Dubai and Halliburton hardly an ideal match, business is business

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When US oil services behemoth Halliburton said this springit was moving its corporate headquarters to Dubai, exudationof praises ensued at full throttle. Maestro developerMohammed Alabbar of Emaar grandeur for example recentlycited the move as proof that a global city is underconstruction in Dubai with no real estate bubble about toburst.

Local and regional commentators from academia and media usedthe occasion to hail Dubai’s new international appeal andits welcoming attitude to foreign businesses, especiallywhen compared with the, at best, lukewarm US reception ofUAE-based companies to American shores. Even the soberFinancial Times called it the emirate’s biggest marketingcoup yet, even if it did allude to Halliburton’s reputationfor untoward corporate behavior.

As a romantic fling, the affair between the US corporateanimal and the overachieving emirate would be worth chasingby gossip columnists and paparazzi—were it not for onemissing element: emotion. It is more a marriage ofconvenience and a dubious one at that. It is a questionableunion and one that will not advance the corporate culturefor which Dubai wants to be known.

Halliburton knows Dubai because it has maintained an officethere since 1991. Having a single executive holding thepositions of chairman, president, and CEO, Halliburton alsohas at least one corporate culture aspect in common with agood number of companies in the GCC. But when thetri-functional David Lesar in March announced his migrationfrom steamy, hot Houston to steamier, hotter Dubai, he spokeentirely the lingo of more business growth, better customerrelations in the “Eastern Hemisphere”, and bringinginnovative “rotary steerable tools” to the company’scustomers in the oil and gas business.

There was not a single hint from Mr. Lesar of any emotionalattachment to the city of Dubai of the sort that top MiddleEastern corporate heads often freely profess, and definitelyno signal that Halliburton wants to be a model for goodgovernance, aspiring to widen the ranks of multinational andlocal companies questing to make Dubai a regional center ofsocially responsible corporations.

In fact if the truth be told, American perception actuallypointed in the opposite direction. Upon hearing the news, USpoliticians and watchdog organizations flooded the publicforums with allegations that Halliburton might try to cutits tax burden through the relocation, shift jobs abroad,avoid scrutiny of its supposedly Un-American activities inIran, or even escape from scathing inquiries into its pastsins of corruption and allegations that is was ripping offthe US army in Iraq via its subsidiary, KBR.

The company immediately acted to deny those accusations,emphasizing that it would remain registered in Delaware, payits taxes, and hire more employees in the US. It alsocompleted its separation from KBR last month and announcedthat it will end its involvement in Iran, which Halliburtonhad managed through a subsidiary registered in the CaymanIslands and working from, yes, Dubai.

But distrust of Halliburton looms large in the US, whereself-appointed watchdog groups included the firm in lists ofthe ten worst corporate criminals of the 1990s and as one ofthe ten worst companies in 2004 and 2005. ConfirmedHalliburton haters also pointed out that Dubai has noextradition treaty with the US.

Part of the over-enthusiasm in cheering Halliburton’s officemove may be rooted in the fact that Dubai is a regionalbigwig but by no means a global contender yet. This showsfrom its position on many of the global, from the WorldBank’s Doing Business ratings (77th) to the World EconomicForum’s Competitiveness Index, where it ranked 29th amongthe 40 most developed economies. Even though it was theindex’s top Arab country, it was still near the top of thebottom third for competitiveness in the high-income peergroup. It also doesn’t help Dubai’s cause to be rated—fairlyor unfairly—as 74th and only just “moderately free”in theHeritage Foundation’s ranking of 153 countries for theireconomic freedom.

Dubai has taken many good steps and it is at a point whereit needs to implement some corrections rather than gettingexcited about another corporate addition to its overcrowdedspace. There are already more than enough companies whoopened shop in Dubai and its various free zones with motivesthat have little to do with a vision of building acosmopolitan center for business and leisure and more to dowith being somewhere that a foreign company can avoidquestions or chase money. Dubai should refocus on the bestpractices and honest aims it set out to pursue not so long ago.

Thomas Schellen is business editor for Zawya Dow Jones in Beirut

Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years. Send mail

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