Abu Dhabi has created a new financial watchdog – the Abu Dhabi Accountability Authority (ADAA). It aims to oversee transparency in Abu Dhabi’s governmental agencies and businesses in which the government owns a 50% stake or higher.
The body will replace the existing Abu Dhabi Audit Authority and will function as an independent corporation.
Speaking on condition of anonymity, one American lawyer in Abu Dhabi said the efficacy of the ADAA will depend entirely on how much autonomy it has.
“The intention appears to be to give ADAA some teeth, but it’s too soon to tell how things will work in practice,” he said. The new law was announced after Abu Dhabi’s ruler Sheikh Khalifa Bin Zayed Al Nahyan called in his National Day speech to increase accountability and improve governance.
The lawyer believes that high profile financial scandals in other countries and, more recently, allegations of financial misconduct by officers of companies in Dubai, may have motivated Khalifa to push for more transparency.
The Authority will aim to ensure more accurate financial reporting, as well as efficient and transparent management. It will also collect and disperse funds of the agencies it oversees.
“Ideally, it [ADAA] will act as a deterrent to those who may have been tempted to misappropriate funds thinking such acts might have gone unnoticed,” said the US lawyer.
The ADAA will also audit and approve annual budgets, and it can demand performance reports from local councils, departments and authorities.
However, it is unclear how far the ADAA’s reach will extend because, technically, even the Abu Dhabi Investment Authority – the largest sovereign wealth fund in the Middle East, with estimated assets of US$700 billion – will fall within its jurisdiction.