If the minister of commerce believes that tightening control over corporate activities and obliging companies to disclose their financial position could mean a loss of trust in corporate executives, then he should write to the higher authorities who have instructed him to ensure that companies function according to the laws.
If on the other hand the minister sees no harm in tightening control over corporate activities since this would be in the interest of shareholders, then he should implement the royal directives by laying down the rules he deems necessary to activate the control measures and ensure transparency.
The leadership earlier set up a ministerial committee to review the conditions of joint stock companies that sustained huge annual losses or only reported marginal profits, thus denying the shareholders the opportunity to benefit from their investments and resulting in major financial damage.
The committee recommended a number of measures including tightening control and supervision over internal auditing and ensuring that companies disclose their financial positions. The recommendations were approved by the Supreme Economic Council and a royal directive issued to the minister of commerce to enforce them. Steps were taken by the ministry in that direction after consulting with companies, but when the latest Cabinet reshuffle was announced, the implementation of the recommendations was grounded.
The new minister was reported to have told businessmen at a chamber of commerce meeting that he ordered the suspension of the instructions issued by his predecessor in this regard and directed instead substitute measures to activate the royal decree. It was understood that the minister has issued verbal instructions to freeze the matter.
Had he suspended the decision of his predecessor by written instruction, he would have been perfectly within his rights. But he does not seem to have done so. Had he written to the higher authorities saying he did not think it was necessary to tighten control over internal auditing and waited for a reply, that would have been his right too. But the minister simply suspended the decision of his predecessor by verbal instructions, which I don’t think was an appropriate thing to do.
It is understood that the minister acted on objections raised by corporate executives. Companies have the right to object and the minister has the right to take their objections into consideration. But I don’t think it was appropriate to respond to such objections by freezing the entire matter the way the minister did. How are we to interpret the minister’s actions? Does it mean he is in favor of big shareholders, and against the small ones, who were hoping the royal decree would be implemented?
