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Reporter's Notebook: Cambodia
Tan Monivann, said his investment firm has no choice but to pay bribes to officials in the Cambodian government. Without doing so, he said, his business would suffer.
"Bribery is a habit that has become part of the culture, and if we don't pay bribes, our business's work will be delayed," said Monivann, vice president of the Mong Reththy Group. He noted that public ministries often refuse to return official documents until he pays "unofficial fees."
Monivann faults low civil servant salaries and the government's lack of formal procedures for processing paperwork for the corruption plaguing his country.
Cambodia lost 75 percent of its annual income taxes in 2005 because of corruption in the private sector, according to an Economic Institute of Cambodia (EIC) report released in July 2006. The report found that the private sector paid 1.37 trillion riels (US$330 million) in bribes in 2005. That amount represents about 50 percent of total governmental revenues for 2005. Only 25 percent of potential taxes were collected from businesses in 2005.
"The potential loss in the government revenue could reach (US)$400 million," the report concluded. "Small and medium enterprises and large enterprises pay unofficial fees to receive services and maintain good relations with public officials."
In fact, if corruption were eliminated, the government would have enough money to raise salaries of civil servants, according to the report. The average civil servant currently makes about 104,350 riels (US$25) a month; without the lost revenue due to corruption, those salaries could increase to 417,400 riels (US$100) or 626,100 riels (US$150) a month.
In the private sector, corruption often occurs when public officials perform inspections, which the report characterized as nothing more than pretexts to demand money. In total, bribes represent between 1.8 and 4.1 percent of annual sales for businesses, depending on their size.
In an August 2006 public statement, Prime Minister Hun Sen strongly criticized the report, arguing that it exaggerated the level of corruption in Cambodia.
"If the government collected [income tax at] only 25 percent, the government would collapse," he said. "Can we believe that we lose 75 percent and collect only 25 percent? If a family gets 25 percent of their income, and 75 percent is used by the husband and children to gamble and use drugs, can the family survive and have enough rice to eat?"
Sen acknowledged that corruption exists, but said the EIC's report overstated the problem.
"I would believe that we collected 70 percent and lost 30 percent," he said. "But 70 percent lost means that people in the whole country are thieves, and the private sector and the government officials are also thieves."
The government will fight illegal smuggling and corruption, Sen said.
Sen disputed that the loss of revenue from corruption was the cause of low civil servant salaries. He blamed the delayed payment of the salaries - sometimes more than two months late - on ministers failing to make timely requests to the National Bank for the funds.
"Civil servants receive their salaries late, and it's not because the government doesn't have enough money at the National Bank," he said.
Private sector and public officials who were surveyed for the report said they believed that the four major causes of corruption in Cambodia are: the low salary of public officials, a lack of an effective anti-corruption mechanism, a culture of corruption and a lack of an independent and effective judiciary. Low salaries were listed as the primary reason for soliciting bribes.
Sen called the EIC's director, Sok Hach, an "ignorant scholar" and urged him to stop publicizing the report.
Sam Rainsy, head of the opposition Sam Rainsy Party, said the report was accurate and that the country would never develop if it did not take action to fight corruption.
"It's like being positive for AIDS. If we hide the disease and refuse treatment, we will die," he said.
He also blamed low teacher and civil servant salaries on the loss of national revenue caused by corruption.
The EIC's report came shortly after the World Bank in June accused the Cambodian government of corruption in some World Bank-financed projects. The World Bank said the government misused funds during the bidding process on 49.7 billion riels (US$11.9 million) worth of contracts for public works projects. It has asked the government to return part of that money, but so far, the government has refused. Only one major official - a member of one of the ruling party's coalition partners - has been arrested. No one from the ruling Cambodian People's Party has been charged.
In June, Hun Sen said the World Bank did not provide the government with enough evidence to substantiate its accusations.
"The World Bank cannot try the government without evidence, so we don't have to pay them back," Sen said.
Rainsy said the government has yet to conduct an adequate investigation.
"The government arrested only small officials, but the top government officials who are responsible are still at large," Rainsy said. "If we want to clean the house, we should clean it from top to bottom."
National Assembly member and Deputy Chairman of the Justice Commission Monh Saphan agreed with the EIC report, saying corruption exists in the private sector because of poor law enforcement, low civil servant salaries and the lack of anti-corruption regulations.
The government recently failed on its promise to adopt an anti-corruption law by the end of June, which it had pledged to do during its annual meeting with international donors last March.
The government has written a draft version of the law, but it has yet to send it to the National Assembly for passage.
The draft version of the anti-corruption law makes corruption a criminal offense; officials found guilty would face one to 15 years in prison, along with fines.
Under the law, the government would establish a commission charged with investigating corruption. The law would require all members of the government, National Assembly, military, police, civil service and judiciary to declare their assets upon assuming and leaving their positions.
National Assembly Finance and Banking Commission Chairman Cheam Yeap, member of the ruling Cambodian People's Party, said the government is trying to get the anti-corruption law up to international standards before it sends the legislation to the Assembly.
"The anti-corruption law will be adopted soon," he said. "We will punish corrupted officials. The anti-corruption law will provide a sword to the government and the court to prosecute corrupt officials. We will eradicate corruption in Cambodia."
Kurt A. MacLeod, Asia regional director of Pact, a nongovernmental organization working to combat corruption, said after the release of the EIC's report that the revenues the Cambodian government would gain by eliminating corruption could help the government expand the economy.
"It has the opportunity to become a beacon of light in Asia, and at the forefront of economic growth. This is only possible if the Royal Government of Cambodia begins to take serious action on creating a clean Cambodia," MacLeod said.
"There is a high demand for a clean Cambodia. … Cambodia is at a crossroads; the choice is clear. It is now up to the Royal Government of Cambodia and the citizens of this country to take action against corruption for the future of its citizens and children."
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