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Oman banks told to avoid conflicts of interest

oman central bankOman’s central bank has told commercial lenders to avoid conflicts of interest when appointing board members and senior management, in a fresh effort to improve corporate governance in the Gulf sultanate.

The move coincides with a wide-ranging government crackdown on corruption, which has seen several company managers jailed and fined for bribery-related offences.

“It is observed that some of the proposals, received of late, for approval of senior management and memberships in boards imply conflicts of interests,” said a circular from the central bank, posted on its website.

For example, there have been proposals for the appointment of board members as senior management in banks, and senior management have been nominated as advisors, consultants and for other positions, the central bank said.

“Banks are advised against any future positions involving scope for conflicts.. and (should) seek clarifications if required,” the circular said. “Licensed banks shall comply accordingly.”

In many Gulf Arab countries, prominent businessmen, royal family members and government officials often hold several board and management positions at private and state-owned companies, partly because of companies’ reliance on state contracts and the small size of the pool of executive talent.

Oman’s ruler, Sultan Qaboos bin Said, has launched an anti-graft campaign after street protests in several Omani cities in 2011 targeted corruption and demanded jobs.

This week, an Omani court sentenced a former executive of an engineering firm to a total of 15 years in jail on five counts of bribery in exchange for contracts from a state-owned oil company.

Last month the Court of First Instance in Muscat sentenced the chief executive of state-owned Oman Oil Company to 23 years in jail for accepting bribes, abuse of office and money laundering, the most severe punishment meted out in a series of corruption trials that began last year.-Reuters