Kuwait Country Profile
General Information
Political Climate
Kuwait is a small country in the Persian Gulf region, with about 9% of the world's known oil reserves. The country's economy has been dominated by oil, which is responsible for almost 50% of Kuwait's GPD and 95% of export revenues. The country is a constitutional hereditary monarchy, in which political power is concentrated in the hands of the Emir and the ruling Al-Sabah family. A unicameral National Assembly is popularly elected every four years. Although political parties are not explicitly forbidden by the constitution, they have been illegal in Kuwait since 1961. Nevertheless, several Sunni, Shi'ite and liberal pro-government and opposition political groups form de facto political parties. According to the Bertelsmann Foundation 2010, the Emir has the power to dissolve the Parliament at will, but he will need to announce elections within 60 days. Kuwait's Parliament has increased its role in politics, but power remains concentrated in the executive branch of government. Tensions between the executive branch and the legislature have grown significantly in the past few years, which have caused the Emir to dissolve the Parliament three times since 2006, as reported by Freedom House 2010. In March 2009, political tension emerged again after Members of the Parliament (MPs) demanded to question Prime Minister Nasser Mohammed Al-Ahmed Al-Sabah (the nephew to the Emir) over allegations of corruption, resulting in the Parliament dissolving. Subsequent elections were held in May 2009, and for the first time in Kuwait’s history, four women won Parliamentary seats. In December 2009, Prime Minister Nasser Mohammed Al-Ahmed Al-Sabah, appeared before the Parliament, being questioned over corruption allegations. This is the first time a prime minister has been questioned by the legislature in Kuwait. Nevertheless, Prime Minister Nasser Mohammed Al-Ahmed Al-Sabah kept his position, despite the opposition trying to remove him. Tensions within the royal family are reportedly fuelling broader political unrest in the country.
Corruption is considered a serious problem in Kuwait and has been a part of the political debate in the recent years; however, the government is often criticised for its hesitance to fight corruption and according to the Bertelsmann Foundation 2010, the executive does not seem to go beyond its rhetoric. On the other hand, the National Assembly plays a much more active role in the fight against corruption, and has often questioned key ministers on public spending and contracting. In 2005, a group of MPs launched a local chapter of the Global Organization of Parliamentarians against Corruption (GOPAC) to combat corruption and educate the public about its societal dangers. Nevertheless, many corruption scandals involving MPs have come out, for example, according to Global Integrity 2008, some MPs have offered services and bribes to obtain constituents' votes, and MPs are also known to send their relatives abroad at the expense of the state and to exploit their positions and private connections to obtain loans and bank guarantees with banks and investment companies. The same source also reports that MPs have written off loans for their constituents. In what may be seen as a reaction to such cases as well as the general public dissatisfaction with corruption that have been sweeping the region since the beginning of 2011, the government accepted in late March 2011 draft laws for setting up a national anti-corruption authority under the Ministry of Justice to investigate graft and illegal profiteering in the public sector, according to a March 2011 article by Kuwait Times. The government also announced that a law for the disclosure of politicians' and public officials' assets will be submitted in the future.
According to the Kuwait Economic Society Kuwait Public Opinion Survey Report 2007, one-third of the households surveyed believe that corruption is widespread in Kuwait, and more than half of the respondents feel that the problem is not being addressed. Furthermore, according to Transparency International Global Corruption Barometer 2009, households perceive public officials and civil servants to be the most corrupt entity in Kuwait, while the judiciary and the Parliament are perceived as the two least corrupt institutions. Petty corruption appears to be common, with 20% of respondents reporting that they or a member of their household have paid a bribe in 2008. However, Kuwaitis appear to be supportive of the government's anti-corruption efforts, with 68% of the household respondents perceiving the government’s efforts in the fight against corruption as ‘effective’, versus 23% perceiving it as ‘ineffective’. However, according to the US Department of State 2009, some experts believe that corruption is more prevalent in Kuwait than what the surveyed households perceived it to be in the Transparency International Global Corruption Barometer 2009.
Business and Corruption
Over the past several years, Kuwait has opened its economy and adopted a more positive attitude towards foreign investment. According to the US Department of State 2011, however, the government can interfere at times, mostly to benefit Kuwait citizens and domestic companies. Business executives surveyed in the World Economic Forum Global Competitiveness Report 2010-2011 identify corruption as the sixth most problematic factor for doing business in Kuwait after issues related to insufficient government bureaucracy, access to financing, restrictive labour regulations, inadequately educated workforce and infrastructures. According to the Bertelsmann Foundation 2010, the ruling family and a few long-established merchant families control key economic activities and sectors. Informal monopolies and oligopolies exist, and connections between the administration and private companies result in uneven market competition. Administrative decisions related to market activity can be arbitrary and sometimes involve corruption.
According to the World Economic Forum Global Competitiveness Report 2010-2011, business executives report that public funds are sometimes diverted to companies, individuals or groups due to corruption, and that government officials are sometimes favouring well-connected companies and individuals when deciding on policies and contracts. This is further illustrated in GOPAC Kuwait’s National Anti-Corruption Strategy 2009, in which it is reported that government officials distribute grants and benefits and assign funds to certain companies, based on tribal or regional considerations for political gain. According to the US Department of State 2011, companies bidding in the public procurement process in Kuwait have at times been accused of attempted bribery or the offering of other inducement. Since 1996, companies securing contracts with the government valued at KWD 100,000 or more are required to report all payment made to agents or advisors during the public procurement process. Furthermore, GOPAC Kuwait’s National Anti Corruption Strategy 2009 also reports that criteria and standards for the government bidding system are unclear, which do not encourage real competitions and the equality of opportunities. Foreign investors considering bidding on public tenders are therefore advised to use a specialised public procurement due diligence tool on public procurement, in order to help mitigate the corruption risks associated with public procurement in Kuwait.
According to Transparency International Global Corruption Barometer 2009, Kuwaiti households give the business and private sector a score of 3 on a 5-point scale (1 being 'not and all corrupt' and 5 'extremely corrupt'). Expatriate workers account for 90% of the work force in the private sector in Kuwait and corruption in the issuance and renewal of work permits is well known. According to Global Integrity 2008, employees of the Ministry of Social Affairs & Labour (MOSAL) are known for forging documents to allow the importation of foreign workers. In 2007, MOSAL closed two companies and fined other companies that were importing illegal workers. According to the US Department of State 2011, companies should also be aware that individuals having a civil or criminal case against them might be prevented from leaving the country until the case is settled or a guarantee is offered. Furthermore, it is reported that travel bans have been imposed on foreigners for allegedly violating Kuwaiti civil law, although it is rather infrequent. Companies are strongly advised to develop, implement and strengthen integrity systems and to conduct extensive due diligence when planning to invest and when already doing business in Kuwait.
Regulatory Environment
Kuwait has a friendly legislation to foreign direct investment; however, some significant restrictions and high oil prices have allowed the government to delay economic reforms and market diversification. The Kuwait Commercial Code provides that foreign companies may not engage in commercial activities in Kuwait, unless the Kuwaiti share of the business or joint venture equals or exceeds 51% of the total capital of the company. According to the US Department of State 2011, in 2001, the National Assembly passed the Direct Foreign Capital Investment Law (DFCI Law) to promote investment in Kuwait. The law authorises foreign-majority ownership in joint ventures and 100% ownership in certain industries, such as information technology, tourism and infrastructure projects; however foreign investment in the upstream petroleum and downstream gas and petroleum sectors remains restricted. Other initiatives taken by the government to attract foreign investment is the reduction of the tax rate from 55% to 15% for foreign companies, and new foreign investors can be exempted from all taxes for up to 10 years under the new DFCI Law. Furthermore, in 2009, the Kuwaiti government announced a five-year Economic Development Plan (2009-2014), which includes different reforms and incentives to attract private investment. According to Arab Times 2011, the 2009- 2014 Development Plan is the first phase of the six consecutive development plans, with the aim of turning Kuwait into the region’s financial and trade centre by 2035. The Foreign Investment Bureau (FIB) within the Ministry of Commerce and Industry promotes and screens all proposals for foreign direct investment in Kuwait. The DFCI Law also provided long-term protection to foreign investors against nationalisation or confiscation, and eliminated the requirement for foreign companies to have a Kuwaiti sponsor or partner. It also exempts foreign-majority owned companies from local agent requirements and authorised ten-year tax holidays for new foreign investors as well as land grants and duty-free import of equipment. However, according to the US Department of State 2011, the DFCI Law does not seem to have changed the investment climate in any significant way and foreign companies still experience delays in getting authorisation, some waiting up to 18 months for approval.
Inconsistent and sometimes contradictory policies and lack of transparency in the decision-making process can be a problem for foreign investors in Kuwait. Business executives surveyed by the World Economic Forum Global Competitiveness Report 2010-2011 indicate inefficient government bureaucracy as the most problematic factor for doing business in Kuwait and that the level of government regulation is quite burdensome, scoring 2.7 on a 7-point scale (1 being 'burdensome' and 7 'not burdensome'). Moreover, business executives surveyed indicate that it is quite challenging to obtain information about changes to government policies and regulations affecting their industries. This is supported by the Heritage Foundation 2010, which reports that Kuwait's bureaucracy is often inefficient, non-transparent, and can be biased in favour of domestic interests, while the US Department of State 2011 reports that the country's bureaucracy is frequently like that of a developing country. Starting a company in Kuwait is a long and bureaucratic process, which, according to the World Bank & IFC Doing Business 2011, takes an average of 35 days and 13 procedures at a cost of 82.7% of the GNI per capita, which is more time consuming compared to the regional average.
Property rights are reasonably well defined, but there are restrictions on non–Gulf Cooperation Council citizens’ right to own land in Kuwait. This restriction is cited by some foreign investors as a major deterrent to foreign direct investment and starting businesses in Kuwait, as reported by the US Department of State 2011. Intellectual property rights are protected by a number of different laws; however Kuwait's IP laws are not fully in compliance with the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. In 2008, the US listed Kuwait in its Special 301 Watch List for failing to update its IP legislation. The Kuwaiti judicial system is well developed and familiar with international commercial laws. Nevertheless, dispute resolution in the Kuwait courts can be very time consuming and enforcement of court rulings is still a problem. Arbitration is also a possible form for dispute resolution; however few contracts contain an arbitration clause. Kuwait is a member of the International Centre for the Settlement of Investment Disputes (ICSID) and has ratified the New York Convention 1958. Access the Lexadin World Law Guide for a collection of laws in Kuwait.
Judicial System
Individual Corruption
The US Department of State 2009 reports that foreign citizens involved in court cases in Kuwait often claim that the courts are biased in favour of Kuwaiti citizens; however, Global Integrity 2008 reports that there is no systematic discrimination against foreigners in the courts.
Surveyed households in both Kuwait Economic Society Kuwaiti Public Opinion Survey Report 2007 and Transparency International Global Corruption Barometer 2009 perceive the judiciary to be the least corrupt institution in the country, and according to the latter source, only a small percentage of the responding households reported having paid a bribe in 2008.
Business Corruption
The US Department of State 2011 reports that foreign companies are often frustrated with the slow pace of the Kuwait Judiciary. Business leaders in the World Economic Forum Global Competitiveness Report 2010-2011 perceive the Kuwaiti judiciary to be relatively independent from influences of members of government, citizens or companies.
Political Corruption
Albeit the formal independence of the judiciary, sources disagree as to whether the judiciary is independent in practice. For example, Global Integrity 2008 states that the government often loses court cases as an indication of the high independence of the judiciary, while the Bertelsmann Foundation 2010 states that the judiciary often makes decisions in accordance with the official political view.
On the other hand, the Heritage Foundation 2011 reports that the judiciary lacks independence because all judges are appointed by the Emir, and that judicial branches are widely perceived to be affected by corruption.
Frequency
The World Bank & IFC: Doing Business 2011:
- To enforce a commercial contract, a company is required to go through 50 procedures, taking 566 days at a cost of 18.8% of the claim on average.
World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business leaders give the independence of the judiciary from influences of members of government, citizens, or companies a score of 4.9 on a 7-point scale (1 being 'heavily influenced' and 7 'entirely independent').
- Business executives give the efficiency of the legal framework for private companies to settle disputes and of the legal framework to challenge the legality of government actions and/or regulations a score of 4.4 and 4.2 respectively on a 7-point scale (1 being 'extremely inefficient' and 7 'highly efficient').
Transparency International: Global Corruption Barometer 2009:
- Citizens give the judiciary a score of 1.7 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt')
- 3% of the households surveyed consider the judiciary to be 'extremely corrupt'.
- 3% of the households who had contact with the judiciary in 2008 report to have paid a bribe.
Police
Individual Corruption
Corruption in the police is common. The US Department of State 2009 reports that corruption occurs especially when a party involved in a dispute has personal connections to the police officer who is assigned to the case. It is also reported that police officers receive bribes from individuals for not interfering in cases of domestic abuse. On the other hand, only a small percentage of the households surveyed in Transparency International’s Global Corruption Barometer 2009 reported having paid a bribe to the police in 2008.
Business Corruption
According to World Economic Forum Global Competitiveness Report 2010-2011, surveyed business executives rank the reliability of police services to enforce law and order in Kuwait as relatively high.
Political Corruption
According to Global Integrity 2008, the police are subject to political interference. The police are sometimes pressured to release accused defendants before transferring them to courts, or to appoint their relatives and friends to join the agency, or benefit from tenders. Nevertheless, Global Integrity 2008 also reports that some police officials, even high-ranking officers, are taken to courts on charges of abuse of power or breaking the law.
Frequency
World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give the reliability of police services to enforce law and order a score of 5 on a 7-point scale (1 being 'cannot be relied upon at all' and 7 'can always be relied upon').
Transparency International: Global Corruption Barometer 2009:
- 3% of the households who had contact with the police in 2008 report to have paid a bribe.
Licences, Infrastructure and Public Utilities
Individual Corruption
According to Transparency International's Global Corruption Barometer 2009, Kuwaiti citizens perceive public officials to be the most affected by corruption. Furthermore, a small percentage of households reported to have paid a bribe in order to obtain medical and other utility services in 2008, while more than one out of ten reported to have paid a bribe to obtain registry and permit services.
Political Corruption
According to Global Integrity 2008, nepotism and cronyism plague the civil service, especially in the promotion to high positions. Political interference also makes it difficult to hold public officials accountable for their actions and some are promoted regardless of their performance if they are associated with powerful political, family or tribal groups.
According to Transparency International’s Global Corruption Report 2009, between 1989 and 2001, the Swiss sports marketing company, International Sports, Media and Marketing (ISMM) is reported to have paid approximately USD 166 million in bribes to different international sports organizations and sports officials in order to gain broadcasting rights. Among other suspects, the former secretary general of the Olympic Council of Asia, Abdul Muttaleb of Kuwait is reported to have gained USD 6 million.
In January 2008, the Kuwaiti Parliament decided to sell Kuwait Airways’ shares because it has been running with a deficit since 1990. According to a 2010 news article by Bloomberg Business Week, amid the public share sale, a committee has been set up to probe corruption allegations and financial and management irregularities at Kuwait Airways. Arabian Aerospace in 2010 reports that the Parliament refused a motion to suspend the privatisation despite that the opposition MPs requested it until the Audit Bureau had reported its findings.
Frequency
The World Bank & IFC: Doing Business 2011:
- In order to obtain a construction permit, a company must go through 25 procedures and spend 104 days at a cost of approximately 173% of income per capita.
World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give government administrative requirements (permits, regulations, reporting) in Kuwait a score of 2.7 on a 7-point scale (1 being 'extremely burdensome' and 7 'not burdensome at all').
Transparency International: Global Corruption Barometer 2009:
- Citizens give the public officials a score of 3.4 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').
- 12% of the households who had contact with registry and permit services in 2008 report to have paid a bribe.
- 4% of households who had contact with the utilities services in 2008 report to having paid a bribe.
- 4% of households who had contact with medical services in 2008 report to have paid a bribe.
Land Administration
Individual Corruption
According to the Transparency International’s Global Corruption Barometer 2009, approximately one out of ten surveyed households reported having paid a bribe to land services in 2008. Furthermore, more than half of the respondents believe that bribing land authorities to obtain favourable decisions is a serious problem in Kuwait.
Political Corruption
Abuse of power is not uncommon in Kuwait. For example, according to Global Integrity 2008, some Members of Parliament have appropriated state land to build their own private residences, meeting places and chalets.
Frequency
The World Bank & IFC: Doing Business 2011:
- Registering property takes 55 days, 8 procedures and costs 0.5% of the average property value.
World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give the protection of property rights in Kuwait, including financial assets, a score of 4.9 on a 7-point scale (1 being 'very weak' and 7 'very strong').
Transparency International: Global Corruption Barometer 2009:
- 12% of the households surveyed reported to have paid a bribe to land services in 2008.
- 63% of the households surveyed consider the bribing of land authorities to obtain favourable decisions a 'serious problem' in Kuwait.
- 56% of the households consider grand or political corruption in land matters to be a 'very serious problem'.
Tax Administration
Individual Corruption
According to the Heritage Foundation 2011, there is no individual income tax, nor value-added tax and sales tax in Kuwait. However, a small percentage of the households who had contact with tax revenue services in 2008 reported to have paid a bribe, as illustrated in Transparency International’s Global Corruption Barometer 2009.
Business Corruption
According to Global Integrity 2008, tax laws are not enforced uniformly and without discrimination. Only foreign-owned companies and the foreign-owned portions of joint ventures are subjected to corporate income tax, both to domestic and offshore income. The US Department of State 2011 reports that there are tax ambiguities in terms of defining foreign companies' taxable presence in Kuwait and several companies are involved in disputes over their tax liabilities.
Frequency
The World Bank & IFC: Doing Business 2011:
- The average company spends 118 hours a year making 15 payments separate tax payments at a total tax rate of 15.5%.
Transparency International: Global Corruption Barometer 2009:
- 12% of the households who had contact with tax revenue services throughout 2008 report to have paid a bribe.
Customs Administration
Individual Corruption
According to Global Integrity 2008, there have been cases in which custom officers have allowed people to import prohibited items and have undervalued the imported goods.
Business Corruption
According to Global Integrity 2008 the implementation of customs regulations is weak and non-transparent. Furthermore, the World Economic Forum Global Enabling Trade Report 2010 reports that trade in Kuwait is impeded by customs procedures, and irregular payments such as bribes taking place during import and export processes.
Frequency
The World Bank & IFC: Doing Business 2011:
- A standard export shipment of goods requires 8 documents, takes 17 days and costs USD 1,060 per container on average.
- A standard import shipment of goods requires 10 documents, takes 19 days and costs USD 1,217 per container on average.
World Economic Forum: The Global Enabling Trade Report 2010:
- Business executives give the transparency of border administration (pervasiveness of undocumented extra payments or bribes connected with imports and exports) in Kuwait a score of 4 on a 7-point scale (1 'non-transparent' and 7 'transparent').
- Business executives give the efficiency of customs administration (burden of customs procedures) in Kuwait a score of 3.5 on a 7-point scale (1 'extremely inefficient' and 7 'extremely efficient').
Public Procurement and Contracting
Business Corruption
According to the Transparency International Global Corruption Report 2006, public contracts and procurement are the sectors most vulnerable to corruption in Kuwait. Foreign companies are excluded from bidding for government-funded projects, unless they work through a Kuwaiti agent or partner. Kuwait's public procurement process is cumbersome and very time consuming and as a result, according to the US Department of State 2011, many bidders offer bribes or other inducements.
Companies are recommended to use a specialised public procurement due diligence tool in order to help mitigate the corruption risks associated with public procurement in Kuwait. For more information on public procurement in Kuwait, see 'Public Anti-Corruption Initiatives' in the Initiatives section.
Political Corruption
According to Global Integrity 2008, the conflict of interest regulations for public procurement officials are not always enforced evenly depending on the integrity of top management in the different institutions. The US Department of State 2011 reports that there are many ongoing investigations and trials involving government officials accused of wrongdoing in the procurement process, but no one has been convicted for bribery since the end of the Gulf War.
According to a 2009 news article by The Washington Times, Parliament cancelled a project to build the al-Zour refinery in March 2009, after lawmakers accused state officials of profiteering from the project because the contracts to build it did not go through the Central Bidding Committee. Eight months after the cancellation of the project, the government once again announced its plans to retender the al-Zour refinery with the supervision of the Central Bidding Committee, as reported in a November 2009 news article by Downstream Today.
For more information on public procurement in Kuwait, see 'Public Anti-Corruption Initiatives' in the Initiatives section.
Frequency
World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give the diversion of public funds to companies, individuals, or groups due to corruption a score of 3.6 on a 7-point scale (1 being 'very common' and 7 'never occurs').
- Business executives give the favouritism of government officials towards well-connected companies and individuals when deciding upon policies and contracts a score of 3.5 on a 7-point scale (1 being 'always show favouritism' and 7 'never show favouritism').
Environment, Natural Resources and Extractive Industry
Political Corruption
According to a 2007 news article by Arab News, the Kuwaiti Oil Minister Sheikh Ali Jarrah al-Sabah resigned over corruption allegations in June 2007. Sheikh Ali was accused of involvement in the USD multi-million Kuwait Oil Tanker Company (KOTC) fraud case in which his cousin, former Oil Minister Sheikh Ali Khalifa al-Sabah, and four other top KOTC officials were accused of stealing more than USD 100 million. According to another 2007 news article by Upstream Online, the former Oil Minister Sheikh Ali Khalifa al-Sabah has never been convicted in this case.
Public Anti-Corruption Initiatives
Legislation: The Penal Law 31/1970 criminalises corruption in Kuwait. The Law covers passive and active bribery, attempted corruption, extortion, money laundering and abuse of office; however, the Law does not criminalise bribing a foreign official. Kuwait ratified the UN Convention against Corruption (UNCAC) in 2007 and is a signatory of the UN Convention against Transnational Organized Crime. This legal framework is assessed as 'strong' by Global Integrity 2008. In November 2009, the National Assembly’s legal and legislative committee approved the anti-corruption draft law, which had been in the political agenda for years. The committee also approved the draft law for financial disclosure, and according to a 2009 article by Kuwait Times, both laws will be sent to the National Assembly for further debate and approval. According to a January 2010 article by Kuwait Times, the Kuwait Transparency Society (KTS) highlights the importance for Prime Minister Sheikh Nasser Al-Mohammad Al-Sabah to adopt five draft laws on anti-corruption, financial disclosure, conflicts of interest, witness protection and the right to examine information. However, in June 2010, the National Assembly failed to hold a special meeting to debate and pass an anti-corruption bill and financial disclosure bill, making it the second time such meeting on anti-corruption legislation has been postponed, as reported by Kuwait Times in June 2010. As of October 2010, reports on anti-corruption and financial disclosure draft laws were still in the process of being finalised, according to an October 2010 article by Kuwait Times. In late March 2011, the government accepted draft laws for setting up a special department under the Ministry of Justice to investigate corruption, graft and illegal profiteering in the public sector, according to a March 2011 article by Kuwait Times. The government also announced that the disclosure of assets' bill will be submitted in the future, but did not provide a specific timeframe. Lexadin World Law Guide for a collection of legislation in Kuwait.
Government Strategies: Kuwait's National Anti-Corruption Strategy foresees the creation of an independent oversight and inspection body to investigate corruption cases and also of a judicial department specialised in corruption cases. The strategy also seeks the enactment of laws and regulations that enhance transparency and integrity and also the protection of whistleblowers. In 2009, the government announced the first Five Year National Development Plan (2009-2014), out of the six consecutive plans aiming to turn Kuwait into the region’s financial and trade centre by 2035. Five key draft laws were included in the plan, including draft laws on anti-corruption and witness protection. Another key reform that needs to be implemented is the establishment of an effective agency to fight corruption, which is still lacking in Kuwait, according to Global Integrity 2008. Click here for more detail on the Five Year National Development Plan.
Anti-Corruption Agency: According to Global Integrity 2008, Kuwait has no anti-corruption agency. The courts are the only entities to deal with corruption.
Auditor General: The State Audit Bureau of Kuwait is a politically independent agency, responsible for supervising public expenses and revenues. According to Global Integrity 2008, the Audit Bureau receives regular funding and has a full-time staff composed mostly of legal specialists and accountants. Reports are published annually and sent to the Emir, Prime Minister, head of the parliament, and the minister of finance, however, the general public do not have access to these reports. Moreover, the government does not always act on the Audit Bureau’s findings.
Ombudsman: Kuwait does not have an independent Ombudsman agency; however there are internal public complaint offices in most ministries. The offices receive complains from citizens and send them to the responsible department, and once the department has replied they send the reply back to the complaining citizen. They are not very proactive in their investigations. Since the public complaint offices are structured as a department in each ministry, they receive regular funding, as any other department of the ministry. The internal complaint offices do no publish reports, as reported by Global Integrity 2008.
E-Governance: The Central Agency for Information Technology (CAIT) was established by the government of Kuwait in 2006 and put in charge of setting national IT policies, implementing the e-government project, managing the government’s official portal and some other duties. The CAIT also provides a directory of different government sectors, business sectors and private societies with telephone numbers, and sometimes addresses. Kuwait Government Online provides government information, data and services in both Arabic and English. From the main page, it is possible to browse a list of government, foundations, institutions and other online Kuwait sites with direct link to some of their information and useful services. The Ministry of Justice (MOJ) contains general information about the MOJ such as on laws, required documents, fees, addresses and telephone numbers of different departments and sectors. In December 2009, the MOJ launched an e-payment service enabling the public to pay fees electronically via the MOJ’s website.
Public Procurement: Public procurement is regulated by the Public Tender Law No. 37 from 1964. All bids for government funded projects above USD 18,250 must be submitted to the Central Tenders Committee (CTC). According to the US Department of State 2011, companies winning contracts with the government for USD 364,931 or more are required to report all payments made to Kuwaiti agents or advisors while securing the contract. Procurement is advertised in the Official Gazette and in one daily newspaper. Unsuccessful bidders can complain to the CTC, but cannot challenge the decision in a court of law. Global Integrity 2008 reports that in practice, companies convicted of corruption are either blacklisted or have to go for a cooling-off period. Hence, Kuwait is not a signatory to the WTO Government Procurement Code.
Whistle-Blowing: There is no legal whistle-blowing protection for public officials reporting corruption. According to Global Integrity 2008, public officials might escape negative consequences for reporting corruption if they sue their employer or take the case to either the press or a Member of Parliament. There is no law protecting private sector employees reporting corruption. In practice, however, protection for whistle-blowers in the private sector will depend on the top management of the company. Sometimes they reward employees who report cases of corruption to improve the situations in banks, companies or institutions, sometimes they do not. A draft law to protect whistleblowers, which would allow Kuwait to comply with international agreements on combating corruption, still awaits Parliament's approval by December 2009. As of March 2011, there was still no news on the approval of the whistleblower protection draft law.
General Comments on the Public Anti-Corruption Initiatives: Kuwait has the appropriate legal framework to fight corruption; however, the implementation is far from effective. Commitment to the fight against corruption does not seem to go beyond rhetoric, as many public officials involved in corruption are rarely punished. The Cabinet has been criticised by Transparency International Kuwait for failing to execute the clauses of the UNCAC for 7 years, after it did not include five draft laws designed to increase transparency and fight corruption in the government's list of priorities that was presented to the Parliament in September 2009. So far the country is still missing an independent anti-corruption agency and a national Ombudsman. Furthermore, the National Assembly failed to hold a session on anti-corruption in June 2010, the second time such a session needed to be postponed, indicating a lack of will to combating corruption. Last but not least, the passing of the five draft laws, such as the anti-corruption law and the whistleblower protection law, are some of the first priorities that the state of Kuwait needs to deal with in order to fight corruption.
Private Anti-Corruption Initiatives
Media: Freedom of speech and freedom of the press are provided for by articles 36 and 37 of the Constitution. In practice, the media are often censored and prosecuted for reporting prohibited religious and political topics. Nevertheless, the Bertelsmann Foundation 2010 describes that journalists in Kuwait are among the most free and outspoken in the region. All newspaper publishers are required to obtain licences from the Ministry of Information (MOI), and the MOI screens all imported media for morally offensive content, and all publication and distribution of informational materials are controlled by the MOI. According to Freedom House 2010, the print media express diversity of opinion and are more critical of the government than other Arab countries; however self-censorship is still practised in order to avoid conflict with the government. The government owns the majority of broadcasters, but the government has started giving licences to private television. It is alleged that the royal family in Kuwait is trying to take financial control of some media outlets, as reported by the Bertelsmann Foundation 2010. According to Freedom House 2010, the government monitors the internet, and sometimes blocks access to websites that seem to ‘incite terrorism and instability’. In 2009, a new internet censorship law was proposed, and it is believed that it may have stricter control on websites and blogs. However, according to Freedom House 2010, no further action had been taken on the measures yet. Freedom House 2010 ranks the country 115th out of 196 countries and Reporters Without Borders Worldwide Press Freedom Index 2010 ranks Kuwait 87th out of 178 countries.
Civil Society: Freedom of assembly and association are provided by law; however, the government limits those freedoms in practice. According to the Bertelsmann Foundation 2010, civil society does not have a long tradition in Kuwait and it is still politically marginalised. Obtaining a licence to organise a CSO can be time consuming and Global Integrity 2008 reports that applicants need to have connections with decision makers in order to obtain a licence. As a consequence many NGOs are forced to operate without legal standing and funding. According to the US Department of State 2009, there were dozens of unlicensed and unofficial CSOs and NGOs in Kuwait. The Law 24/1962 (Article 6) prohibits licensed CSOs from engaging in political activities and CSOs are hesitant to take position on political issues. Furthermore, members of licensed NGOs are required to obtain permission from the Ministry of Social Affairs and Labour (MOSAL) in order to attend international conferences.
Kuwait Economic Society (KES): Founded in 1970, KES is an independent NGO built on the fundamental principle that the key to sustainable economic development rests on partnership between important bodies, such as the civil society, private sector, government and parliament. Some of the major focuses of KES are: promoting economic growth and reform of Kuwait’s economy, improving transparency and curbing corruption within public institutions. KES publishes public surveys and economic reviews on its website, however, some of them are only available in Arabic.
Kuwait Transparency Society (KTS, in Arabic): KTS has been a local partner of Transparency International since 2005 and was recognised as National Contact in January 2007. The organisation has been granted National Chapter in Formation (NCIF) status in 2008. KTS is the only CSO that was granted a licence from the Kuwait government. In 2009, TI Kuwait started a political media campaign titled 'No Development with Corruption'. The campaign will continue until the promised anti-corruption laws are passed. They will work to make the anti-corruption laws among the top priorities for the government. They called for all concerned organisations as well as parliamentarians to take part in the planned campaign in order to counter corruption.
Resources
The websites listed below provide useful facts about Kuwait as well as contacts and tools for companies operating in Kuwait:
- International Finance Corporation: Global SME Toolkit
Guide to sustainable business management practices for SMEs. - Business Fighting Corruption
An online resource centre for business on collective action to avoid corruption which contains a guide and resources for partnerships with companies and other stakeholders to fight against corruption. - CIA World Factbook: Kuwait Profile
Sources for further reading:
- US Department of State: Investment Climate Statement - Kuwait 2011.
- The Bertelsmann Foundation: Transformation Index - Kuwait 2010.
- Global Integrity: Kuwait Country Profile 2008.
Conventions and Indices
UNCAC Status: Signed 9 December 2003. Ratified 16 February 2007.
Status on UNCAC Implementation
This field describes the country's status on the United Nations Convention against Corruption. Please note any declarations and reservations made upon ratification. The list of signatories can be found on the UNODC website. Read more about the UNCAC.
Other Relevant Conventions or Treaties:
- UN Convention against Transnational Organized Crime: Ratified 15 September 2005.
Read Transparency International's summary and assessment of the convention.
Transparency CPI: 2011: 54/182 (Score: 4.6)
Transparency CPI
This field consists of the score for the country in question on the Corruption Perceptions Index from Transparency International as well as its ranking.
World Bank CORR Index (-2.5 - +2.5): 2010: + 0.35
World Bank Corruption Index
This field consists of the score for the country in question on the 'Control of Corruption' indicator in the World Bank Governance Research Indicator Country Snapshot (GRICS): 1996-2010.
OECD Country Risk Classification (0-7): 2011: 2
Country Risk Classification
The classification of countries by risk category has the aim of providing OECD countries with a basis for calculating the premium interest rate to be charged to cover the risk of non-repayment of export credits. Countries are placed in risk categories 0 - 7, with 0 being the lowest risk category and thus the least expensive. Conversely, premium group 7 is the highest risk category. Each classification is comprised of 2 components: 1) an assessment of the country's economic/financial situation, and 2) its overall political stability. Access the complete list of OECD Country Risk Classification figures.
Data Verification:
Publication date: April 2011
Data verified by: Global Advice Network
Information Network
| Relevant Organisations |
|
Kuwait Transparency Society (in Arabic) | 26 Al Awal Street | National chapter of Transparency International. |
Kuwait Economic Society (KES) | Northern Shuwaikh | NGO working with capacity-building for its members, promotion of small companies, lobbying for legislative reform, improving transparency and curbing corruption. |
Commercial Area No. 9 | KCCI is a non-government institution representing business establishments in Kuwait. The KCCI acts on the behalf of, represents and lobbies for the interests of businesspeople and industrialists in Kuwait. | |
| Partner Embassies |
|
Royal Danish Consulate General | Al Mubader Center | Consulate general. |
Jabriyah, Area 6 | Embassy. | |
Embassy of Norway (Kuwait is covered by the Embassy of Norway in the United Arab Emirates)
| Hamdan Street, Al Masaood Tower, 10th Floor | Embassy |
Embassy of Sweden (Kuwait is covered by the Embassy of Sweden in Riyadh, Saudi Arabia) | Collector Road B | Embassy. |
Arabian Gulf Street P.O. Box 2 | Embassy. | |
Embassy of Austria | Daiyah, Area No. 3 | Embassy. |
Country Profile Sources
General Information Sources
- Kuwait Times: 'Government accepts anti-corruption law', 28 March 2011.
- The World Bank & IFC: Doing Business 2011.
- The Heritage Foundation: Index of Economic Freedom - Kuwait 2011.
- US Department of State: Investment Climate Statement - Kuwait 2011.
- World Economic Forum: The Global Competitiveness Report 2010-2011.
- The Bertelsmann Foundation: Transformation Index - Kuwait 2010.
- Freedom House: Freedom of the World - Kuwait 2010.
- GOPAC: Kuwait's National Anti-Corruption Strategy 2009.
- Freedom House: Freedom of the World - Kuwait 2009.
- Transparency International: Global Corruption Barometer 2009.
- US Commercial Service: Doing Business in Kuwait: A Country Commercial Guide for US Companies 2009.
- Global Integrity: Kuwait Country Report 2008.
- The Bertelsmann Foundation: Transformation Index - Kuwait 2008.
- Kuwait Economic Society: Kuwaiti Public Opinion Survey Report 2007.
- Kuwait Economic Society: Kuwaiti Public Opinion Survey Report 2006.
- BBC News: Kuwait Country Profile.
Corruption Levels Sources
Judicial System
- The World Bank & IFC: Doing Business 2011.
- US Department of State: Investment Climate Statement - Kuwait 2011.
- The Heritage Foundation: Index of Economic Freedom - Kuwait 2011.
- World Economic Forum: The Global Competitiveness Report 2010-2011.
- The Bertelsmann Foundation: Transformation Index - Kuwait 2010.
- US Department of State: Human Rights Report - Kuwait 2009.
- Transparency International: Global Corruption Barometer 2009.
- US Commercial Service: Doing Business in Kuwait: A Country Commercial Guide for US Companies 2009.
- Global Integrity: Kuwait Country Report 2008.
- Kuwait Economic Society: Kuwaiti Public Opinion Survey Report 2007.
Police
- World Economic Forum: The Global Competitiveness Report 2010-2011.
- Transparency International: Global Corruption Barometer 2009.
- US Department of State: Human Rights Report - Kuwait 2009.
- The Bertelsmann Foundation: Transformation Index - Kuwait 2008.
- Global Integrity: Kuwait Country Report 2008.
Licences, Infrastructure and Public Utilities
- The World Bank & IFC: Doing Business 2011.
- World Economic Forum: The Global Competitiveness Report 2010-2011.
- Arabian Aerospace: 'Kuwait Airways privatisation continues despite losses and corruption accusations', 1 July 2010.
- Bloomberg Business Week: 'Kuwait Airways Sale Spurred by Wealth Fund Action (Update 2)', 4 March 2010.
- Transparency International: Global Corruption Report 2009.
- Transparency International: Global Corruption Barometer 2009.
- Global Integrity: Kuwait Country Report 2008.
- The Bertelsmann Foundation: Transformation Index - Kuwait 2008.
Land Administration
- The World Bank & IFC: Doing Business 2011.
- World Economic Forum: The Global Competitiveness Report 2010-2011.
- GOPAC: Kuwait's National Anti-Corruption Strategy 2009.
- Transparency International: Global Corruption Barometer 2009.
- Global Integrity: Kuwait Country Report 2008.
Tax Administration
- The World Bank & IFC: Doing Business 2011.
- US Department of State: Investment Climate Statement - Kuwait 2011.
- The Heritage Foundation: Index of Economic Freedom - Kuwait 2011.
- Transparency International: Global Corruption Barometer 2009.
- Global Integrity: Kuwait Country Report 2008.
Customs Administration
- The World Bank & IFC: Doing Business 2011.
- World Economic Forum: Global Enabling Trade Report 2010.
- Transparency International: Global Corruption Barometer 2009.
- Global Integrity: Kuwait Country Report 2008.
Public Procurement and Contracting
- US Department of State: Investment Climate Statement - Kuwait 2011.
- World Economic Forum: The Global Competitiveness Report 2010-2011.
- Transparency International: Global Corruption Barometer 2009.
- Downstream Today: Kuwait eyes Al Zour Refinery Retender on LSTK Basis - Source, 24 November 2009.
- The Washington Times: 'Kuwait to scrap $14 billion refinery project', 15 Mars 2009.
- Global Integrity: Kuwait Country Report 2008.
- Transparency International: Global Corruption Report 2006.
Environment, Natural Resources and Extractive Industry
- Global Integrity: Kuwait Country Report 2008.
- Arab News: 'Under-Fire Kuwait Oil Minister Steps Down', 1 July 2007.
- Upstream Online: 'MPs call on Sheikh Ali to quit', 15 May 2007.
Public Anti-Corruption Initiatives Sources
- Kuwait Times: 'Government accepts anti-corruption law', 28 March 2011.
- US Department of State: Investment Climate Statement - Kuwait 2011.
- Kuwait Times: 'Kuwait: Panel to finalize anti-corruption law', 11 October 2010.
- Kuwait Times: 'Anti-graft session fails to get quorum', 22 June 2010.
- Kuwait Times: 'Transparency Society urges PM to adopt anti-corruption bill', 25 January 2010.
- Freedom House: Freedom of the World - Kuwait 2009.
- Lexadin: The World Law Guide - Legislation Kuwait 2009.
- US Department of State: Investment Climate Statement - Kuwait 2009.
- Kuwait Times: 'Kuwait: Legal panel approves anti-corruption bill', 9 November 2009.
- Kuwait Times: 'Cabinet blamed for failing to fight corruption', 17 September 2009.
- Global Integrity: Kuwait Country Report 2008.
- The Bertelsmann Foundation: Transformation Index - Kuwait 2008.
- The United Nations ESCWA: National Profile of the Information Society in Kuwait, August 2007.
- United Nations Public Administration Network: E-government in Kuwait: From Vision to Reality 2006.
Private Anti-Corruption Initiatives Sources
- The Bertelsmann Foundation: Transformation Index - Kuwait 2010.
- Reporters Without Borders: Kuwait Country Report 2010.
- Reporters Without Borders: Worldwide Press Freedom Index 2010.
- Freedom House: Freedom of the Press - Kuwait 2010.
- Freedom House: Freedom of the World - Kuwait 2010.
- Freedom House: Freedom of the Press Index 2010.
- US Department of State: Human Rights Report - Kuwait 2009.
- Kuwait Times: 'Legal panel approves anti-corruption bill', 9 November 2009.
- Kuwait Times: 'KTS fights for anti-corruption laws', 7 October 2009.
- Freedom House: Freedom of the Press - Kuwait 2008.
- The Bertelsmann Foundation: Transformation Index - Kuwait 2008.
- Global Integrity: Kuwait Country Report 2008.
