[PHNOM PENH POST]
THE remaining provisions of Cambodia’s Anti-Corruption Law have come
into effect four months ahead of schedule, causing a stir among
internat-ional companies that do business in the Kingdom.
One of
the law’s provisions made illegal the payment of so-called facilitation
fees, or informal payments to government officials for various services,
insiders said yesterday.
Although insiders said companies
generally supported the law, which came into effect on August 1, they
questioned the speed with which the provision was implemented, given
Cambodia’s entrenched culture of informal payments.
“The
international business community is scrambling to try and reconcile this
new law with what is a common business practice in Cambodia,” Matt-hew
Rendall, managing partner at the law firm Sciaroni & Associates,
said.
Businesses are still digesting the law and its effects, but
Rendall defined illegal facilitation fees as any payment that is not
formalised and scheduled. Offenders could face up to five to 10 years in
jail, he said.
But that definition comes in sharp contrast to
allowances made by some of the Kingdom’s main trading partners.
Countries such as Australia and the US allow facilitation fees to be
paid in countries where they are legal.
The Organisation for
Economic Cooperation and Development’s Convention on Combating Bribery
of Foreign Public Officials in International Business Transactions does
not deem facilitation payments illegal, though it does discourage the
practice.
Companies now face severe penalties for making those payments in Cambodia, according to the law.
“What business person wants to take that risk?” Rendall said.
David
Carter, president of the Aust-ralia Business Association of Cambodia,
said the law was the right step forward for the Kingdom.
Still,
Carter is concerned that the government’s move to call the law into
effect so abruptly could have negative consequences in the short term
for businesses.
“People are simply unprepared. So what businesses are doing now is figuring out how to live with it,” he said.
“If anything, it’s going to have a slowing, if not stopping, effect on business.”
Carter
called for the government to formalise and schedule as quickly as
possible the payments that businesses have been forced to pay on an
informal basis.
That would be the only way businesses could
avoid prosecution by the Anti-Corruption Unit and continue operations as
normal, he said.
Carter is also the chief executive of Infinity Insurance.
Others in the business community argued that although the law was now in effect, its implementation had yet to be determined.
Bretton
Sciaroni, partner at Sciaroni & Associates and president of the
American Cambodian Business Council, said the business community had
been in discussions with the Cambodian government about the adoption of
the law for some time. Those discussions were ongoing, he said.
Sciaroni
said the law could have “a very dramatic impact on how business is
conducted in Cambodia”, as he understood it would be strictly enforced.
But he said it was too early to project about possible consequences.
“In
a sense, it’s a bit premature [to discuss possible effects], because we
still need to know how it’s going to be implemented,” Sciaroni said,
emphasising that American businesses would comply with the law.
Further education about the law needed to take place in both the public and private sectors, Sciaroni added.
Council
of Ministers spokesman Phay Siphan reacted to concern that the law was
put into effect too quickly by saying those challenges would be met.
“With a commitment from the people and a commitment from the government, we can overcome any inconvenience,” he said.
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