Bahrain

8. Responsible Business Conduct

The Ministry of Labour and Social Development in 2011 authorized the creation of the Bahrain Corporate Social Responsibility Society (BCSRS) as a social and cultural entity. Though there are no measures in Bahrain to compel businesses to follow codes of responsible business conduct, the BCSRS has sought to raise awareness of corporate social responsibility in the business community, and in 2021 hosted the GCC International Conference on Social Responsibility and Sustainable Development. The Society is a founding member of the Arab Association for Social Responsibility, which includes representatives of most Arab countries.

In 2003, Bahrain established a National Steering Committee on Corporate Governance to improve corporate governance practices. The MoICT promulgated the new Corporate Governance Code pursuant to Decree No. 19 of 2018. The new code expanded the base of companies obligated to implement responsible governance, as per the country’s Corporate Governance Code issued in 2010, to include all locally incorporated closed joint stock companies. The law stipulates minimum standards required for corporate governance and applies to all companies incorporated in Bahrain, other than companies that provide regulated financial services licensed by the CBB.

The GOB drafted a Corporate Governance Code to establish a set of best practices for corporate governance and provide protection for investors and other company stakeholders through compliance with those principles. The GOB enforces the code through a combined monitoring system comprising the MoICT, CBB, Bahrain Stock Exchange (BSE), Bahrain Courts, and other professional firms, including auditors, lawyers, and investment advisers. The code does not create new penalties for non-complying companies, but states that the MoICT (working closely with the CBB and the BSE) may exercise penalty powers granted to it under the Commercial Companies Law 2001.

The GOB has put in place advanced regulations and laws protecting labor rights, including vulnerable categories such as migrant workers from South and Southeast Asia. Despite legislative guarantees of certain rights, workers may be exposed to unfair labor practices such as unpaid overtime, denied vacation, or nonpayment of wages. Labor courts have not been fully effective in settling labor disputes between employers and employees. However, there have been reports of cases that were settled in favor of employees in Bahraini labor courts. Bahrain is a class five country on the International Trade Union Confederation (ITUC) Global Rights Index for freedom of association and workers’ rights, with the index ranging from one to five in ascending order from best to worst.

Beginning in 2022, all companies must integrate into the Wage Protection System (WPS) to pay employees’ salaries via prepaid card or financial transfers through a bank or financial institution approved by the Central Bank of Bahrain. Domestic workers and Flexi-Permit holders are exempt from the mandate. The LMRA has the authority to review employer-employee transactions in the system.

Law Number 35 of 2012, the Consumer Protection Law, ensures quality control, combats unfair business practices, and imposes sanctions for breaches of the law’s provisions. MoICT is highly effective in implementing the law.

Bahrain’s amended Corporate Governance Law enhances transparency and ethical business conduct standards. Among the changes, the GOB urged companies to submit audited ratified accounts to the MoICT.

The GOB does not maintain a National Contact Point (NCP) for the Organization for Economic Cooperation and Development (OECD) guidelines, nor does it participate in the Extractive Industries Transparency Initiative (EITI).

Additional Resources

Department of State

Department of the Treasury

Department of Labor

Climate Issues

Bahrain’s Vision 2030 outlines measures to protect the natural environment, reduce carbon emissions, minimize pollution, and promote sustainable energy. Bahrain’s Sustainable Energy Authority (SEA), within the Ministry of Electricity and Water Affairs, designs energy efficiency policies and promotes renewable energy technologies that support Bahrain’s long-term climate action and environmental protection ambitions. Endorsed by Bahrain’s Cabinet and monitored by SEA, the National Energy Efficiency Action Plan (NEEAP) and the National Renewable Energy Action Plan (NREAP) set national energy efficiency and national renewable energy 2025 targets of 6 and 5 percent, respectively, with the NREAP target increasing to 10 percent by 2035.

9. Corruption

Senior GOB officials have advocated publicly to reduce corruption. Legislation countering corruption is outlined in Bahrain’s Economic Vision 2030 and National Anti-Corruption Strategy. Bahrain joined the United Nations Convention Against Corruption (UNCAC) in 2003. Bahrain ratified its penal code on combatting bribery in the public and private sectors in 2008, mandating criminal penalties for official corruption. In December 2013, the Ministry of Interior launched the National Strategy to Combat Corruption. Under Bahraini law, government employees are subject to prosecution and punishments of up to 10 years imprisonment if they use their positions to engage in embezzlement or bribery, either directly or indirectly. The law does not require GOB officials to make financial disclosures. In 2010, Bahrain ratified the UNCAC and the Arab Convention Against Corruption, and in 2016, joined the International Anti-Corruption Academy. In December 2021, the Ministry of Interior General Directorate of Anti-Corruption and Economic and Electronic Security initiated 96 embezzlement, bribery and abuse of authority cases and three economic infractions that were referred from the Cabinet. In January 2022, the Public Prosecution Office referred seven corruption cases, 12 tax evasion and 10 money laundering cases to the courts, in addition to two tax evasion cases and five money laundering cases that have been pending since 2021. Giving or accepting a bribe is illegal. The GOB, however, has not fully implemented the law, and some officials reportedly continue to engage in corrupt practices with impunity.

The National Audit Office, established in 2002, is mandated to publish annual reports that highlight fiscal irregularities within GOB ministries and other public sector entities. The reports enable legislators to exercise oversight and call for investigations of fiscal discrepancies in GOB accounts. In 2013, the Crown Prince established an Investigation Committee to oversee cases noted in the National Audit Office annual report, which lists violations by GOB state bodies. On March 1, 2022, Deputy Prime Minister Shaikh Mohammed bin Mubarak Al Khalifa stressed the importance of consolidating responsibility and accountability to protect public funds and directed all agencies to cooperate with the National Audit Office.

The Minister for Follow-Up Affairs was designated in 2015 to execute recommendations made in that year’s National Audit Office annual report. The Crown Prince, who concurrently has served as Prime Minister since November 2020, urged all GOB entities and the COR to work closely to implement the report’s recommendations.

The Ministry of Interior’s Anti-Corruption and Economic and Electronic Security Directorate signed an MOU with the United Nations Development Programme to enhance the anti-corruption directorate’s capabilities.

Bahrain has conflict-of-interest laws in place, however, their application in awarding contacts is not fully enforced.

Local non-governmental organizations generally do not focus on corruption-related issues, though civil society activists have spoken out against corrupt practices in the public sector.

Few cases have been registered by U.S. companies reporting corruption as an obstacle to their investments in Bahrain.

Bahrain signed and ratified the United Nations Anticorruption Convention in 2005 and 2010, respectively. Bahrain, however, is not a signatory to the OECD Convention on Combating Bribery. In 2018, Bahrain joined the OECD’s Inclusive Framework on Base Erosion and Profit Shifting (BEPS).

Resources to Report Corruption

Contact at government agency or agencies responsible for combating corruption:

General Directorate of Anti- Corruption & Economic & Electronic Security
Ministry of Interior
P. O. Box 26698, Manama, Bahrain
Hotline: 992

Contact at “watchdog” organization:

Dr. Hussain al-Rubaie
President
Bahrain Transparency Society
P.O. Box 26059
Adliya, Bahrain
Phone: +973 39642452

 

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