‘Facilitation’ fees now punishable with jail, though enforcement thought unlikely
The government has brought into force a new law that makes all illegal payments to officials punishable by up to 15 years in jail for those who accept such payments, and up to 10 years for those who make payments.
Im Oudom, a member of the Secretariat of the Council of Jurists within the Council of Ministers, said that King Norodom Sihamoni signed an amendment on Aug 1 that brought the entirety of the Anti-Corruption Law, as well as all other legal articles on corruption, into full effect under the new Penal Code.
“We are not waiting any more,” Mr Oudom said.
“We can now go ahead and implement it,” he said of the anti-graft laws.
Investors and legal experts, however, said that despite the tough stance adopted by the government vis-a-vis corruption, implementing the new law would prove very difficult.
According to Article 605 of the Penal Code, payment of a “facilitation fee”—a financial transaction that receives no receipt—to a public official is punishable by between five and 10 years in jail. The government official who receives the payment can be imprisoned from seven to 15 years in jail.
The law means that all informal transactions made to officials – whether it be for a visa or to register a business – will be deemed a serious criminal offense punishable by imprisonment.
Kirth Chantharith, spokesman for the National Police Commissariat, said that authorities would disseminate the law to police officials “soon” and that every effort would be made to implement it.
“This law needs both police and people to follow it,” he said.
The adoption of recent anticorruption legislation in Cambodia should change the landscape for how both government officials and investors go about their work in the country. Paying bribes and other facilitation fees here is extremely common, earning Cambodia a reputation as one of the most corruption-rife countries in the world.
Business owners said yesterday that they are trying to absorb the implications of the new legislation. Business associations have also been holding meetings with both the government and legal experts to discuss the new rules. The Australian Business Association of Cambodia met with its members last week to discuss the matter, while the British Business Association of Cambodia met regarding the same topic late last month.
Governments are also paying attention.
The US Embassy has been working closely with the American Chamber of Commerce to raise awareness about Cambodia’s anticorruption law.
“In January, we supported the AmCham’s third annual seminar on this issue which featured presentations by lawyers, business representatives, and government officials,” said US Embassy spokesman Sean McIntosh in an e-mail.
“We now look forward to the robust implementation of this important piece of fundamental legislation,” he said.
The International Business Chamber, an organization that promotes close relations between private firms and the government, also organized an event on the matter.
Because facilitation fees are now deemed illegal here, they are also forbidden under the Foreign Corrupt Practices Act in the US. The United Kingdom’s Bribery Act, which was fully adopted in July, also prohibits facilitation fees to foreign officials.
“It is a massive issue for businesses in Cambodia. People should not mistake the importance of it,” said Stephen Higgins, vice president of the Australian Business Association in Cambodia and CEO of ANZ Royal Bank.
Mr Higgins said that the Australian business association here had held a meeting last week with all of its members, officials from the Anticorruption Unit and a legal expert from Australia’s Attorney General’s Department. Mr Higgins was also present at a seminar in Bangkok last week where he said investors had asked about the implications of Cambodia’s law on corruption.
“We were advised by the gentleman from the ACU [Anticorruption Unit] that the law is now in effect and that anyone paying facilitation fees is liable to criminal punishment,” Mr Higgins said.
“Given most corporate filings here require payment of small facilitation fees, that creates a major issue for business,” he said.
Government officials lower down the chain of command – but who are well accustomed to taking kickbacks as part of their job – are unlikely to be fully aware of what the law means for their way of doing business.
“How it is going to be enforced hasn’t really been explained in detail,” said Gary Sterling, a committee member for the British Business Association in Cambodia and CEO of Sterling Project Management, a construction firm.
“There is not any clear strategy as to how this law will be implemented in the longer term,” he said.
Sok Sam Oeun, executive director of the legal aid group Cambodia Defenders Project, said it remained to be seen how serious the government was about implementing the law and actually jailing government officials who take kickbacks.
“Let’s wait and see how many cases like that go to the court,” Mr Sam Oeun said.
He said a vigorously enforced policy of “zero tolerance to facilitation fees” could mean that private companies or donor agencies who are being pressured to pay kickbacks may decide to leave Cambodia rather than stay and be forced, by circumstances, to break the provisions in the new laws.
In February, the American logistics giant FedEx decided to reduce operations here in order to comply with Cambodia’s anticorruption law.
FedEx said it stopped accepting shipments to Cambodia valued at more than $300 because of ingrained practices here that required the company to pay undocumented fees to customs officials on items valued over that amount.
FedEx said that it would only recommence full operations in Cambodia once authorities modernized the clearance system for goods by publishing official customs clearance rates and properly invoice all payments.
Customs officials declined to comment on the FedEx claims of undocumented payments, though government official acknowledged the problem.
