Dr Lao Mong Hay, Senior Researcher, Asian Legal Resource Centre, Hong Kong
In May 2006 the World Bank announced that it had uncovered misuse of funds in seven projects in Cambodia funded by its grants and loans. In June it confirmed there had been fraud and corruption in three of the projects, and decided to suspend funding for them. These three projects are being implemented by the Ministry of Land Management, Ministry of Rural Development, Ministry of Public Works and Transport, and Ministry of Industry. The bank requested the government to make prompt repayment of USD 7.6 million, and urged it to address the problems identified in these projects and deal “head-on with corruption”.
This is the third big case of fraud and corruption in projects funded by international aid over the last three years in Cambodia, and the second in World Bank-funded projects. In 2004, the World Food Programme discovered that USD 1.2 million of its aid had gone missing. In 2005 it succeeded in getting the government to pay back USD 900,000, in three annual installments. The year before, the World Bank discovered misuse of funds in a project to demobilise 30,000 soldiers. The Cambodian government was then forced to repay USD 2.8 million or find money for other projects cut.
Corruption, the cancer eating Cambodia
Corruption in the Cambodian public sector is nothing new. The UN peace-keeping force that ruled the country in 1992-1993, officially called the United Nations Transitional Authority in Cambodia (UNTAC), found that many pieces of equipment handed over to the Cambodian government or about to be shipped out were stolen. At a meeting in 1994 a senior minister who is still in the government said that government officials had handled the UNTAC equipment left behind for the government like “highway robbers”.
The drafters of Cambodia’s new constitution and international aid agencies together with their local partners were aware of the extent of corruption, and strongly felt the need to prevent it right from the beginning. But this cancer of Cambodian society, as one prime minister put it, has since continued to grow unabated. The World Bank noted in its 2004 Country Procurement Assessment Report that “corruption pervades public sector activities” in Cambodia.
The idea of fighting corruption was enshrined in the Cambodian constitution of 1993 itself. Upon taking office, all top elected officials, government ministers, members of the parliament and senators must take an oath of office–whose text is an annex to the constitution–in which they pledge, among other things, to “oppose all forms of corruption”. Successive Cambodian governments have, since the promulgation of that constitution, repeatedly pledged to fight corruption, enact an anti-corruption law and even set deadlines for such enactment.
Two initiatives to tackle corruption were begun at almost the same time in 1994-1995 after a government had been formed under the new constitution. One came from a local non-governmental organisation, the Centre for Social Development (CSD), with support from the Asia Foundation, and the other from the Asian Development Bank (ADB).
The CSD initiative was aimed at mobilising public opinion and ultimately to enact an anti-corruption law. Many national seminars have been held on the issue, at times presided over by the prime ministers or their colleagues, not to mention many smaller meetings. There have been study tours for concerned senior government officials and lawmakers to countries in the region, including Singapore and Hong Kong, both of which are renowned for their effective anti-corruption laws and agencies. A law was drafted and redrafted well before the adoption of the UN Convention against Corruption. Lately, an American organisation named PACT has taken over the redrafting of the same law, to bring it up to the convention’s standards. At time of writing, the promised deadlines for the enactment of that law have repeatedly passed and the final draft has not seen the light of day. The ultimate goal of this initiative has remained as elusive as ever.
The ADB initiative was aimed at giving technical assistance to develop legislation and guidelines to streamline procedures so as to prevent corruption in public sector procurement in general and in the management of foreign aid for development projects in particular. However, it also did not lead to a law as had been envisioned. The Cambodian government in 1995 issued a sub-decree (or government executive order, an anoukret), which ranks fourth in the hierarchy of rules to govern the country, behind the constitution, or any law or royal decree.
The 1995 Sub-Decree Governing Public Procurement had its legal parentage in a provision of the budget law of 1994, that,
“Expenditures from the general budget and special treasury account are ruled by public procurement procedures which are defined and organized by decree issued by the Council of Ministers, based on proposals by the Ministry of Economy and Finance.”
In 2003, the World Bank found the 1995 sub-decree “inappropriate” and the reference article in the budget law of 1994 “very brief and general”. The bank said that “efficient and transparent public procurement is a vital component of economic growth”, which should have its own sovereign law.
The World Bank, expediency & rule by decree
Despite its 2003 findings and its preference to see the development of strong institutions for the rule of law, the World Bank still finds rule by decree expedient: its report recommends that the sub-decree “be quickly strengthened as an interim measure” while a sovereign procurement law is being drafted. It says that it chooses “practical ways” to cut down on corruption in public procurement “over the relatively short term”, while the enactment of a law on public procurement would take several years.
But there are no assurances that any “improvement” of the 1995 sub-decree would curb corruption and that there would be no further sub-decrees and ministerial orders to amend and dilute this improved sub-decree and create a confusing environment conducive to fraud and corruption as has happened in the past.
The World Bank’s approach in fact supports the political culture of the Cambodian ruling elite, a culture in which the idea of a strong executive and the concomitant practice of ruling by decree are entrenched. In this culture, laws are drafted in general terms and the government is free to adopt detailed rules for their enforcement.
Regulations are not subject to constitutional provisions that apply to laws. Parliament can exercise control of their legality only through questions to concerned ministers. But so far there have been no such questions and it is highly doubtful whether parliament has kept any track of regulations adopted by the government. The plethora of sub-decrees and ministerial orders pertaining to public procurement adopted subsequent to the 1995 sub-decree speak to this fact. There has been only one occasion when a court has overturned government regulations, when an influential company challenged a government decision in court and won. Organisers of demonstrations have challenged the government ban on their demonstrations in court, but the court has always dismissed their cases.
The prime minister himself arbitrarily exercises his prerogatives outside cabinet to issue written or verbal orders–sometimes as annotations on proposals submitted to him–which affect the constitutional rights of people or even court judgments. For instance, in May 2006 he overrode a court judgment in Siem Reap province, which had ordered the return of land to the forestry department after it had been illegally occupied by a group of soldiers and civilians. Spurred on by the prime minister’s order, which was made in a public speech, villagers in the same areas started to clear forestland to occupy or sell to other people and make some money. Similar orders have been issued secretively with the aim of stopping or suspending the execution of court judgments. Later in the same month the prime minister issued an order to “take the land from rich, powerful officials to give to the real poor, landless farmers as social land concessions” without prior due process of law, either to ascertain the illegitimacy of ownership of land and how it had come about.
Sometimes the prime minister has made verbal orders on the spur of the moment. These are afterwards interpreted differently by parties to the conflict he had meant to solve. In October 2004 he made a public pledge to give land to the poor during ongoing land conflicts. Inspired by this pledge and interpreting it to mean that the prime minister favoured them, some poor and not-so-poor villagers went to occupy the land of some wealthy people in the seaport Sihanoukville, claiming that the owners had illegitimately acquired it.
Government departments have also issued ministerial orders or regulations (prakas) to detail rules to enforce specific laws or specific provisions of laws under their jurisdiction. These occupy the fifth rank in the hierarchy of rules. Like sub-decrees, they are outside of constitutional purview and typically do not warrant judicial intervention.
It is doubtful that the government has set up any mechanism to ensure that regulations comply with one another. For instance, the ministry of commerce has issued–invariably in exchange for kickbacks–orders to grant companies monopoly licences to import specific products, regardless of whether or not they the economic principles stipulated in the constitution. Armed with such orders, companies can get–mostly through bribes–police and customs authorities to enforce them and prevent other companies from competing with them and importing the same products, even secondhand or used products. They can charge high prices and make a high profit at the expense of consumers. There has been no court challenge to such orders so far.
The political culture in Cambodia also includes a general perception that the government has the right to administer penalties for breaches of its regulations. Any order can provide for administrative penalties for any breach of its provisions, but some also stipulate criminal penalties for breaches as specified by a law or laws under which or for the enforcement of which it was issued. For example, the 1999 Sub-Decree on the Control of Water Pollution provides in article 34 for criminal penalties for breaches of its provisions, as per the 1996 Law on Environment Protection and Natural Resource Management. Other regulations variously mention criminal penalties under law in general terms or do not specify any law at all. On top of the lack of specifics, those regulations are silent on which authorities are responsible for informing the police or prosecutors whenever any criminal offence has been suspected. It cannot be expected that the police or prosecutors will be informed of such an offence as a matter of course. Even if informed, it is still difficult to initiate any investigation in the absence of specifics. For its part, the 1995 sub-decree provides for administrative sanctions such as dismissal and suspension for any breach of its provisions. It allows that such breaches may be criminal offences under law, but refers their determination and the related criminal liability of their authors to criminal justice.
Non-prosecution & problems of authority
In Cambodian criminal justice it is not clear as to whether or not the police and the prosecutor can initiate any action by themselves immediately after a corruption case involving government officials has been made known to them, although the prosecutor can order the police to conduct an investigation, and give guidance.
In fact there are two other institutions which can conduct investigations into such a case: the Ministry of Parliamentary Relations and Inspection, and the National Audit Office, whose responsibility is to audit the accounts of all government departments and government-funded organisations, including the accounts for projects funded by foreign aid.
The auditor-general has not initiated any investigation into the World Bank-funded projects on the ground that all his investigators have been tied up with other work, implying that if investigators were available, he could have ordered an investigation without the bank asking it of him. However, the auditor-general is a parliamentary officer appointed by–and responsible to–the National Assembly. He does not have extensive powers though under the Audit Law. He does the auditing of public accounts and write reports on them, which he then submits to the assembly, and the Senate. If there is any irregularity in the accounts of any public entity, he must report it to parliament, the government, and the concerned entity. He has no power to call the police or the prosecution to investigate an irregularity. He cannot publish all his findings either, as he is not allowed to include in his published reports detailed information which is contrary to national interests, such as information affecting national security, defence, territorial integrity, the country’s international relations or legitimate commercial interests of any organisation or individual. The government decides on which information falls into these categories, and it is not difficult for it to declare reporting on fraud and corruption as classified information. The law also is silent on the action required of the national institutions to which the auditor-general reports on fraud and corruption in the management of public funds. The law leaves the government free to prosecute or not.
Even where Cambodian authorities have clear-cut legal authority to prosecute the authors of crimes, the officials responsible for initiating action still at times refer cases they have made to their superiors, including the prime minister, to seek their advice before acting. For instance, in May 2006 customs officers arrested employees of a shipping company and impounded its two ships and one trailer boat. They also identified fellow officers who had colluded in smuggling gasoline into the country. The director-general of the Customs Department, Pen Siman, claimed his department had gathered all the evidence needed for prosecution, yet despite having the authority to prosecute smugglers, still he sought advice from Prime Minister Hun Sen on what course of action to take.
Limited jurisdiction & impunity
Financial offences in general–and misuse of public procurement funds in particular, such as corruption, fraud and embezzlement–are not automatically addressed by Cambodia’s existing criminal law. This is because the law was intended only as a transitional measure during 1992-1993, and it specifies as possible offenders the parties to the peace process and others working on their behalf. Now that period is well over and the terms of the law are no longer applicable. Although the law was used to indict seven judges and prosecutors for corruption in 2005 and 2006, its jurisdiction over the authors of crimes who are not such officials or members of political parties can be contested on these grounds. Furthermore, the criminal offences provided for in the law may not cover all the elements of breaches identified in the 1995 sub-decree.
The patronage system and concomitant executive control of all institutions by the ruling Cambodian People’s Party also ensures that impunity is the rule and punishment the exception. Even where persons are punished, it is mostly by way of administrative sanctions that are not commensurate with the offences committed. For instance, upon the discovery of fraud and corruption in the World Bank-funded projects, only the director of one of these projects, Mua Kimsan, was removed from his position. Even then, he denied that his removal was linked to alleged corruption. In this case, as in others, administrative sanctions were used to blunt criticism and soothe public opinion, rather than uphold the law.
Punishment may be only temporary. Sooner or later reprimanded officials are rehabilitated and appointed to equivalent or even higher positions, unless they are not members or supporters of the ruling party, or former members. For instance, in 1999 Sam Sotha, director-general of the Cambodian Mine Action Centre, an internationally-funded landmine clearance organisation, was removed from his position for corruption. He was later appointed as secretary-general of the Cambodian Mine Action Authority, thanks to his close connections with the prime minister’s circle. In 2000 Judge Oum Savuth of the Municipal Court of Phnom Penh was charged with bribery and the illegal release of offenders, and was removed from his position. He was subsequently appointed to the Court of Appeal and then became a member of the Supreme Council of the Magistracy, the highest body governing the judiciary. The seven judges and prosecutors mentioned above were later acquitted of wrongdoing, and although the appeals process is continuing they have all been reinstated.
Punishment is inconsistent and discriminatory. In May 2006 Prime Minister Hun Sen removed Nhep Bunchin, Minister of Labour, for alleged corruption while the Ministry of Parliamentary Relations and Inspection was still investigating his case. His dismissal was generally seen as politically motivated, because Nhep Bunchin is a member of the Funcinpec party, which is the junior coalition partner of the CPP. Many of his colleagues had been removed from their government positions since February 2006. In the recent case of fraud and corruption in the World Bank-funded projects, not one of the four ministers responsible for the projects has faced any punishment or criminal investigation.
Conclusion
With the persistence of rule by decree together with the many lacunae and flaws in the law, public sector activities in Cambodia are practically outside of the jurisdiction of the courts. However well conceived and drafted they may be, decrees will not reduce corruption to an acceptable level. Swindles in financial management and procurement will persist, and the Cambodian people will continue to benefit much less from foreign aid than they should, but they will still have to shoulder the burden of repayment to the World Bank and other donors.
Expediency and rule by decree have encouraged corruption and maladministration in Cambodia. There is an urgent need to phase out rule by decree and establish the rule of law to govern all public sector activities, and indeed the country as a whole. The public sector must be under the jurisdiction of the courts. The courts, together with judges and prosecutors, must be free of executive control and corruption, as well as affiliations to political parties. They should be allocated adequate resources to perform their duties. They should also be assisted by a strong and independent legal profession.
There should be no more delay in the enactment of the long-awaited anti-corruption law and the public procurement law proposed by the World Bank. The laws that are the bricks and mortar of the judiciary also cannot be delayed any longer: the penal code; code of criminal procedure; civil code; code of civil procedure; organic law on the organization and functioning of courts; law on the amendment of the Supreme Council of Magistracy; and, law on the status of judges and prosecutors.
Certain existing laws, beginning with the Audit Law, must be amended to extend the jurisdiction of courts over public sector activities. The Audit Law must specify clearly the powers and duties of the auditor-general and his subordinates to inform the police and prosecutors when they suspect any criminal irregularity in the accounts that they investigate, and initiate their own investigations. All censorship of national audit reports must end. Reports must also be sent to the prosecutor-general of the Court of Appeal for any course of action to take if criminal irregularity is detected. The improved 1995 Sub-Decree Governing Public Procurement, and any eventual law following from this decree, must specify criminal penalties for breaches. Whenever a criminal irregularity is identified, the prosecutor-general or any other prosecutor must initiate action to bring its author to justice.
Mechanisms and procedures should be instituted to ensure the constitutionality and legality of government and ministerial regulations. The National Assembly must exercise its control of government activities. It needs to keep track of regulations and ensure that they conform to the laws it has enacted. It needs also to set up a mechanism for people to complain against regulations affecting their constitutional rights. Laws and regulations should be published in an official gazette, which should be made available at specified locations, for public access. There should be an office where all regulations must be registered before they can come into force. The office should also be publicly accessible.
There are no more grounds left upon which to claim–as the World Bank and other donors have done year after year since 1993–that Cambodia has no people to build and run strong institutions for the rule of law, especially the judiciary. The public officials now in office have been continuously trained and retrained by international and local organisations at great expense for the last 13 years. They should have by now attained knowledge and skills in their respective fields at the level of graduates from technical or vocational colleges. Furthermore, Cambodian universities have produced hundreds, if not thousands, of graduates every year, some of whom have received higher diplomas from foreign universities. The claim that the people of Cambodia are not capable of running their country according to the rule of law is nothing more than an excuse for the wanton maladministration that rule by decree has perpetuated in its stead.
