Released on: September 5, 2008, 11:05 am

Press Release Author: H A Fotouh

Industry: Financial

Press Release Summary: \"The Islamic bank directors, management team and auditors
should perform their professional duties having in mind satisfying the needs of the
shareholders and Allah. Corporate governance enhances accountability, transparency
and trustworthy\", said Hany Abou-El-Fotouh, ABC Bank – Egypt First Vice President &
Corporate Governance Group Head.


Press Release Body: Abou-El-Fotouh was speaking at Islamic Finance & Investment
World – Africa 2008, held last week in Johannesburg, South Africa. He said that
corporate governance is the system by which companies are directed and controlled as
defined in UK Combined Code. It involves a set of relationships between a company’s
management, its board, its shareholders and other stakeholders.
According to this definition, shareholders appoint directors of the board. The board
oversees management, appoints CEO and is accountable to shareholders. The management
team manages the organization and in turn is accountable to the board and
shareholders for long-term shareholders value maximization

Addressing the delegates about the main stakeholders in Islamic banking corporate
governance framework, Abou-El-Fotouh said “ the stakeholders include, among others,
law- & rule makers; Central Bank; stock exchange; regulations, listing rules,
Islamic Accounting Standards Board, employees, Murabaha Investment account holders;
Murabaha financing partners; Current account creditors and the Islamic community.
Islam itself is the most important stakeholder, he added.

About the Islamic concept of corporate governance, Abou-El-Fotouh said that it
stresses the three main areas of accountability, transparency and trustworthiness.
Additionally, good governance is consistent with Islamic principles, such as
preventing gharar (risk, uncertainty, and hazard) and avoiding business transactions
that cause injustice to any of the parties. Islamic financial institutions abide by
the Shariah which governs the operations and transactions in accordance with Islamic
principles derived from the Quran and Hadith. As to supervisions, Islamic financial
institutions must have Shariah boards which review and ensure that all transactions,
contracts, products and applications relating to the Islamic financial institution
comply to Shariah rules and principles with the specific fatwa, rulings and
guidelines that have been issued.

Abou-El-Fotouh explained that every Islamic bank should be headed by an effective
board, which assumes specific responsibilities. The vision, strategy and corporate
values of the Islamic bank should be clearly specified and understood. He further
pointed out that there should be an effective board composition, with a strong
independent element where no individual or small group of individuals should be
allowed to dominate the board’s decision making. Additionally, there should be a
clear division of responsibilities at the helm of an Islamic bank, which will ensure
balanced and clear lines of role, responsibility, authority and accountability
throughout the Islamic bank

He explained that an Islamic bank must have a formal and transparent process for the
appointment of directors to the board and the appointment of CEO. Additionally, the
directors must be persons of caliber, credibility and integrity with the necessary
skills and experience and be able to devote time and commitment. The board as a
whole, the directors and CEO must be subject to a formal and an ongoing assessment
of their effectiveness.
Abou-El-Fotouh concluded by saying that there is no “single model” of corporate
governance that can work well in every country. Each Islamic financial institution
should develop its own model that can cater for its specific needs and
objectives. Similarly, there is no hard and fast rule that can be applied in
nurturing good governance culture in Islamic financial institutions

About Hany Abou-El-Fotouh:

First vice president and group head of corporate governance and compliance, ABC
Bank, Egypt, he is a leading expert on money laundering and terrorist financing
controls in the Middle East-North Africa region with extensive experience in AML
compliance and training. Founder of the Middle East Compliance Officers’ Forum, he
has been honored for his work in promoting compliance awareness in Egypt and the
MENA region. Previously, he held top compliance positions in multinational
institutions, such as HSBC Bank Egypt, Banque Saudi Fransi, and Oman International
Bank.



Web Site: http://

Contact Details: Contact:
Middle East Compliance Officers Forum
H Hassan,
Tel- 2011-2665600
hanyfotouh@yahoo.com
hany.abouelfotouh@arabbanking.com.eg
http://www.linkedin.com/in/hanyfotouh