Unethical practices to gain access to or to speed up public services

Unethical practices to gain access to or to speed up public services.

Risk type: Practice

Risk driver: Internal

DESCRIPTION

SMEs often face difficulties in the form of requests for unofficial payments from so-called natural monopolies or ‘network industries’. Or they may have to pay bribes in order to speed up administrative services or clear goods through customs. These transactions often involve intermediaries. The following three forms are common:

• Unethical practices to gain access to public services: SMEs confront requests from private sector entities that provide public services, such as the supply of electricity, water, or gas. Since SMEs cannot run their business without these services and lack bargaining power due to limited consumption, they have to act according to the rules imposed on them.¹
• Bribing for registration, permits, and licences: Bribes are paid in order to speed up registration processes and the issuance of permits and licences. Payments can also occur in order to obtain unofficial permits and licences.
• Bribing at customs: Bribes are often paid in order to speed up services from the customs division or in order to avoid levies on goods and tolls on transport demanded by police, customs, or local government officers at roadblocks or at the border. In some cases, customs clearance agents assist the company in clearing goods.

RED FLAGS

Red flags of unethical practices to gain access to public services:

• There are undue delays in establishing connections.
• Connection costs are unusually high.

Red flags of bribing for registration, permits, and licences:

• The registration process or issuance of a permit or licence takes an unusually short time.
• Registration costs or costs for issuance of a permit or licence are higher than usual.
• Payments due to a public authority are issued to an individual.

General red flags of bribing at customs: ²

• There is misrepresentation or inconsistency in the application or during the due diligence process.
• Border transit times are unusually short.

Red flags of assistance by a customs clearance agent: ²

• A customs official recommends the representative.
• The agent makes unusual requests such as backdating or altering documents or asking for commissions that are substantially higher than the ‘going rate’.
• The agent asks for payment by unorthodox or convoluted means such as through strange bank accounts outside the country where the services are being offered.
• The agent appears to be unqualified or understaffed, has inadequate infrastructure and staff, or has a bad reputation.
• The agent has a record of clearing goods through remote or notoriously corrupt customs posts and overpromises on speed or promises unusually short border transit times.
• The agent is unable to provide a verifiable company reference or evidence of membership in a professional association.

KEY GUIDING DOCUMENTS

UNIDO and UNODC, 2007, Corruption prevention to foster small and medium-sized enterprise development, Volume I, United Nations Industrial Development Organization(UNIDO) and United Nations Office on Drugs and Crime (UNODC)

Igbanugo, H. A. and Gwenigale, R. A., 2011, Assessing and Minimizing Customs-Related Corruption Risks in Sub-Saharan Africa’s Ports, Igbanugo Partners Int’l Law Firm, PLLC

FULL REFERENCES

1. UNIDO and UNODC, 2007, Corruption prevention to foster small and medium-sized enterprise development, Volume I, United Nations Industrial Development Organization(UNIDO) and United Nations Office on Drugs and Crime (UNODC)
2. Igbanugo, H. A. and Gwenigale, R. A., 2011, Assessing and Minimizing Customs-Related Corruption Risks in Sub-Saharan Africa’s Ports, Igbanugo Partners Int’l Law Firm, PLLC