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Wednesday 27 August 2014 - 12:49

Kuwait’s corruption problem

Story Code : 406908
Kuwait’s corruption problem
An overall bureaucratic hurdle and non-transparent public administration create opportunities for corruption, and there is government favouritism towards domestic companies. Public procurement is an area prone to corruption as it is often cumbersome, and wrongdoings in the procurement process committed by government officials are common. However, no one has been convicted for bribery since the end of the Gulf War.

Earlier in June, Kuwait was hit by a momentous corruption scandal. 

Kuwait’s premier and a senior royal filed two separate lawsuits to the attorney general demanding an investigation into allegations of a coup plot and a huge corruption scandal.

The Gulf state was shaken earlier this year ago after news surfaced about videotapes allegedly showing former senior officials plotting a coup against the government.

This was followed in June by allegations of massive corruption by ex-government officials.

Prime Minister Shaikh Jaber Mubarak Al Sabah sent a letter to the attorney general demanding an investigation into “allegations of money laundering, abuse of public funds and (financial) dealing with Israel,” made during a television interview, acting Justice Minister Shaikh Mohammad Abdullah Al Sabah told state news agency Kuna.

The accusations were made by Shaikh Ahmad Fahd Al Sabah, a senior member of the ruling family, on Saturday.

Shaikh Ahmad, a former energy and economy minister, said he has material evidence senior ex-officials plotted a coup and stole tens of billions of dollars of public funds.

He has filed a lawsuit over the alleged conspiracy and corruption and handed over the evidence he had collected, including videotapes showing the former officials conspiring, his lawyer Falah Al Hajraf said on Twitter.

The government said in April the videotapes had been tampered with and were not authentic. But Shaikh Ahmad said in the interview he had won a ruling from a Swiss arbitration authority which was later attested by the British Supreme Court that the videotapes were genuine.

Later on an opposition group of former parliamentarians labelled the allegations “the most serious corruption case in Kuwait’s modern history,” and called for an international probe in a statement.

They also called for the government to be sacked, parliament dissolved and snap elections held on the basis of the pre-December 2012 electoral law. They demanded all officials suspected in the case should be dismissed and held accountable.

The developments come after similar allegations made at a public rally by prominent opposition members that former high-ranking officials had stolen around $50 billion and deposited them in foreign banks, including in Israel.

The government said it plans to file a lawsuit against the opposition leaders for the allegations they made against current and former officials, saying the accusations were not backed by evidence.

The Audit Bureau, the country’s accounting watchdog, has been asked to launch a separate investigation into the allegations while the newly-established Kuwait Anti-Corruption Authority said on Monday it will start its work by investigating the case.

Following months of relative calm that came after years of political disputes, Opec member Kuwait was rocked by the two alleged scandals which threaten to plunge the emirate into a serious political crisis.

Kuwaiti opposition groups, which boycotted the last two election, in April called for democratic reforms, including a Western-style party system and an elected government to limit the powers of the emirate’s ruling Al Sabah family which has been in power for over 250 years.

Kuwait anti-corruption law

The Penal Law 31/1970 criminalises corruption in Kuwait. The Law covers passive and active bribery, attempted corruption, extortion, money laundering and abuse of office; however, the Law does not criminalise bribing a foreign official. Kuwait ratified the UN Convention against Corruption (UNCAC) in 2007 and is a signatory of the UN Convention against Transnational Organized Crime. According to a January 2010 Kuwait Times article, the Kuwait Transparency Society (KTS) highlighted the importance to adopt five draft laws on anti-corruption, financial disclosure, conflicts of interest, witness protection and the right to examine information. In September 2011, Kuwait passed an anti-corruption draft law, criminalising the manipulation of public tenders and auctions, bribery, counterfeiting, forgery and graft; the law includes articles on financial disclosure and money laundering, and it provides criminal penalties of up to seven years in prison for these corrupt practices. According to a September 2011 article by The Jurist, the passage of the law has been a reaction to the IMF's assessment report the same year which criticised Kuwait's anti-money laundering laws and financial monitoring. In January 2013, the National Assembly passed the Anti-Corruption and Wealth Disclosure decree, calling for the setting up of a national anti-corruption authority. The decree also requires ministers, MPs and senior bureaucrats to submit a disclosure of their wealth before and after taking office in order to effectively track their wealth, as reported by a January 2013 Kuwait Times article. In April 2013, Kuwait adopted an anti-money laundering and terror funding law. Organised criminal groups and non-governmental organisations convicted of money-laundering can be sent to prison for up to 20 years. For the passage of the law, an approval from the Emir and the parliament is needed.

Anti-Corruption Agency

 The courts are the entities that deal with corruption in Kuwait. Furthermore, in 2011, the National Assembly passed a bill to form an anti-corruption authority only two days after the Emir made a speech demanding its creation, as noted in a Kuwait Economic Report 2012 published by the Embassy of Switzerland in Kuwait. In 2013, the Kuwait Council of Ministers passed a decree appointing seven members to form a board of trustees of the first ever anti-corruption authority in Kuwait.

Public Procurement

 Public procurement is regulated by the Public Tender Law No. 37 (in Arabic) from 1964. All bids for government-funded projects above USD 18,250 must be submitted to the Central Tenders Committee (CTC). According to a December 2012 article published by UK Business & Investment, the Central Tenders Committee continues to modify its practices in line with better international standards. This is evidenced in the Committee's move towards awarding more contracts based on quality of bids rather than simply on the lowest cost. According to the US Department of State 2013, companies winning contracts with the government for USD 364,931 or more are required to report all payments made to Kuwaiti agents or advisors while securing the contract. Procurement is advertised in the Official Gazette and in one daily newspaper. Unsuccessful bidders can complain to the CTC, but they cannot challenge the decision in a court of law. Kuwait is not a signatory to the WTO Government Procurement Code.

Whistleblowing

There is no legal whistle-blowing protection for public officials or private sector employees reporting corruption. According to a 2012 Government Defence Anti-Corruption Index report by Transparency International, whistle-blowers are encouraged to report corruption.
However, there is no clear reporting mechanism for whistle-blowers. The most effective way to report corruption is through the media. A draft law to protect whistle-blowers, which would allow Kuwait to comply with international agreements on combating corruption, awaited Parliament's approval in December 2009. As of January 2014, there was still no news on the approval of the whistle-blower protection draft law.
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