Lawyer Bassim Alim, chairman of the Bankruptcy Protection & Reconciliation Committee, was quoted as saying that many of the SME owners had made grave financial and administrative mistakes, and some of them were found to be hiding illegal foreign workers. The committee is a non-governmental organization seeking to reconcile the owners of the small and medium enterprises with their debtors so as to save them from bankruptcy.
"None of the SMEs proprietors came to the committee with a complete file, consisting of all the required papers. Our committee does not have any power or authority. We are only a reconciliatory body," Alim said.
Nabeel Abbas, another member of the committee, said most of the SMEs they talked to were not eligible for obtaining assistance by the Ministry of Commerce. "Most of them do not have official ledgers or proper accounts. This represented a major obstacle for us to help them," he said.
He said the committee found out that many of these SMEs did not have proper administration, an accounting system, an employment policy or a decision-making mechanism. "Many of them had a single employee who was the owner of the establishment. All our efforts to help them failed," he said.
Abbas said many of the SMEs who promised to present their books to the committee in order to get help failed to do so. "The decision of the Minister of Commerce made it imperative for all SMEs to present accounting books for the previous three years in order to be qualified for the ministry's assistance," he explained.
Abbas said the committee tried to help only five of these companies, but they could not come up with all the required papers and so failed to meet the conditions of the ministry. "Our experiment has thus failed flatly," he said.
Abbas noted that the bad management, the weak financial resources, and the high risks ended up with many SME owners in prison. "The owners were not qualified enough to deal with labor issues. The chamber of commerce should have trained them before allowing them to enter into business," he said.
He said that many of the owners of the SMEs only came to the committee when they were a few inches away from court. "Our objective was to protect them against bankruptcy through reconciliation. However, in view of the fact that they came to us late and without the required papers, we could not do anything to help them,” he said.
Asked about the role of commercial banks in assisting SMEs, Abbas said many of the banks would not dare to lend them money due to the high risks. "The banks would not risk spending the money of their depositors on SMEs who did not have audited accounts or sound budgets," he said.
Abbas observed that the SMEs were registered at the banks as "institutions with very high risks" and called for the establishment of special banks to provide finances through soft loans to the SMEs.
