Friday, August 05, 2005

Cover-Up in Saudi not legal :: Arab News

Commercial cover-up is a very popular term in the Saudi market where non-Saudis own business in the Saudi market hiding behind Saudi names.

Any Saudi man that enters any grocery shop these days will notice whether a Saudi or non-Saudi owns the business. Most of the time the business are owned by non-Saudis by using the same name as a cover-up for their hidden jobs, Al-Hayat newspaper reported.

The Ministry of Commerce is fighting commercial cover-up for many decades now. Every year, the list of punishments are issued by the ministry to fight violators but it has little effect. If cases are discovered, then it will be very hard to prove it. It first started in the 70s during the economic boom.
Cover-ups are a lot like the ghosts we've posted on here.

Cover-ups arise when the government restricts ownership (of a business, property, stocks) to Saudis only. The government's primary objective may be to foster Saudi ownership and active participation in business, or it may be to keep out foreign influence or control. The effective of the restriction is to create profitable opportunities for Saudis to sell the use of their name to non-Saudis; it's not legal, but it is profitable. It's possible that the restriction has little of its intended effect (on ownership), and has an extensive effect of tempting Saudis into breaking the law.

What would the Saudi economy be like if it the ownership law worked as intended?

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