Gulf states advised to tackle fraudsters

James Reinl, United Nations Correspondent

• Last Updated: June 27. 2008 12:05AM UAE / June 26. 2008 8:05PM GMT

UNITED NATIONS // A corruption watchdog has warned Gulf officials to introduce severe measures against fraudsters stealing money out of the booming water and construction industries, during the launch of a global report.

Transparency International urged bureaucrats to step up the battle against backhanders, bid rigging and embezzlement when doling out construction contracts for new desalination plants, reservoirs and sewage works.

Dieter Zinnbauer, editor of the Global Corruption Report 2008 – Corruption in the Water Sector, said tackling fraud was of paramount importance in the Arab world because Saudi Arabia, Oman, Yemen, Jordan and Egypt ranked among the world’s top 10 markets for new projects.

“Many of the countries that are major growth markets for water sector infrastructure are in the Gulf and the Arab world – and many of them are also ranked as highly corrupt,” Mr Zinnbauer said.

“Because of this, we are urging the governments of this region to take steps to tackle all types of corruption in the water industry and prevent higher prices from impacting consumers.”

While the UAE fared relatively well in the watchdog’s most recent Corruption Perceptions Index, ranking 36th on the list, other peninsular nations received mixed results. Qatar topped the region, ranking 32nd on the index, followed by the UAE and then Bahrain (46), Jordan (53), Oman (55), Kuwait (60), Saudi Arabia (81) and Yemen (137).

During the launch of the 367-page report at UN headquarters in New York on Wednesday, Huguette Labelle, the group’s chairman, warned that three billion people are expected to live in “water-stressed areas” by 2025.

“Water is a resource without substitute. It is paramount to our health, our food security, our energy future and our ecosystem. But corruption plagues water management and use in all these areas,” Ms Labelle said.

“This corruption takes many forms, whether it is regulatory capture, embezzlement of funds, bid rigging, collusion, bribery, kickbacks, extortion and nepotism – all of these and more are prevalent.”

The report highlighted corruption across the globe, from petty cases of extortion in developing Africa to multi-million dollar backhanders in the United States and Italy.

Improbity in Egypt’s (110) water industry is widely regarded as a serious problem, according to the report. Last summer, angry protesters took to the streets and built roadblocks in response to dire water shortages that many saw as linked to corruption.

Corruption in the Philippines (136) hindered the building and performance of irrigation dams, preventing the start of a US$1 billion (Dh3.67bn) agricultural initiative, researchers said.

In India (74), crooked payoffs are estimated to raise irrigation contracts by 25 per cent, feeding a corrupt system of political handouts that leaves smallholder farmers vulnerable to water shortages.

Water users in Africa are especially vulnerable to corruption, according to researchers. In Nairobi, Kenya (156), slum dwellers without access to city pipes pay between five and 10 times more for water than their wealthy counterparts.

In Zimbabwe (161), where corruption and extortion thrive under Robert Mugabe’s dysfunctional rule, a female customer was wrongly billed 60 times her normal rate and had to pay in full to get service restored.

“Corruption’s impact on water is a fundamental governance problem, yet it is not sufficiently addressed in the many global policy initiatives for environmental sustainability, development and food energy security,” Ms Labelle said.

Although researchers said corruption is an inevitable consequence of major public work projects – both in the Gulf and beyond – governments can turn the tide by bolstering regulations and hiring more inspectors.

Officials should increase transparency by publishing budgets, audits and contractors’ bids during the building of dams, reservoirs, desalination plants and sewage plants, researchers said.

jreinl@thenational.ae