Media coverage
Al-Sham Writers Association · 2010-09-04
The article examines the rise of public and private shareholding companies in Palestine after the establishment of the Palestinian National Authority in 1994, amid weak legal and regulatory frameworks, especially in insurance, mortgage, banking, telecommunications, and energy. It focuses on the non-banking financial sector, criticizing the granting of the Palestine Securities Exchange operating concession to a private company and pointing to conflicts of interest, weak oversight, and an unusually harmonious relationship between the stock exchange and the Palestine Capital Market Authority.
The article examines the rise of public and private shareholding companies in Palestine after the establishment of the Palestinian National Authority in 1994, amid weak legal and regulatory frameworks, especially in insurance, mortgage, banking, telecommunications, and energy. It focuses on the non…
## Joint-Stock Companies in
Palestine
## The State of the Non-Banking
Financial Sector
Economic expert and President of PalThink for Strategic
Studies, Gaza
In
a previous article bearing the number (1) in a series of articles dealing with the
public and private joint-stock companies sector in Palestine, based on its importance in development and in modernizing Palestinian
society and bringing it into the stream of civilization, I said that the Israeli occupation used to place obstacles
and impossible requirements before the establishment of joint-stock companies, whether public or private,
with the aim of keeping the Palestinian economy small, family-based, and limited, easy to break, and preventing
Palestinians from working and thinking as a collective. I also said that with the establishment of the Palestinian National
Authority in 1994, a fever of establishing joint-stock companies, whether private or public,
spread across all fields of investment by businessmen who possessed sufficient experience and
knowledge of this type of company as a result of their work around the world, especially
in the Gulf, where they moved, in rapid steps, to establish private and public joint-stock
companies, benefiting from the newness of the Authority and its weak experience in the field of oversight over companies, as well as in
drafting the laws and decrees governing the establishment and operation of private and public companies. Thus,
many joint-stock companies were established in the fields of insurance, mortgages, and banking, and
huge economic sectors were privatized such as fixed and mobile telecommunications, and long-term monopolistic contracts were awarded
in the fields of energy and electricity, as well as the contract for supplying petroleum and gas from Israel
to the Palestinian territories with the Israeli Dor company, and the contract for the exploration of Gaza gas to the British company British
Gas and the agreement to sell it to Israel later, as well as the management of the liberated lands
in the Gaza Strip after the Israeli withdrawal in 2005 and the establishment of the Palestinian Investment Fund,
and many other contracts and companies. This took place before the completion, or in the absence, of the legal and legislative
infrastructure regulating the work of these companies, and before the maturation of social
and cultural awareness around or about them. Although some components of the legal environment
regulating this sector were later established through the creation of the Capital Market Authority, the
Palestinian Monetary Authority, and other official institutions empowered by law to regulate the work of these
companies and oversee them, the field of public and private joint-stock companies still has far more left unsaid than said openly:
## The Palestinian Capital Market Authority and the Palestine Securities Exchange
One example of this is the
securities market company, which was established in Nablus as a private joint-stock company in 1996
and held its first session in February 1997, that is, only one year after
the organization of the first legislative elections in the Palestinian territories and before this
Legislative Council had been able to accumulate the expertise necessary to deal with such complex structures. Meanwhile,
the Palestinian Capital Market Authority was established by a law issued by the Palestinian National Authority
as the body entrusted with supervising and overseeing financial institutions, including the securities market, in 2004, that is, eight years later.
In other words, the securities market and many other private joint-stock companies in the fields of insurance,
mortgages, and others remained operating without sufficient legal oversight for several years. According
to the provisions of Law No. (13) of 2004 on the Formation of the Capital Market Authority, the Capital Market Authority aims
to create the appropriate climate for achieving the stability and growth of capital; likewise, to regulate,
develop, and monitor the capital market and protect investors’ rights. The Capital Market Authority is entrusted with supervising:-
·
The securities market
·
Insurance companies
·
Financial leasing companies
·
Mortgage companies
It is not established how Palestine Securities Company was granted the franchise to operate the Palestinian capital market
without this being done through a public tender allowing the opportunity for participation by other individuals and companies.
There is also nothing indicating the financial value paid by the capital market company
to the Palestinian National Authority in return for this license, the duration of the franchise granted to the company, when
it is renewed, at what value, whether it is a fixed value or changes annually, and why the Palestinian National
Authority did not own a share in it!!! More important than that,
what are the legal, financial, and economic justifications for granting a franchise of a monopolistic nature in a strategic
field such as the capital market to a private company, and under a nascent political and constitutional system!! It is worth noting that Palestine Securities Company
has, for several years now, continued to announce its desire to transform into
a public joint-stock company and open subscription in its shares to the public, though this has not yet been achieved.
Palestine Securities Exchange Company is managed by a board of directors composed of 7 persons, namely the following gentlemen:
1.
Dr. Rami Hamdallah
Chairman
of the Board of Directors and President of An-Najah University
2.
Dr. Farouq Zuaiter
Vice Chairman of the Board of Directors
3.
Mr. Ziyad Al-Turk
Member
of the Board of Directors
4.
Mr. Samir Hulileh Member of the Board of Directors
5.
Dr. Basim Khaled Makhoul, Member of the Board of Directors
6.
Mr. Roman Matthew Member of the Board of Directors
7.
Al-Sanabel for Trade and Investment Company Member of the Board of Directors
Some of the gentlemen on the board of directors hold administrative and executive positions in other companies,
reaching in some cases eight positions. Some of them manage, or are members of the boards of directors of, private or public companies whose shares are listed for trading on the capital market, which represents a dangerous overlap between the role of the supervisor and the role of the supervised, weakens the prestige of oversight,
and strikes at the principle of equal opportunity before listed companies.
Meanwhile, the Palestinian Capital Market Authority, which is the institution entrusted with supervision and
follow-up, is managed by a council composed of (6) persons, which constitutes a violation of the Basic Law, which requires 7 persons to manage the Authority. They are the following gentlemen:
1.
Maher Al-Masri, Chairman of the Board of Directors.
2.
Mr. Nasser Tahboub, Vice Chairman of the Board of Directors and representative of the Ministry of Economy.
3.
Dr. Jihad Al-Wazir, representative of the Palestinian Monetary Authority.
4.
Ms. Muna Al-Masri, representative of the Ministry of Finance.
5.
Mr. Nabil Abu Diab, representative of the Palestinian banks.
6.
Mr. Aziz Abdel Jawad, representative of the listed companies.
And while Arab and international financial markets usually witness multiple crises and disputes between listed companies, supervisory bodies, and financial intermediation entities, especially in recent years with the global international crisis, we find that the relationship between the Palestine Securities Exchange and the Capital Market Authority appears completely harmonious, with no disputes prevailing over it, contrary to what is expected and customary between two institutions governed by a relationship of supervision and oversight. The New York Stock Exchange, which is the largest and most organized in the world, experienced the Madoff scandal, which was exposed at the end of December 2008. Madoff, who worked at the New York Stock Exchange and held senior positions there, managed to deceive the world’s largest companies and major billionaires whom one cannot imagine could be deceived, such as Alwaleed bin Talal, as Madoff succeeded in stealing $50 billion over ten years of his work on the New York Stock Exchange. Meanwhile, since the establishment of the market in 1996 and the supervisory authority over it in 2004, no significant cases have been uncovered except when reports circulated at the beginning of 2008 about the intention of the Capital Market Authority to dismiss, or the resignation of, the Chairman of the Board and Chief Executive Officer of the Securities Exchange, Dr. Hassan Abu Libdeh, against the backdrop of unconfirmed reports of stock manipulation and collusion with businessmen in deals worth several million dollars. Dr. Abu Libdeh left his position at that time without denying or confirming such reports.
It is worth mentioning that the Palestinian newspaper Al-Quds published in its Tuesday, February 12, 2008 issue under the title: "
Dr. Abu
Libdeh criticizes the performance of the Capital Market Authority" the following: at the workshop organized by MAS in Ramallah in February 2008
Dr. Hassan Abu Libdeh called for the need to make changes in the Capital Market Authority, including its chairman and board of directors, because of the Authority’s major failures in all areas of its work and duties, pointing out that it still obstructs the law that requires public shareholding companies to list on the financial market. He referred to the existence of a major flaw in the failure to list these companies, attributing that to the Authority, which bears responsibility for it, attacking it because it had not taken any practical step in drafting the governing regulations related to the licensing of investment funds and in implementing the law on listing public shareholding companies, and that it still obstructs the law despite being the body that is supposed to be keen on implementing it. Abu Libdeh stressed that there is an enormous defect in the failure to list these companies, saying that every public shareholding company not listed on the financial market is a company operating in secrecy, and that the Capital Market Authority had not made a single effort to conclude a single agreement with any Arab or international body, and that the head of the National Committee for Governance and the Authority would not be able to carry out implementation and promotion as long as the governing regulations remain absent. "End of quote."
Text © Al-Sham Writers Association — archived here with attribution to the source. — Machine translation for archival reference. — Original source