The ‘Souq Al-Manakh' case: A tight noose around the necks

Arab Times

11 hours ago

THE 'Souq Al-Manakh' case is like a tight noose around the necks of those with 'hard-to-finance debts' that has been ongoing for more than 42 years. It seems to have no end, as our colleague Ahmed Al-Sarraf stated in his article published Sunday in Al-Qabas newspaper. He pointed out that there is ongoing injustice not only against debtors, but also against their heirs, children and grandchildren due to the progressive annual interest of 15 percent. From the beginning, the handling of this case has been ill-advised. Law No. 41/1993, which was imposed by the National Assembly at the time, has a lot of harsh stipulations and made the penalty eternal. Even after the death of the debtor, the heirs are held accountable for the accumulated debt.
The government at the time was subordinate of the National Assembly, so it approved and implemented this law. The law stipulates numerous measures restricting the debtors' freedom of movement, including a travel ban, confiscation of assets and putting them under the control of a government employee who managed the assets without commercial experience. Kuwait is not alone in facing this problem.
During the tenure of British Prime Minister Margaret Thatcher, Britain experienced what is known as the 'securities crisis'. Thatcher quickly resolved the problem without any additional cost to debtors. She transformed the crisis into an opportunity to revitalize the economy of the United Kingdom. Bahrain experienced the 'post-dated checks' crisis, which threatened economic activity.
The late Prime Minister Sheikh Khalifa bin Salman, may Allah have mercy on him, restored the debts to their original value and eliminated the interest rate. In Kuwait, a debtor needed to sign 10 or 20 checks to purchase a single item in installments. Bear in mind that the cash balance in 1982 amounted to about KD4 billion, while debts in the 'Manakh Market' amounted to approximately KD27 billion. The increased risks prompted attempts to prevent the market collapse at the time through efforts exerted by the government and Kuwait Chamber of Commerce and Industry (KCCI). However, parliamentary interventions prevented justice from being served. This is why people flocked to the Public Prosecution in a remarkable action aimed at preserving their rights.
This problem continues today, more than 43 years after the Souk Al-Manakh crisis, and 32 years after the issuance of Law No. 41/1993 and other stringent and harsh laws. While the principal debt at that time was KD100,000, it reached about KD4.8 billion today and continues to grow annually. On the other hand, if the management of tangible assets, stocks, companies and funds were left to the debtors, the value of these assets would have increased, and the debtors would have been able to pay their debts. Economic activity would have witnessed significant growth, instead of being frozen and adding pressure to the financial and economic cycle. In the government's annual budgets, there is a clause on 'bad debts'.
Unfortunately, this clause was included in the budget, specifically for Souk Al-Manakh and other debts, without taking into account the reality. This has resulted in 'bad debts' estimated at KD7 billion, subject to increase. Most of the debtors in the Souq Al-Manakh case include their heirs, children and grandchildren. This has never happened in any country except Kuwait, because some of the then MPs sought to impose the will of certain influential figures on businessmen who outperformed them in terms of profits.
Yes, the government as a whole currently has the power to lift the injustice inherited from decades ago. The government can repeal Law No. 41/93 and address the problems that resulted from this legislation. The government can serve justice to the new debtors (the heirs), so that the crisis does not recur. Most of the debtors have already passed away and the government will not bear the burden.
The Council of Ministers has a historic opportunity to lift this injustice. Ahmed Al-Sarraf was right when he described the penalties as 'unprecedented punishment'. Can His Highness the Prime Minister, His Excellency the First Deputy Prime Minister, and the entire government do it and rescue the people from a grievance that has lasted for half a century? If the then parliamentary interventions were used to entrench tyranny, the Council of Ministers today has the power to establish justice for the sake of the people.