Etisalat board took $10.2m in bonuses - gov't report
Salary and bonus discrepancies expose telco to “severe financial risk”; $337m lost on overseas operations.
A UAE Government report has revealed that the Etisalat chairman and board members paid themselves a total of AED37.5m ($10.2m) in bonuses in 2009, and has noted a string of discrepancies in bonuses and salaries at the country's largest telecoms operator.The State Audit Institution (SAI) found that Etisalat's salary system had integral weaknesses and lacked necessary safeguards to prevent exploitation, according to Arabic daily Emarat Al Youm. It said that those safeguards that are in place are not enforced, exposing the company to "severe financial risks".According to the newspaper the SAI report said one employee had been able to take advantage of the system to embezzle a total of AED27m ($7.35m), and also noted that former Etisalat employees whose service had been terminated, still owed the company more than AED2.93m ($798,000) as of the end of 2008.
The report also highlighted an incident where the telco approved an AED2m ($544,000) loan to an employee who wanted to buy a house, even though the maximum limit for his grade of employment should have limited his loan to AED1m ($272,000). The loan was in clear violation of Article 722 of the company's human resources regulations, the newspaper said.
According to the SAI's findings, the telco made an AED1.24bn ($338m) loss across ten of its overseas operations in 2009. By the end of that year, the value of loans and debts granted by Etisalat to affiliate companies totalled AED10bn ($2.72bn), which constituted 35 percent of the value of Etisalat's investment in these companies. The SAI said these were granted without the proper collateral, which put company finances at risk.
The newspaper said the SAI report recommended that Etisalat must conduct cost effectiveness measures, and suggested that Etisalat overpaid for a number of its overseas acquisitions, including for Ivory Coast-based Atlantique Telecom, Tanzania's Zanzibar Telecom (Zantel), Canar Telecommunications Company in Sudan, and Egypt Telecom.
According to the newspaper, the SAI urged that any increase in investment must be based on fair value of the assets of the target company, and said that in the future revenues from the new companies should correspond to the prices paid for them.
Responding to the report, Etisalat said that all bonuses had been approved by the UAE government.