Jordan

Jordan Corruption Report

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Snapshot

Jordan_250x124.pngCorruption is an obstacle for businesses in Jordan. A system of wasta (middlemen) is common throughout the country and is considered part of doing business, thus making transactions opaque and hindering competitiveness. Other obstacles to business include high levels of bureaucracy, red tape, vague regulations and conflicting jurisdictions. Jordan's Penal Code criminalises corruption, including abuse of officebribery, money laundering and extortion, but the government does not implement the law effectively. Corrupt public officials are not systematically punished, and high-ranking civil servants are rarely prosecuted. Demands of facilitation payments and bribery may be encountered but are less frequent than in other Middle Eastern countries, and gifts are criminalised under Jordanian law. 

May 2015
GAN Integrity Solutions

Judicial System

Jordan's civilian courts are open and procedurally sound (FitW 2015), but the judiciary is compromised by allegations of nepotism and the influence of special interests. Further, the executive branch can reportedly influence judicial decisions and functions, and a lack of transparency with regards to the settlement of disputes has been observed (HRR 2013). Businesses believe Jordan's legal framework is efficient in challenging government regulations and in settling disputes (GCR 2014-2015). Jordanian law stipulates that foreign investors can seek third party arbitration or an internationally recognised dispute settlement (ICS 2014). Jordan is a member of the International Centre for the Settlement of Investment Disputes (ICSID) and the New York Convention of 1958.

Police

Jordan's police is not free from corruption. Abuse of functions and corruption within the security apparatus are rarely investigated, and there are few convictions when investigations occur (HRR 2013). In addition, there are widespread allegations of impunity among police officials (HRR 2013). Companies are confident in Jordan's police forces to protect business from crime and to uphold law and order (GCR 2014-2015), and security forces demonstrate high levels of professionalism in maintaining public security (ICS 2014).

In one corruption case, a former chief of Jordan's intelligence service was sentenced to over 13 years in prison for embezzlementmoney laundering and abuse of office in connection with a graft case (The Telegraph, Nov. 2012).

Public Services

Some forms of corruption can be found within Jordan's public administration. The most prevalent practice is the use ofwasta (i.e., connections) to advance personal business interests (ICS 2014). Public sector positions are often assigned based on wasta (BTI 2014), resulting in overstaffing, under-qualified staff, poor quality public services and unnecessary and inefficient administrative procedures. 'Hidden costs' are reported due to bureaucratic red tape, vague regulations and conflicting jurisdictions (ICS 2014). A very small percentage of businesses expect to give gifts to public officials to ‘get things done’ or to obtain an operating licence (ES 2013).

Despite the aforementioned obstacles, the process of obtaining licences is not particularly burdensome, and starting a business in Jordan is less costly and less time consuming than the regional average (DB 2015).

Land Administration

Jordan's land and construction sector is generally free from corruption. Private property is well defined and protected through sound legal processes, and there are no serious limitations to the acquisition, sale or use of property (ICS 2014). Property rights are well-protected in Jordan (GCR 2014-2015), and registering property is less time-consuming but more costly than the regional average (DB 2015). No companies report being expected to give gifts to public officials to obtain construction permits (ES 2013).

There are persisting rumours and accusations of royal land grabs. A group of tribal leaders accused the King of allegedly transferring public land to business cronies in 2011. Despite the Royal Court denying the accusations, critics remain skeptical (CatC 2012).

Tax Administration

Companies may encounter corruption when dealing with Jordan's tax authorities. Tax regulations and rates are cited among the impediments to doing business (GCR 2014-2015), and irregularities regarding taxation are reportedly frequent (BTI 2014). Some businesses expect to give gifts in meetings with tax officials (ES 2013). Reportedly, tax collection is flawed because of wasta (connections), favouritism and the misuse of political power; small companies lacking connections are often subjected to an arbitrary application of value added tax (VAT), while companies with political connections will usually not be held accountable for tax evasion and might often be exempted from paying taxes (GI 2011).

Customs Administration

Jordan's customs administration is free from corruption. The border administration is transparent, and irregular payments in relation to exports and imports are rare (GETR 2014). Only a very small percentage of surveyed companies expect to give gifts to public officials to obtain an import licence (ES 2013). In late 2013, Jordan became party to the OECD Declaration on International Investment and Multinational Enterprises (ICS 2014). The time and cost required to deal with exports and imports in Jordan are lower than regional averages (DB 2015).

Public Procurement

Jordan's public procurement sector lacks transparency and objectivity (PPSA 2013). Companies believe practices of favouritism among procurement officials are widespread and contend public funds are sometimes diverted because of corruption (GCR 2014-2015). The procurement bodies responsible for tender review and remedies are perceived to be corrupt, and procurement processes can be cancelled without any explanation, thus lowering transparency within the sector (PPSA 2013). Procedures governing procurement lack transparency and have allowed several public officials and businessmen to profit from ill-structured deals or deliberate undervaluation (CatC 2012). The privatisation process over the past decade has provided some of the most obvious examples of illicit transactions (CatC 2012).

Inconsistencies between public procurement legislation and local practice have been identified and were mainly linked to the absence of sufficient enforcement mechanisms and inadequate integrity safeguards (PPSA 2013). Legislation provides for competitive bidding but allows for favours domestic firms, thus hindering fair competition (PPSA 2013). Unsuccessful bidders may challenge the procurement decision through a court case. Bidders convicted of violating procurement regulations by engaging in corrupt practices are blacklisted (GI 2011). In one case, a former chairman of the public phosphate mining company (JPMC), Walid Kurdi, who is also an uncle of the King, was charged with ten counts of abuse of office (Al Bawaba, Jan. 2013), sentenced to 37 years of labour and fined USD 400 million (Al Bawaba, Jun. 2013). Kurdi was involved in overseeing contracts between JPMC and foreign firms, through which Kurdi embezzled USD 40 million.

Natural Resources

Corruption in Jordan's extractive industries does exist. For instance, abuse of water resources in Jordan’s agricultural sector has come to be a central environmental issue (BTI 2014). The significant decline in water resources is to a large extent due to the misuse of water by a number of influential trans-Jordanian families with close ties to the King and government members (BTI 2014).

In one corruption scandal in Jordan’s oil industry, the State Security Court (SSC) kept secret the proceedings of a bribery case related to a USD 2.1 billion refinery project involving high-level business and political officials with connections to the royal family. Of those convicted of corruption, Khalid Shaheel, a businessman with royal connections, was permitted to serve his sentence in a 'luxurious facility', and Adel Qudah, a former finance minister, was granted house arrest despite initially being given a prison sentence (CatC 2012).

Legislation

The Penal Code of Jordan criminalises extortionactive and passive bribery, bribing a foreign official, abuse of office and money laundering. Jordan's Anti-Corruption Commission Law includes actions related to wasta and nepotism. The Financial Disclosure Law stipulates that certain government officials must disclose their assets in a sealed envelope to be opened by the chief justice in case of a complaint. The Jordanian Code of Conduct in the Public Sector requires ministers to submit a financial disclosure statement and forbids them to hold seats on the board of private companies, to take part in commercial or financial business, or to receive any salary from a third party. Access to information is somewhat restricted by the State Secret and Documents Law. The Anti-Money Laundering Law complies with Middle East/North Africa Financial Action Task Force (MENAFATF) standards. A new competition law is currently under Parliamentary review and aims to attract foreign investment and protect small and medium-sized businesses from restrictive anti-competitive practices (ICS 2014). In 2013, a national anti-corruption strategy was launched, but effective implementation of any of its objectives is impeded by a lack of institutional checks and balances and by limited access to information and journalistic reporting (FitW 2015). Jordan has ratified the UN Convention Against Corruption. Access the Lexadin World Law Guide for a collection of legislation in Jordan.

Civil Society

Jordan's constitution provides for freedoms of speech and press, but the government does not respect these provisions in practice (HRR 2013). Journalists often face harassment and physical attacks and are forbidden from covering controversial issues (FotP 2014). A 2011 law forbids reporting on corruption and criminalises defamation, thus leading to an environment self-censorship among journalists (FotP 2014). Access to information is often blocked in practice (FotP 2014). Online content is increasingly censored, and the government threatens journalists and website editors critical of the government (HRR 2013). News websites must register with the government, which retains the freedom to block foreign or domestic websites that do not comply with content restrictions (FotP 2014). Journalists found guilty of offences involving speech or association can be prosecuted under the Penal Code or tried by the quasi-military State Security Court (FotP 2014). Corruption within the sector is a threat to independent reporting as several media professionals have been bribed by the General Intelligence Directorate (FotP 2014). Jordan’s press environment is described as 'not free' (FotP 2014).

Jordan's constitution provides for freedom of assembly, but the government restricts these rights (HRR 2013). Despite the high number of NGOs in Jordan, civil society traditions are weak, and a large proportion of NGOs is created and controlled by the royal family (BTI 2014). The government is legally allowed to control the internal affairs of civil society organisations and decide on whether or not to accept foreign funding, and it allegedly infiltrated NGOs to have access to the organisations’ internal meetings (HRR 2013). Despite a move towards more inclusion after the Arab Spring, NGOs are generally excluded from the policy-making process, and political leaders frequently ignore civil society’s interests or demands (BTI 2014).

Sources

Topics: Middle East & North Africa