The Supreme Council of Accounts recommended in its summary of its report to the Depositary and Management Fund, published on Monday, the withdrawal of the Depositary Fund from the timber and service sectors for the benefit of local enterprises and development companies, as well as from the hotel management and economic and social sectors. Save, care and manage savings.
The Supreme Council of Accounts also recommended the reformulation of the legal and institutional framework of the Depositary and Management Fund to strengthen the internal control system, strengthen the leadership mechanisms to ensure control of sub-subsidiaries and properties, and the framing of strategic options with operational plans and the legal status of subsidiaries and investments
The Board recommended that the Ministry of Economy and Finance, as the supervisory authority of the Fund, ascertain the extent to which the latter respects the obligations and objectives on which the approval was made for the creation of companies or contributions and the rules and regulations governing direct portfolio management in terms of concentration and risks, Investments; review of how to lead sub-companies; effective tracking and avoid overlap of jurisdictions; development of a policy clarifying the rules for the distribution of profits by companies and contributions and reviewing the status of companies that do not.
With regard to the financial leadership of investments, the Supreme Audit Council recommended that the Fund should constantly track the relationship between equity capital and risk and take appropriate measures to rebalance the shares of different classes of assets, stocks, bonds, real estate and money, in order to rationalize the relationship between return and risk, And to verify the data relating to the calculation of capital and to report to the Guard Committee.
The recommendations of the Supreme Council of Accounts came after several legal, administrative and financial imbalances, such that the Dahir of 10 February 1959, the founder of the Depositary and Management Fund, did not change with regard to the Custody and Oversight Committee, whose role remained advisory, Despite the significant development of the CDG Group’s involvement, the diversity of its activities and the growing number of its subsidiary companies.
And that the newly established fund gave broad management powers to the Director-General, where the latter would decide on all operations relating to investment, recruitment and appointment to positions of responsibility as well as the creation or deletion of administrative structures.
The Fund’s strategic vision over the past few years has undergone several changes. It has evolved from an institution to pool savings funds and invest them in treasury bonds into an active economic player investing in areas that are more exposed to many risks as well as in some unusual sectors such as the establishment of industrial zones and areas receiving service migration activities . It also invests in various types of assets including listed and unlisted shares, bonds, real estate and residential assets, loans and advances for branches and financial contributions …
With regard to the Fund’s interventions, the latter has a direct total of 70 subsidiaries and direct financial contributions to the end of 2017, compared with 57 at the end of 2006, out of 143 sub-companies and financial contributions of the CDG Group, The various sectors and activities of banking services and financial contributions run by holding companies and real estate activities as well as in the areas of land development, tourism and insurance.
Subsidiaries and financial contributions owned by the Fund are managed under a portfolio called “Direct Contributions Portfolio”. The value of the latter amounted to AED 41.3 billion at the end of 2017, of which 90 per cent were in the form of unlisted shares and 10 per cent were listed on the stock exchange, respectively, amounting to AED 37.2 billion and AED 4.1 billion. During the period from 2006 to 2017, the Fund recorded an additional investment of AED 29.8 billion, a significant increase of 259% due mainly to the significant development of investments related to non-listed investments with an additional investment of AED 26.5 billion. Investments related to financial contributions listed on the ASE rose by AED 3.3 billion.
Afadas also disclosed the contribution of the capital of a sample of the subsidiary companies and the financial contributions of the Depositary Fund for the lack of compliance with the prior permission of the Prime Minister as provided for by law.