Saudi Arabia: Authorities name, shame pair convicted of business licensing fraud

Abu Dhabi: The Saudi Ministry of Trade has named and shamed a Saudi citizen and an Egyptian after they were convicted of business licensing fraud, local media reported.

“The Saudi was found guilty of enabling the Egyptian resident to run a real estate development business in Riyadh through a trade licence registered in the name of the citizen,” according to court records.

Yesterday, the ministry published a summary of the judicial ruling issued by the Criminal Court in Riyadh, including a fine, closing the firm, liquidating its activities and revoking its license.

The court ruling also canceled the commercial register of the business, collecting zakat, fees and taxes.

The court also ordered deporting the Egyptian man after serving his term, not allowing him to return to the kingdom.

Saudi Arabia has tightened penalties for business licensing fraud, also known as Tasattur or cover-ups, in which foreign nationals owning businesses in the kingdom while using the names of Saudi citizens, local media reported.

A new anti-business licensing fraud regime passed by the Saudi Cabinet Tuesday, seeks to eliminate the shadow economy and includes tough penalties for offenders of up to 5 years in prison and a fine of up to SR 5 million.

A ministerial committee was set up to take on commercial fraud and propose solutions to bring down its impact.

The committee will take aim at activities such as foreign nationals owning businesses in the kingdom while using the names of Saudi citizens.

There will be advanced levels of coordination among authorities issuing business licenses and manpower visas.

The Saudi Data and Artificial Intelligence Authority will build an index to measure the percentage of suspected cases of commercial cover-ups and keep updating the records based on the data it receives from the authorities.

Protecting whistleblowers

The new anti-business fraud regime protects whistleblowers and rewards them up to 30 per cent of the fine collected after a final court ruling is issued.

The system stipulated proactive measures to prevent the occurrence of cover-up crimes to narrow the sources of this phenomenon by addressing the stages that preceded thecrime, and punishments, the most important of which is the seizure and confiscation of the unlawful funds of the perpetrators.

The system enables the relevant government agencies to curb business licensing fraud or cover-up crimes, demanding that each entity that issues licenses to businesses follow up on them, and inform the Ministry of Commerce of any suspicious practices.

The new system authorises relevant entities to use technology to prove the crimes and violations of the commercial concealment through “electronic evidence” in addition to other methods of proof.

The system also allows commuting or exempting from penalties for those who report any fraudulent activities.