Biz integrity under threat: TI
The integrity of business in the Kingdom is threatened by a
flawed legal framework and a culture of corruption, according to a
report released yesterday by Transparency International Cambodia.
Some two years in the making, the corruption watchdog’s wide-ranging
study gives the business sector – one of 13 governance institutions it
says is required to sustain a system of integrity – an overall “weak”
rating of 32 points out of a possible 100.
Endemic corruption, business connections to the political elite, a
weak judiciary and a lack of transparency all contribute to a business
environment with little accountability and a lack of integrity,
according to the report.
“Threats to business integrity include the limited implementation of
certain laws, as well as widespread petty corruption and high-level
nepotism within the patronage network of the ruling elite,” the report
reads.
While there are laws to allow for the easy establishment of businesses and the creation of contracts, and a requirement for financial record keeping, the rules are poorly enforced and easily avoided, TI found.
Heavy bureaucratic processes open the door to bribe seeking and bribe
offering, while business records stay in-house and are rarely made
public.
Rath Sophoan, chairman of the board of directors for TI, said many
foreign companies in Cambodia were prevented by their own regulations
from engaging in corrupt practices.
“They have lots of laws governing them, and they have resources and
the capacity to build internal structures to reduce their chance of
committing corruption,” he said, using UK businesses as an example.
However, for local companies that rely heavily on government support for their business, corruption is difficult to avoid.
“But what they can do is try to ensure that the corrupt practice is minimal, to ensure competition is fair,” Sophoan said.
Speaking during a panel discussion at the release of the report
yesterday, Mu Sochua, a lawmaker with the opposition Cambodia National
Rescue Party, said a code of conduct needs to be established for all
companies to abide by.
“For companies that want to follow those basic principles, they need
to be encouraged. They need it recognised that they are clean and
corruption-free,” Sochua said.
Sochua also called on larger companies to be more transparent with regard to their ownership.
Among its recommendations to strengthen business integrity, TI says
firms should develop their own sets of internal anti-bribery provisions,
with penalties handed to employees who break them. The corruption
watchdog has also called on the Anti-Corruption Unit to work with the
Ministry of Economy and Finance to find ways to reward businesses for
cleaning up their act, such as incentives for paying their taxes
correctly.
Despite 15 years of nearly 8 per cent average annual growth, Wan-Hea
Lee, the head of the UN Office of the High Commissioner for Human Rights
in Cambodia, said corruption was an issue that had led to greater
inequality in the country.
“Yes there has been growth, tremendous growth, but the Human
Development Report [shows] that there has been highly unequal growth,”
she said, referring to a recently released UN report.
“Who knows what kind of growth, what level of growth and how
equitable it could have been had this question of equity have been
addressed squarely and what role corruption plays in that,” she said.
The government declined to attend the TI study’s release, but when
contacted yesterday Council of Ministers spokesman Phay Siphan said the
government was making improvements “gradually”.
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