RIYADH, 1 March 2006 — The rise and fall of Enron from, “America’s most innovative company” with claimed revenues of $101 billion and a work force of around 21,000 till its bankruptcy in late 2001, hold important lessons for the Kingdom, which has the biggest stock market in the Middle East with a capitalization that reached SR2.44 trillion last year.
This message was delivered by Dr. Robert Bryce, American author, during a lecture on “ Enron and Saudi Arabian Stock Market: Lessons for Saudi Investors” delivered at the King Fahd Cultural Center on Monday night.
The event was organized by Al-Eqtisadiah, a sister publication of Arab News, under the patronage of Prince Faisal Bin Salman, chairman, Saudi Research & Marketing Group.
Earlier, Abdulwahab Al-Fayez, editor-in-chief of Al-Eqtisadiah, introduced the speaker, while Dr. Abdullah Al-Humaid, acted as the moderator. A large number of Saudi investors and academics were present.
“The collapse of Enron is a story of commercial fraud, lack of transparency and underhand dealings,” said Dr. Bryce, an author who did research on the subject.
He said the downfall of Enron should serve as an eye-opener for Saudi investors given the fact that the Saudi stock market has been experiencing a boom which Prince Alwaleed ibn Talal finds “unnatural”.
According to Bryce, Enron’s stock value surged by around 300 percent between 1998 and late 2000, while TASI (Tadawul All-Share Index) also shot up by 575 percent between January 2005 and January 2006. “Investors in Tadawul should look closely at this issue,” he observed.
Bryce said he had talks with senior officials of the Saudi Capital Market Authority (CMA) who briefed him on the regulatory framework put in place to prevent share prices manipulation and insider trading.
Yet, as Saudi economists pointed out during the question-answer session, the capital market was experiencing fluctuations making the investors jittery. “There is a need for greater transparency, since crooks are everywhere. Some Saudi companies are manipulating the stock market causing an artificial rise in share prices,” Saudi economist Dr. Ihsan Bu-Hulaiga, observed.
This theme was also taken up by Saudi financial consultant Motassim Al-Morshad, who said “transparency will remain an issue despite the constant monitoring by CMA.”
