Technologies, Andres de Leon, said his company's hyperloop technology is “ready” and safe.
He said the company prioritised safety throughout its development and, last year, Munich Re, one of the world's largest reinsurance companies, announced it was ready to insure their technology.
“Our levitation, propulsion, and vacuum technology have all been developed [...] over several decades and have been deployed and tested at full scale,” he said in a statement to The National.
“Only once the system has been certified and approved will it move people,” he said.
HyperloopTT has begun designing and engineering processes for its Abu Dhabi projects and hopes to break ground soon.
With no delivery date yet announced, Mr de Leon said timelines had to be considered carefully, as government approval, permits, and regulations could create necessary delays.
MATCH INFO
Bayern Munich 2 Borussia Monchengladbach 1
Bayern: Zirkzee (26'), Goretzka (86')
Gladbach: Pavard (37' og)
Man of the Match: Breel Embolo (Borussia Monchengladbach)
Match info
Manchester United 1
Fred (18')
Wolves 1
Moutinho (53')
Fight card
Preliminaries:
Nouredine Samir (UAE) v Sheroz Kholmirzav (UZB); Lucas Porst (SWE) v Ellis Barboza (GBR); Mouhmad Amine Alharar (MAR) v Mohammed Mardi (UAE); Ibrahim Bilal (UAE) v Spyro Besiri (GRE); Aslamjan Ortikov (UZB) v Joshua Ridgwell (GBR)
Main card:
Carlos Prates (BRA) v Dmitry Valent (BLR); Bobirjon Tagiev (UZB) v Valentin Thibaut (FRA); Arthur Meyer (FRA) v Hicham Moujtahid (BEL); Ines Es Salehy (BEL) v Myriame Djedidi (FRA); Craig Coakley (IRE) v Deniz Demirkapu (TUR); Artem Avanesov (ARM) v Badreddine Attif (MAR); Abdulvosid Buranov (RUS) v Akram Hamidi (FRA)
Title card:
Intercontinental Lightweight: Ilyass Habibali (UAE) v Angel Marquez (ESP)
Intercontinental Middleweight: Amine El Moatassime (UAE) v Francesco Iadanza (ITA)
Asian Featherweight: Zakaria El Jamari (UAE) v Phillip Delarmino (PHI)
Best Academy: Ajax and Benfica
Best Agent: Jorge Mendes
Best Club : Liverpool
Best Coach: Jurgen Klopp (Liverpool)
Best Goalkeeper: Alisson Becker
Best Men’s Player: Cristiano Ronaldo
Best Partnership of the Year Award by SportBusiness: Manchester City and SAP
Best Referee: Stephanie Frappart
Best Revelation Player: Joao Felix (Atletico Madrid and Portugal)
Best Sporting Director: Andrea Berta (Atletico Madrid)
Best Women's Player: Lucy Bronze
Best Young Arab Player: Achraf Hakimi
Kooora – Best Arab Club: Al Hilal (Saudi Arabia)
Kooora – Best Arab Player: Abderrazak Hamdallah (Al-Nassr FC, Saudi Arabia)
Player Career Award: Miralem Pjanic and Ryan Giggs
Community Shield info
Where, when and at what time Wembley Stadium in London on Sunday at 5pm (UAE time)
Arsenal line up (3-4-2-1) Petr Cech; Rob Holding, Per Mertesacker, Nacho Monreal; Hector Bellerin, Mohamed Elneny, Granit Xhaka, Alex Oxlade-Chamberlain; Alex Iwobi, Danny Welbeck; Alexandre Lacazette
Arsenal manager Arsene Wenger
Chelsea line up (3-4-2-1) Thibaut Courtois; Cesar Azpilicueta, David Luiz, Gary Cahill; Victor Moses, Cesc Fabregas, N'Golo Kante, Marcos Alonso; Willian, Pedro; Michy Batshuayi
Chelsea manager Antonio Conte
Referee Bobby Madley
Match statistics
Abu Dhabi Harlequins 36 Bahrain 32
Harlequins
Tries: Penalty 2, Stevenson, Teasdale, Semple
Cons: Stevenson 2
Pens: Stevenson
Bahrain
Tries: Wallace 2, Heath, Evans, Behan
Cons: Radley 2
Pen: Radley
Man of the match: Craig Nutt (Harlequins)
Banned items
Dubai Police has also issued a list of banned items at the ground on Sunday. These include:
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Political flags or banners
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Bikes, skateboards or scooters
The specs
Price, base / as tested Dh135,000
Engine 1.6L turbo
Gearbox Six speed automatic with manual and sports mode
Power 165hp @ 6,000rpm
Torque 240Nm @ 1,400rpm 0-100kph: 9.2 seconds
Top speed 420 kph (governed)
Fuel economy, combined 35.2L / 100km (est)
A State of Passion
Directors: Carol Mansour and Muna Khalidi
Stars: Dr Ghassan Abu-Sittah
Rating: 4/5
Sunday's Super Four matches
Dubai, 3.30pm
India v Pakistan
Abu Dhabi, 3.30pm
Bangladesh v Afghanistan
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Dubai Rugby Sevens, December 5 -7
World Sevens Series Pools
A – Fiji, France, Argentina, Japan
B – United States, Australia, Scotland, Ireland
C – New Zealand, Samoa, Canada, Wales
D – South Africa, England, Spain, Kenya
Leaderboard
63 - Mike Lorenzo-Vera (FRA)
64 - Rory McIlroy (NIR)
66 - Jon Rahm (ESP)
67 - Tom Lewis (ENG), Tommy Fleetwood (ENG)
68 - Rafael Cabrera-Bello (ESP), Marcus Kinhult (SWE)
69 - Justin Rose (ENG), Thomas Detry (BEL), Francesco Molinari (ITA), Danny Willett (ENG), Li Haotong (CHN), Matthias Schwab (AUT)
