Financial crime leads to billions of lost business in Middle East, survey finds

Some 45 percent of MENA respondents in a Thomson Reuters survey had been a victim of financial crime as opposed to 47 percent globally. (AFP)
Updated 24 May 2018
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Financial crime leads to billions of lost business in Middle East, survey finds

  • Some 45 percent of MENA respondents in Thomson Reuters victims of fraud, corruption and bribery
  • 77 percent of MENA respondents deliberately avoided customers, suppliers, countries or industries viewed as most exposed to financial crime.

LONDON: Middle Eastern companies are losing billions of dollars in business opportunities because of fears about financial crime, according to a Thomson Reuters survey published on Thursday.

Concern about the possibility of severe financial and reputational damage due to regulatory breaches leads foreign investors and firms to shun companies and entire regions where they see “heightened risk.”

In the Middle East and North Africa (MENA), 77 percent of survey respondents said that they deliberately avoided customers, suppliers, countries or industries which they viewed as most exposed to financial crime.

“The impact in terms of lost opportunities at both organizational and national level is difficult to quantify, but likely to impact productivity and economic development,” Thomson Reuters said.

The report was conducted online by an independent third party in March 2018. More than 2,000 senior managers at large global organizations completed the survey, from 19 countries.

In a hard-hitting conclusion, the report said: “For the first time our research has put a price on financial crime: three and a half percent of corporate turnover for the 2,373 large companies in our survey alone. That adds up to a staggering $1.45 trillion.”

Financial crime was said to blight individual lives and undermine the ability of governments to provide key services such as education and health. The IMF has shown that it reduces economic growth and social cohesion.

Che Sidanius, global head of financial crime regulation at Thomson Reuters, said that financial crime caused “incalculable” harm around the world. The proceeds of activities spanning bribery, corruption, fraud, and narcotics trafficking have been implicated in the financing of terrorism, human rights abuses such as slavery and child labor, and environmental crime.

“This has serious economic and social costs in terms of the lost revenues to national exchequers that could be invested in social development, and in terms of the impact on individual lives,” Sidanius said.

Other key findings were that 45 percent of MENA respondents had been a victim of financial crime as opposed to 47 percent globally; 96 percent believed that bribery and corruption was an important issue to tackle; 57 percent indicated that the consequences of bribery and corruption meant less government revenue; only 59 percent said that they fully conducted due diligence; and only 60 percent fully conducted due diligence, the report said.


Saudi Aramco to invest in refinery-petrochemical project in east China

Updated 18 October 2018
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Saudi Aramco to invest in refinery-petrochemical project in east China

  • This is the third such project in China that Saudi Aramco has set its sight on
  • Last month, Saudi Aramco signed a long-term deal with the Zhejiang project’s operator Zhejiang Rongsheng to supply crude oil

ZHOUSHAN, China/SINGAPORE: State oil giant Saudi Aramco signed an agreement on Thursday to invest in a refinery-petrochemical project in eastern China, part of its strategy to expand in downstream operations globally.
The memorandum of understanding between the company and Zhejiang province included plans to invest in a new refinery and co-operate in crude oil supply, storage and trading, according to details released by the Zhoushan government after a signing ceremony in the city south of Shanghai.
Zhejiang Petrochemical, 51 percent owned by textile giant Zhejiang Rongsheng Holding Group, is building a 400,000-barrels-per-day refinery and associated petrochemical facilities that was expected to start operations by the end of this year.
This is the third such project in China that Saudi Aramco has set its sight on as it seeks to lock in long-term outlets for its crude oil and produce fuel and petrochemicals to meet rising demand in Asia and cushion the risk of a slowdown in oil consumption.
Last month, Saudi Aramco signed a long-term deal with the Zhejiang project’s operator Zhejiang Rongsheng to supply crude oil.
The oil giant had not yet finalized the size of its stake in the project and still needed to complete due diligence, Aramco’s Senior Vice President of Downstream, Abdulaziz Al-Judaimi, said on the sidelines of the event.
Saudi Aramco expects to supply 170,000 barrels per day of Saudi crude to the refinery in Zhoushan when it starts operations, he said.
The first crude carrier supplying the refinery should arrive in December or January, depending on when the project starts, he added.
Aramco also owns part of the Fujian refinery-petrochemical plant with Sinopec and Exxon Mobil Corp, and has plans to build a 300,000-bpd refinery with China’s Norinco. It is also in talks with PetroChina to invest in a refinery in Yunnan.