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May 26, 2015

Cambodia’s Anti-Corruption Law Update


By Bretton  G.  Sciaroni

This article first appeared in the May 2015 issue of International Bar Association (IBA) Anti-Corruption Committee Newsletter.

The anti-corruption activities of the Royal Government of Cambodia are moving apace as the Anti-Corruption Unit (ACU), an entity created in tandem with the promulgation of the 2010 Anti-Corruption Law (ACL), continues to find new and innovative ways to implement the law.

The law, which embraces a strict standard of liability (much like the British Anti-Bribery Law), makes even facilitation payments illegal. Most of the enforcement actions involve arrests of government officials. But the ACU has been deployed in the past year in some very interesting ways. For example, the ACU worked with the Ministry of Education, Youth and Sports and the police to monitor the national high school examinations last August. In the past, the national exams have been plagued with rampant cheating, resulting in high passage rates. This last year, under the watchful eye of the ACU, the trend was reversed, with a very high failure rate. Another innovative use of the ACU was to tackle the issue of ghost workers in the government, in which salaries are collected for non-existent employees.

The Royal Government of Cambodia (RGC) has taken two proactive measures to enhance anti-corruption efforts in the business community. The first is a campaign to have individual companies sign a Memorandum of Understanding (MOU) with the ACU. These MOUs do not obligate the private sector to do anything more than is required by the 2010 Anti-Corruption Law (ACL), nor do they give the ACU any enhanced powers or authorities than those already granted by law. Both parties simply pledge to follow the law and cooperate in suppressing corrupt actions.

So what is the purpose of the MOU?  Companies may sign for several reasons, but the main purpose of the MOU is that it can be used to ward off requests for unofficial payments from government officials. These officials are surely aware that the ACU is making arrests of government officials on an almost weekly basis, so the production of the MOU by a company when under-the-table payments are requested can work as a deterrent to the illegal request.

There are other useful purposes that an MOU serves. It raises awareness of anti-corruption in general, not only in the Royal Government but among the public. It also serves to strengthen compliance programs inside companies. It is consistent with good corporate governance standards in the private sector. And it shows potential investors that corruption-free business can be conducted in Cambodia.

The initiative is gaining momentum in Cambodia’s business community. The first MOU, the initiative of Coca-Cola, was signed at the Anti-Corruption Day ceremony on December 9, 2013. The following year, the MOU was signed by Prudential Insurance Cambodia on October 10, 2014. By the time of the 2014 Anti-Corruption Day, an additional six companies signed the MOU.

Coca-Cola, the originator of the MOU concept, is the one company that has had substantial experience to date in using the MOU. According to the country General Manager, Paul Popelier, it has proved very useful in blocking requests for facilitation payments. His company only rarely has had to refer a matter back to the ACU.

Another initiative within the private sector is the ACU’s drafting of a Guidebook on Anti-Corruption Program for Business in Cambodia which draws upon a variety of sources, including Anti Anti-Corruption Ethics and Compliance Program for Business (UNODC); Anti-Corruption Ethics and Compliance Handbook for Business (OECD, UNODC, and World Bank); and UN Global Compact: 10 Principles (United Nations). Since mid-2014, the ACU has held several consultations with the business community to discuss its draft Guidebook  and compliance programs.

Undoubtedly corruption remains a serious issue in Cambodia, and any company considering doing business here must consider its compliance programs. The fact that the vast majority of arrests and prosecutions to date have been against government officials should give the private sector little solace; according to the law, the person who gives a bribe is as guilty as the person who receives it. Implicit in the pattern of arrests to date is the notion that the ACU is aware of the likely origin of most unofficial payments. Nevertheless, the ACU and the government is working with the business community to ensure compliance with the law. In a country where corruption is endemic, it is a good start.

Sciaroni & Associates is a leading professional services and investment advisory firm  doing business in Southeast Asia since 1993.  Based in   Cambodia  with legal offices in  Laos and Myanmar, we provide skilled counsel, knowledgeable business insights and experienced guidance to many of the world’s leading companies, financial institutions, governments and international organizations to help maximize the value of our clients’ investments.

For more information, please visit www.sa-asia.com or contact us at info@sa-asia.com.


 
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Sciaroni & Associates is a leading professional and investment advisory firm doing business in Southeast Asia since 1993. Based in Cambodia with legal offices in Laos and Myanmar, we provide experienced advice and business insights to many of the world’s leading companies, governments, economic think tanks, global development funds, international NGOs and the Royal Government of Cambodia in accordance with strict international standards.
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