Public companies in Palestine (1): what goes unsaid far exceeds what is declared

In the coming period, through a series of articles, I will address the field of work of the public and private shareholding companies and those owned by the Palestinian National Authority, with the aim of shedding light on these companies for and against, stressing the importance of the shareholding-company sector in developing the Palestinian economy, creating job opportunities and its great contribution to joining the Palestinian economy and society to the caravan of developed economies.

Historical introduction:-

It is known that the Israeli occupation placed obstacles and impossible requirements before the founding of shareholding companies, whether public or private, with the aim of keeping the Palestinian economy small, family-based and limited, in a way that made it easy to break and to restrain its development; and also to prevent the Palestinians from thinking and working as a collective, to deprive the Palestinian economy of benefiting from the modest savings that might be available in the hands of ordinary citizens, and to restrain the Palestinians in the diaspora from investing part of their money inside Palestine.

With the founding of the Palestinian National Authority in 1994, a fever of founding shareholding companies, whether private or public, spread in all fields of investment, on the part of businessmen who had acquired sufficient experience and knowledge of this type of company as a result of their work around the world, especially in the Gulf, and who hastened with rapid steps to found private and public shareholding companies.

These companies were founded with the aim of filling the vacuum that was expected as a result of the partial disengagement of the Palestinian economy from the Israeli economy, and in application of the policy of substitution that had begun to take shape among the Palestinians with the aim of strengthening their economic independence. But because of the newness of the experience of the Palestinian National Authority and of Palestinian society with all its components of political forces, civil society and trade-union institutions in this field, and also because they were all preoccupied with the political concern of completing the building of institutions, this made them insufficiently qualified to engage with these new entities with their largely unfamiliar legal forms. Small enterprises owned by an individual or a limited number of individuals were the prevailing pattern at that time. Large shareholding companies were founded and huge economic sectors were privatised, such as telecommunications, energy and the gas in the sea of Gaza, and banks, banking institutions, insurance companies and mortgage companies were founded, before completing the legal and legislative infrastructure regulating the work of these companies and before the maturing of societal and cultural awareness about them.

Is it absence from the picture, or being kept out of it?

The private and public shareholding-company sector still needs more discussion in a way that strengthens transparency and official and popular oversight, especially since the focus in past years by local and international civil-society institutions was largely on the performance of the Palestinian National Authority, which was the object of attention of many local and international reports that confirmed the existence of suspicions of the spread of phenomena of corruption, favouritism and poor administrative performance. Meanwhile the field of shareholding companies was not addressed to the same degree despite its importance. Therefore the field of the private and public shareholding-company sector is dominated by much haziness, a lack of transparency and low levels of official and popular oversight. Despite the annual reports these companies publish on their websites, the relationship of some shareholding companies with the official and societal oversight institutions is characterised by favouritism, courtesy and conflicts of interest … which has kept them to a large extent away from follow-up and auditing.

Likewise some companies, especially the monopolistic ones, enjoy much influence at both the political and media levels; many researchers and interested parties have met with the refusal of some local newspapers and news websites to publish any point of view or article that addresses these companies with criticism and questions about them and their role, since they depend to a large extent for their funding on paid advertisements from these companies.

It is also noticeable that some of these companies follow an unprofessional employment policy in that they take unobjective criteria into account such as family and political affiliation and social level. Therefore a serious and deep discussion goes round in people's minds from time to time about these companies — often in public and more often in secret — whether those owned by individuals or those belonging to the Palestinian National Authority such as the Palestine Investment Fund, the Palestinian National Authority's shares in many companies such as the telecommunications company, the electricity generating station in Gaza, the gas fields discovered in the sea of Gaza and the monopoly contracts the National Authority signed in the first years of its life; and likewise about the fate of some of the international support funds or private funds that were plundered under the name of fictitious companies that existed only on paper.

Everyone recalls that the first Palestinian Legislative Council previously opened the files of many of these companies; likewise the current attorney general declared on taking up his post years ago that there were corruption files worth more than 700 million dollars .. After the passage of several years since then we are still waiting!!! And these are files proposed for the commission for combating illicit gain that was recently established … .

Many aspects for discussion:

Given the extreme importance of the private shareholding-company sector and of those companies owned by the National Authority — which is the money of the Palestinian people — and because of the multiplicity of issues raised about them, I will address in a series of successive articles some important aspects relating to this sector. With the reminder that the Palestinian people, who suffer poverty and need in the Gaza Strip, dependence on donors in the West Bank, and poverty and dispersal in the refugee camps and on the borders, have every right not only to know but to enjoy their money and their resources.

Some of these issues will be addressed in the following articles:-

1. How the right of monopoly is granted to particular companies and not others in a given field … and when the monopoly ends!!.

2. The nature of the agreements signed with these companies and the extent to which they are monitored by the oversight institutions.

3. The extent of these companies' compliance with paying the taxes they owe.

4. The extent of the Authority's and its institutions' oversight of these companies in terms of wage levels, the level of service provided to the public and the criteria for assessing it!!!

5. How members of the board of directors are chosen and the extent to which professionalism is applied and social and political favouritism avoided.

6. Some individuals enjoy membership of many companies at the same time, which brings them enormous incomes and leads to flattery and hypocrisy in order to preserve the membership that brings a huge income with hardly any effort.

7. The huge remunerations that members of boards of directors obtain in return for attending board sessions.

8. The political influence enjoyed by some shareholders and members of boards of directors.

9. Oversight of these companies' accounts by the official institutions authorised to do so.

10. The extent of the powers given to the National Authority and its institutions in some of these companies' strategic decisions, such as dismissing dozens of employees without prior notice or closing branches ..etc.

11. The proportion of funds these companies invest inside the homeland and in which fields!! and those they invest outside it

12. The extent of these companies' compliance with disclosing the results of their annual business as the basic law obliges them.

13. The extent of these companies' cooperation with researchers wishing to study and assess these companies, and making the financial and administrative statements available for public inspection through their websites or in discussion sessions and public dialogues as the law requires of them.

14. The extent of these companies' contribution to social development under what is called the “social responsibility fund” as is the case in the countries of the world, and how it is distributed across the different regions of the homeland!!

15. The fate of the funds of subscribers in companies that have not operated despite the passage of years since their founding.

Last but not least

In the hope of bringing about a serious discussion about the field of shareholding companies, whether private, public or governmental. It is an invitation to the Palestinian government headed by Dr Salam Fayyad to look into the situation of these companies in a way that strengthens the transparency and institutionalism it seeks, and also an invitation to the oversight institutions, the universities and civil-society organisations to give attention to this field of work. Stressing that the discussion here is not general and does not include everyone, since there are many shareholding companies that have played and play an important role in national development and are a good example that we hope will be followed by those shareholding companies that still deal with Palestine merely as an investment opportunity that must be exploited, and quickly.