Fighting cover-up trade effectively

Last week, the Saudi Cabinet approved a new law to combat the widespread phenomenon of cover-up businesses. New mechanisms have also been adopted to curb the practice under which a non-Saudi takes part in certain business activities that are only allowed for citizens. This is done using a Saudi citizen as a front.

The new law stipulates harsh penalties that include up to five-year imprisonment, fines up to SR5 million ($1.3 million) and confiscation of illegal funds gained by perpetrators following a verdict against them. The court may also order the closure of the facility or establishment found guilty of violations, cancel the commercial registration or license and prevent the convicted from partaking in any economic activity for five years.

Non-Saudi’s convicted of the crime may be deported from the Kingdom and barred from entering the country again.

The new law has mandated officials from the ministries of commerce, municipal and rural affairs, human resources and social development, environment, water and agriculture and the General Authority of Zakat and Income to conduct criminal investigations in such cases.

In addition to the officials of these ministries, other competent bodies who are already authorized to probe cases like these continue to exercise their power to inspect and monitor violating establishments.

However, it is necessary to take any action after collecting incriminating evidence, which should also include electronic evidence. This point needs clarification, as there are limits to the extent of reliance on technology to prove a violation, particularly in the litigation stage. It basically involves using electronic data as evidence against violators.

Criminal investigation teams are authorized to summon suspects and anybody who has information that may lead to the uncovering of the crime or violation, record their statements, seize assets and seek help from the police and other competent authorities when needed.

These teams should be given specialized training, which should include forensic analysis, correlation and fact adjusting.

Furthermore, the law also approved the principle of protecting the identity and data of whistleblowers in cases. It also stipulates rewards for whistleblowers, which could be up to 30 percent of the fine collected after the final verdict is issued.

The new law has doubled the responsibilities of any government authority that issues licenses to practice any economic activity, as it is now responsible for following up the facilities they issued the practicing licenses to, provided that such authority has to inform the Ministry of Trade of any suspicion of a violation or crime stipulated in the law.

It is therefore necessary for all license-issuing bodies to maintain a supervisory role to ensure the success of government efforts in fighting these illegal practices.
 

• Dimah Talal Alsharif is a Saudi legal consultant, head of the health law department at the law firm of Majed Garoub and a member of the International Association of Lawyers.