Man on a mission

Alex Zalami is planning a quiet revolution in the way Middle Eastern companies view corporate social responsibility and ethics, but admits he could face a long journey. Richard Agnew reports.

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By  Richard Agnew Published  May 22, 2005

Man on a mission|~|PROGRESS-200.jpg|~|PROGRESS: Zalami says his ethics agenda is gaining much more acceptance than it would have five years ago.|~|TUCKED away in the corner of a second-floor office within Dubai’s Chambers of Commerce and Industry (DCCI), Alex Zalami has wider ambitions than his immediate surroundings suggest. The executive director of the Dubai Ethics Resource Centre (DERC) has only five permanent staff to call on for the not-for profit outfit, which was set up a year ago by the emirate’s authorities to offer training and advisory services around corporate social responsibility and governance. But Zalami’s tactics so far have been to expand the centre’s influence beyond that of his own team. He and his outside consultants have been running a series of initiatives over the last 12 months to promote the idea that investment in ethics can benefit businesses over the long term, rather than burdening them. And by working hard to recruit allies among Dubai’s government and business elite, he thinks he’s nearing a position where the rest of the emirate’s corporate leadership will sit up and take notice. “Even if I double my staff tomorrow, DERC will not be the custodian of the ethics agenda,” Zalami says. “It just doesn’t work that way. I would like to see as broad a coalition of stakeholders as possible buy into the mission of the centre. I don’t necessarily mean by giving financial support, but by offering political support and making it clear to the rest of Dubai that this centre has not parachuted from nowhere. The ethics agenda is part and parcel of taking Dubai where Dubai wants to go,” he adds. To say that ethical business practices are already at the heart of Dubai’s economic development might raise a few eyebrows, but Zalami is deadly serious when he argues that his ideas have gained much more acceptance than they would have just four or five years ago. Internationally, dodgy accounting methods by companies in the US such as Enron and Worldcom have pushed the issue of corporate social responsibility to the fore, while globalisation and post-9/11 security concerns have put pressure on the region’s traditionally closed banking sector to become more transparent. Arab money — much of which used to go to the West — has also returned to the Middle East in bulk, with investors demanding the same levels of disclosure as they benefited from elsewhere in the world. Zalami says that these factors, as well as a move by the government to align Dubai’s standards of governance with the expectations of global firms, helped persuade the emirate’s authorities to accept the idea of the centre, after much lobbying to allow it to move from its previous base in Abu Dhabi. Previously, it operated under the guise of the Gulf Centre for Excellence in Ethics (GCEE) in the UAE’s capital, having originally been created to develop ethical guidelines for medical firms with the country’s Ministry of Health. “We have argued all along that an institution like ours is beneficial to any country, but you need to convince people that this is the case,” Zalami says. “An idea like this can get support only if it is perceived that it is in someone's interest. It is not driven by some kind of enlightenment; it is driven by the perception that it adds value. Once [Dubai’s authorities] saw that it would add value, they embraced it,” he adds. At the same time, Zalami concedes that wide-scale acceptance of his ethics programmes and initiatives will not be rapid. His stated aim is to offer the centre’s resources regionally. But clearly, many Middle Eastern countries continue to lag behind other parts of the world. According to Transparency International, for example, a fall in perceived corruption was witnessed in the UAE during 2004, but things were seen to have worsened in Kuwait, Bahrain, Oman and Saudi Arabia. Zalami is also not the type to start banging the drum about a lack of governance in the region, and concedes that his plans to promote DERC’s training and consultancy programmes in other Gulf countries will take time. In Dubai, the centre has no powers to create or enforce laws, so Zalami is instead creating incentives for businesses and government agencies to adopt ethical practices, which he hopes could then find their way into the emirate’s regulations and laws. Also, while multinationals operating in Middle Eastern markets can be sued for ethical breaches in their home country, Zalami is wary that forcing international principles on regional companies could backfire. “I don’t want to sound like a cultural relativist,” he says. “But there are things that are rooted in culture that find their way into standards of governance. We see our mandate here as having to surface the socially-rooted and religiously-inspired values that are already common in this region and build on them to create standards of governance that are consistent with both international standards and cultural values,” he adds. Zalami talks a lot about ensuring Dubai’s big companies’ ‘buy-in’ to his agenda, but one of his first strategic moves was to target the emirate’s universities and colleges. Shortly after DERC was officially launched in October, the centre established a group of representatives from tertiary educational institutions in Dubai to plan projects, which have so far included an online leadership course for ethics teachers, and ‘simulations’ that get students involved in ethical decision-making. These kinds of initiatives, Zalami argues, will have a major impact as students graduate and take the things they have learned into the workplace. “It is in the interests of local business to behave ethically, because that will inspire confidence and cooperation in securing the economic goals of the UAE and the region,” says Dr. Howard Reed, director of Dubai Women’s College, one of the institutions that has partnered with DERC. “Economic success depends upon good governance and transparency in decision-making. [And] educational organisations play a crucial role in training business leaders to play a part in a global economy that requires more transparency in decision-making and a greater attention to issues such as conflict of interest, which is a particular problem for economies in the Arab world,” he adds. So far, though, Zalami has managed to stir up some debate over ethics among the emirate’s existing big players. A group of business leaders, for example, came together in December last year to identify key challenges relating to governance, and has attracted around 20 participants from Dubai and elsewhere in the Gulf. Chaired by Dr. Omar Bin Sulaiman, director general of the Dubai International Financial Centre (DIFC), the forum is expected to evolve into the region’s first Institute of Directors (IoD) early next year. “Our role is to prepare the ground for the IoD,” explains Zalami. “It would be an independent centre that we would facilitate. We wanted to take the idea to maturity by bringing those future members of the institute together in an interim programme to talk about issues, such as ‘what is conflict of interest in the context of the Gulf and what is financial disclosure in the context of the Gulf?’ Within a few months, I would like to see the members of the programme being willing to declare themselves founding members of the IoD. The group would then be spun off,” he adds. Although Dubai itself has not been immune to bad press over transparency, Zalami is confident that the centre made the right choice about its new location. “Anyone expecting that this kind of serious reform will take place in a straight line, without challenges and pitfalls, would be mistaken,” he says. “Would I like to see some of the things that go on changed? Yes. But there is more commitment in Dubai than any other place in this part of the world. That does mean that we will not have serious challenges, that we will not see cases of breaches … that might have an adverse effect on what Dubai has invested so much in. But there is tremendous commitment on the part of the leadership in Dubai to seeing this through,” he adds. So far, Zalami says that government-controlled agencies and businesses in the emirate have been quick to adopt the programmes it promotes, and hopes that other sectors, such as the financial and construction industries, will follow their lead. “In Dubai, government-owned companies appear to be on the leading edge when it comes to paying attention to governance standards and this is a model not shared with the rest of the world. Public companies are perceived to be inefficient, but here we have a model that offers opportunities. If these companies adopt high standards they provide an instant model and the likelihood of these standards becoming law is increased,” he adds. And now he’s got the ball rolling, Zalami is confident that fewer people will try to steer clear of him. “We have gone quite a way towards putting this coalition together,” says Zalami. “We’re not there yet — I would like to see a broader coalition than the one that exists today. We need to reach a critical mass to ensure the sustainability of the centre and if we can get to that point soon, we will have made major inroads. We’re on our way and that makes me optimistic,” he adds. ||**||

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