By : Omar Shaban
In a series of articles talking about the public and private corporation sector in palestine which comes to highlight the importance of this sector in developing and modernizing the Palestinian society, I said, in the first article, that the Israeli occupation was imposing restrictions and very hard requirements in front of establishing the corporations whether the private or the public ones. These measures which were imposed by the Israeli occupation aimed at making the Palestinian economy small, limited and fragile. They also aim to prevent the Palestinians from working and thinking as a united society. Moreover, I mentioned that expert businessmen wildly established public and private corporations. They are familiar with this field as they worked before in such companies in all over the world, especially, the gulf countries. This step came by the time of founding the Palestinian authority in 1994. Those skillful and initiative businessmen got benefits from having a newly born authority which was not experienced in this sector. Big corporations, banks and banking institutions, insurance and mortgage companies were established. In addition, there was a kind of privatization for huge economical sectors such as: the communication landlines and mobiles , the energy, and the gas fields in Gaza Sea. Furthermore, awarded gas drilling contracts to British Gas, BG Company and the agreement of selling it to Israel besides running the ex-settlement area in the Gaza strip after the Israeli withdrawal in2005. All this would happen before completing the legal and legislative infrastructure which operates and organizes the work of these companies and before raising the social and cultural awareness towards these companies. Many issues are still dealt under the table despite of founding the components of the legal ground to operate and organize this sector by founding the capital market authority, the Palestinian Monetary Fund and other official institutions.
The Palestinian capital market authority and Palestine securities exchange:
One example for that is the stock market company which was established in West Bank city of Nablus as a private corporation in 1996 while the Palestinian capital marker authority was established in 2004 by an act of the PA as an authority entrusted with the supervision and control of the financial institutions. That means the capital market authority and many other private insurance and mortgage corporations were working without enough legal control for many years. According to the act of forming the capital market authority no. (13) 2004, the capital market authority aims to provide suitable climate to achieve the stability and the growth of the capital besides organizing, operating and monitoring the capital market and protecting the investors’ rights. The capital market authority is supposed to supervise the following:
1. The stock market , The insurance companies, financial leasing companies and the mortgage companies
I wonder how Palestine securities exchange was granted a privilege exclusive to operate the Palestinian capital market without holding a public auction allow other individuals and companies to participate. Why did this happen and why Nablus was chosen to be the center of the market. There are no indications for the financial value which the capital market company paid to the PA for neither this license, nor the period of the granted privilege, the renewing date or the cost are known…!!! It is worthy mentioning that Palestine securities exchange, for years, has been to announce its desire to be changed into a public corporation and open the subscription for the shares to the public, but this hasn’t happen yet. Some of the board members of the company occupy executive and administrative positions in other companies that may reach to 8 posts. Other members of the board are occupying inn same time position in other private and public corporations which are listed for trading their shares in the capital market. This represents the conflict of interests and the duplication of the role which in some way weakens the monitoring and supervising.
On the other hand, the Palestinian capital market authority, which is entrusted with the supervision and control, is run by a six-member board a case that breaches the basic law which required 7 members for the authority.
Recently, no doubt most of the countries witnessed at least one crisis in their capital markets even the biggest and the most organized ones like NY exchange market which suffered from Maddof crises that has been revealed late December 2008. Maddof the bluffer worked in NY exchange was able to cheat the largest companies and the greatest billionaires who are not expected to be cheated like Al Waled ben Talal. He stole 50 billion dollars during 10 years of work in NY exchange market. Despite that, things are going well in the Palestinian non-banking financial sector for the relationship between Palestine exchange market and the capital market authority is completely harmonious which is not expected. Since establishing the capital market in 1996 and the authority which supervise it in 2004, no dispute emerged except when in early 2008 when some media reports mentioned that the capital market intended to dismiss and depose Dr. Hasan Abu Lebda, the chairman of the board and CEO, because of manipulating the shares and colluding with businessmen who are responsible for deals worth millions of dollar. Dr. Abu Lebda left his position without denying or confirming that news. It is worthy mentioning that on Tuesday 12/2/2008 under the title of “Abu Lebda criticizes the performance of the capital market”, Al Quds newspaper published the following: During the workshop which was organized by Mass institution in RamAllah in February 2008, Dr. Abu Lebda called for making changes in the body of the capital market authority including its chief and the board of directors for its big failures in all its working fields. He also alludes that the market authority hinders the act which obligates the public corporation to be listed in the capital market. Furthermore, he considers not listing the public corporations by the market authority as a big defect denoting at the same time that the authority didn’t take any concrete step to put the regulations of investment funds licenses, nor implement the act of listing the public corporations. Finally, he highlighted that every public corporation which is not listed in the capital market is working in shadows .The capital market authority also didn’t exert any effort to conclude an agreement with any Arab or international authority and any progress will not happen under the absence of the regulations.
Omar Shaban, is an economic expert and the head of Palthink for Strategic Studies which is an independent think tank in Gaza.