Saudi Arabia has long been open to foreign investment, especially if it promotes economic development, transfers foreign expertise to Saudi Arabia, creates jobs for Saudis or boosts exports. Despite the Saudi economy being bolstered by a strong performance in the oil sector in 2010, it also witnessed increasing inflation. Improvement of the business climate continues to be an important part of the Saudi government's broader programme to liberalise the country's trade and investment regime, and diversify an economy overly dependent on oil and petrochemicals, according to the US Department of State 2011. The two aforementioned sectors are strongly influenced by the interests of members of the royal family and social elite. Saudi officials, however, have given assurances that the so-called Economic Cities, a USD 60 billion project of industrial and commercial zones currently under construction, will be free from interference from the royal family. Although Saudi institutions are generally perceived to be stable, and sudden changes in basic economic rules seldom occur, it may still not be an easy environment to operate in for foreign investors for reasons such as a conservative cultural environment, according to the US Department of State 2011.

Information on corruption and demands for bribes between foreign investors and Saudi companies or public officials is relatively scarce, and views on the pervasiveness of the problem are fairly mixed. For example, according to the US Department of State 2011, foreign companies identify corruption as an obstacle to investment in Saudi Arabia. Public procurement and general protection of companies are cited as areas in which senior officials or social elite often have a stake and where bribes are solicited - frequently disguised as commissions. This is supported by Freedom House 2009, which states that companies often have to pay bribes to middlemen and government officials to secure business deals. On the other hand, however, the World Economic Forum Global Competitiveness Report 2010-2011 reports that companies do not identify corruption as a very problematic factor for doing business in Saudi Arabia. Other factors, such as inefficient government bureaucracy and access to financing, are cited as more problematic business constraints. Nevertheless, according to the report, companies consider the occurrence of irregular payments and bribes in Saudi Arabia as fairly common. In sum, it seems as if most sources mainly base their perception of corruption on proven high-scale corruption scandals, such as the BAE scandal, thus falling short of providing any accurate picture of the pervasiveness of corruption and the use of facilitation payments in business dealings.

Research conducted by Arab News and published in October 2009 reveals a culture of pervasive petty corruption in dealings between government officials and companies in Saudi Arabia. For example, as estimated by an anonymous Saudi businessman, 95% of governmental procedures involve bribery in the form of expensive gifts, such as plane tickets or other reciprocal favours. In addition, such bribery is typically justified as compensation for government employees who work for low wages, or simply as a 'tip' for the service being rendered. The cost of such bribes reportedly increases proportionally with the value of the service provided. In addition, public officials typically get 10% of the value of the fines issued to companies due to small violations. Businesspeople complain that this practice works as an incentive system for public officials to issue undue or inflated fines. An example of this could be the case reported by Gulf News in an August 2008 article, according to which, a company specialised in medical equipment received a fine amounting to SAR 3 million for failing to honour a contract signed with the Ministry of Health. The company tried to offer a ministerial employee a bribe worth SAR 150,000 to avoid paying the fine, but the attempt was discovered, and the company had the fine doubled and was blacklisted from bidding on future contracts. Based on the above, companies are generally advised to consult with experienced attorneys, to develop, implement and strengthen integrity systems, and to carry out extensive due diligence before committing funds or when already doing business in Saudi Arabia. In addition, Freedom House 2010 reports that rent-seeking and corruption are not uncommon in government procurement processes. In order to mitigate the corruption risks associated with public procurement in Saudi Arabia, investors are advised to exert caution when bidding on public tenders, and are therefore recommended to use a specialised public procurement due diligence tool.

The Foreign Direct Investment Law 2000 governs the Saudi Arabian investment regime and permits foreigners to invest in all sectors of the economy, except for specific activities in some strategic sectors. Yet, the list of sectors in which foreign investment is prohibited continues to shrink due to efforts to liberalise trade. The Saudi private sector has matured considerably in recent decades and has more sophisticated managerial structures than most other Middle Eastern and North African (MENA) countries. In addition, Saudi Arabia has embarked on a process of market reforms and was ranked as the world's Top Reformer by the World Bank and IFC in 2006, which also ranked it as the 11th easiest place to do business in the world in 2011. However, according to Freedom House 2010, these impressive figures are also a result of the Saudi Arabian General Investment Authority's efforts to change specific rules and procedures that are measured by the World Bank and IFC's indicators. The procedures of starting up a business have been simplified by the creation of a one-stop office at the Ministry of Commerce and Industry, and, according to the World Bank & IFC Doing Business 2011, it now only takes an average of 5 days and 4 procedural steps at a cost of 7% of GNI per capita to start a company and only 2 days and 2 procedural steps at no cost to register property. In general, Saudi Arabia now performs just as well or better than most OECD countries in relation to access to credit, paying taxes and importing and exporting goods. Business executives surveyed in the World Economic Forum Global Competitiveness Report 2010-2011 give complying with administrative requirements (permits, regulations, reporting) a score of 4 on a 7-point scale (1 'extremely burdensome' and 7 'not burdensome at all'). Moreover, business executives give the transparency of government policy-making, based on how easy it is for companies to obtain information about changes in government policies and regulations, a score of 4.8 on a 7-point scale (1 'impossible' and 7 'extremely easy'). However, companies identify inefficient government bureaucracy as one of the four most problematic factors for doing business in Saudi Arabia.

Although the regulatory framework for private business has improved in recent years, the Bertelsmann Foundation 2008 reports that it is applied inconsistently in practice and principles of good governance have not yet been applied to the bureaucracy. On the contrary, it has remained opaque, over-centralised and unaccountable, and no informal regulatory services are managed by NGOs or private sector associations. Freedom House 2010 also states that, while certain regulations and procedures have been simplified, the Saudi bureaucracy continues to be slow-moving, lacking transparency, and makes extensive documentation demands. While this environment has not automatically led to corruption, it has, nevertheless, facilitated its occurrence. This is supported by the US Department of State 2011, according to which, there are few aspects of the Saudi regulatory system that are transparent. Still, however, although bureaucratic procedures may be cumbersome, red tape can reportedly be overcome with persistence. All foreign investment projects in Saudi Arabia must initially obtain a licence from the Saudi Arabian General Investment Authority (SAGIA), which was established by the Council of Ministers in April 2000. Investors will find a large compilation of relevant information on the SAGIA website concerning, among other things, investment opportunities, the cost of doing business and laws and regulations.

According to the US Department of State 2011, other disincentives to investment include a lack of transparency in intellectual property rights enforcement, requirements that companies employ Saudi nationals, slow payment of government contracts, a restrictive work visa policy, a highly conservative cultural environment, and enforced segregation of the sexes in most business and social settings. Furthermore, although the Saudi government is making progress towards establishing a commercial court system, there is not yet a transparent, comprehensive legal framework in place for resolving commercial disputes. It is also reported that Saudi litigants typically have an advantage over foreign parties in investment disputes due to their first-hand knowledge of Saudi law and culture. For that reason, foreign investors involved in a dispute are advised to contact local attorneys with knowledge of Saudi legal procedures. Saudi Arabia has ratified the New York Convention of 1958 and is a member of the International Centre for the Settlement of Investment Disputes (ICSID). Access the Lexadin World Law Guide for a collection of legislation in Saudi Arabia.

Individual Corruption

According to the US Department of State 2010, the denial of public trials and the lack of due process in the judicial system continue to occur, especially for individuals who criticise the political system.

Business Corruption

The Bertelsmann Foundation 2008 reports that judicial professionalism is often limited, especially when it comes to technical areas of commercial law. Judicial corruption occurs, but is less rampant than in many other MENA countries. Companies surveyed by the World Economic Forum Global Competitiveness Report 2010-2011 reveal that they generally perceive the Saudi judiciary to be independent, but that the efficiency of the legal framework in dispute settlement is relatively inefficient. According to the US Department of State 2011 and the US Department of State 2010, dispute settlement in Saudi Arabia is time-consuming and results in uncertain judgments, as court rulings often take years to enforce. In several cases, disputes have reportedly caused various problems for foreign investors. At times, investors have had their access to exit visas blocked, thus forcing them to remain in Saudi Arabia against their will. In cases of alleged fraud, foreign investors may also be jailed to prevent their departure from the country while awaiting police investigation or trial. Due to the fact that Saudi individuals have an advantage over foreign investors in investment disputes because of superior knowledge of Saudi law and culture, foreigners are highly advised to hire local attorneys with knowledge of Saudi legal practices.

Political Corruption

The king is the highest judicial, executive and legislative authority, and according to the Bertelsmann Foundation 2008, senior Saudi princes can avoid the judiciary more or less at will. A clergy appointed by the king has been given some limited autonomy to run the judicial system on a day-to-day basis, but Bertelsmann Foundation 2010 reports that overall the judiciary is seen as subject to the influence from the royal family. According to Freedom House 2010, the judicial system leaves judges with extended discretionary powers as no juries exist, and individual judges usually decide on both verdicts and punishments according to their interpretation of religious law. In 2007, King Abdullah announced the establishment of a new Supreme Court and an Appeals Court, thus replacing the old judiciary council which was widely seen as reactionary and inconsistent. The establishment of new courts was among the first steps of Abdullah's comprehensive judicial reform project that started with the implementation of the Law of the Judiciary in 2007. In February 2009, the King appointed new heads of the Supreme Court and the Appeals Court. Although the king still appoints members to the judiciary, sources such as the Carnegie Endowment 2009 see the new measures as practical steps toward increased judicial independence, as they introduce some institutional checks between judicial entities. Nevertheless, the US Department of State 2010 reports that the Saudi judiciary is not independent and political interference is not uncommon.

In April 2010, the Board of Grievances began trials for 14 staff members of the Ministry of Justice in Jeddah on charges related to the abuse of power. They were allegedly involved in counterfeiting official documents concerning property belonging to the King Abdullah University for Science and Technology, according to the US Department of State 2010.

Frequency

The World Bank & IFC: Doing Business 2011:
- Enforcing a commercial contract in Saudi Arabia requires a company to go through an average of 43 administrative procedures, which takes an average of 635 days at an average cost of 27.5% of the claim.

World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give the independence of the Saudi judiciary from influences of members of government, citizens, or companies a score of 5.2 on a 7-point scale (1 'heavily influenced' and 7 'entirely independent').

- Business executives give the efficiency of the legal framework for private companies to settle disputes and to challenge the legality of government actions and/or regulations a score of 4.4 on a 7-point scale (1 'extremely inefficient' and 7 'highly efficient').

Individual Corruption

According to the US Department of State 2010, police forces are generally effective at maintaining law and order in Saudi Arabia. Still, however, a perception of small-scale corruption among police forces has reportedly emerged as well as a perception that the police act with impunity. This is supported by Freedom House 2010, according to which, corruption within the Saudi security sector is widespread.

Business Corruption

According to the World Economic Forum Global Competitiveness Report 2010-2011, companies are generally confident in the reliability of Saudi police forces to protect them from crime and to uphold law and order. Although small-scale corruption is perceived to be emerging within the police forces, there are no reports available on the tendency among Saudi police officers to specifically target the private sector and solicit bribes from companies.

Frequency

World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give the reliability of Saudi Arabian police services to enforce law and order a strong score of 5.5 on a 7-point scale (1 'cannot be relied upon at all' and 7 'can always be relied upon').

Business Corruption

Companies should be aware that bureaucratic procedures in Saudi Arabia remain cumbersome, even though the US Department of State 2011 notes that red tape can generally be overcome with persistence.

According to an October 2009 article by Arab News, petty corruption is rampant in Saudi public agencies that grant licences to private companies, and businesspeople claim that even the most simple tasks cannot be achieved without paying bribes or gifts to public officials. Government procedures normally take some time to be completed, but can reportedly be completed faster if bribes are paid and vice versa. For example, related to the approval of imported cosmetic products, an anonymous Arab businessman claims to pay up to RSA 10,000 for each product to get the procedures and permits done quickly. In total, bribes could reach up to RSA 100,000, depending on personal connections.

Political Corruption

Although there are no accurate estimates of the level of corruption in Saudi municipalities or any other governmental sector, a municipal employee interviewed by Arab News in 2009 asserts that it is high. Arab News reports that a court sentenced 16 municipal employees to fines of between RSA 3,000 and RSA 100,000 and prison sentences for having accepted bribes in July 2009. One of the men was found guilty of taking an RSA 180,000 bribe to issue a licence for a building whose owner had not fulfilled stipulated conditions. Another local public official had accepted RSA 50,000 to issue a commercial licence to a businessman.

In a corruption and bribery scandal involving USD 373,000 in the municipality of Taif, a Jeddah court had postponed the issuance of a verdict three times as of August 2009. In 2008, the court had convicted 16 officials of the municipality of Taif. Sentences included prison, dismissal, and fines. Seven others accused were absolved of all charges, while two businessmen were fined USD 40,000 each, according to the US Department of State 2010.

Arab News also reports that corruption is particularly rampant in the Ministry of Health, and National Council members demanded the resignation of Health Minister Dr. Hamad Al-Manie for inefficiency and corruption in his ministry in July 2008. That same year, eight health officials in Madinah were accused of taking bribes from 13 Saudi and foreign businesspeople. The bribes were taken for granting licences to open, move or transfer ownership of a number of pharmacies.

In September 2010, a Medina Control and Investigation Board report revealed financial and administrative corruption and abuse of power by senior officials at the Medina branch office of the Ministry of Hajj, dealing with Saudi religious affairs. Violations identified included appointment of unqualified employees to high-ranking positions, nepotism, and abuse of government property, according to the US Department of State 2010.

Frequency

The World Bank & IFC: Doing Business 2011:
- Building a warehouse in Saudi Arabia requires a company to go through 12 administrative steps, which take an average of 89 days at a cost of 43.8% of per capita income and is more efficient than the average for OECD countries.

World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give government administrative requirements (permits, regulations, reporting) in Saudi Arabia a score of 4 on a 7-point scale (1 'extremely burdensome' and 7 'not burdensome at all'), constituting a competitive business advantage for the country.

Individual Corruption

According to Freedom House 2010, one of the areas in which property rights are often insecure is land deeds, especially in peripheral regions that are marked for development and in older urban areas where titles can overlap and are not well-documented. According to the report, much abuse is reported in this field; appropriation of state and private lands is one of the main channels of rent-seeking and patronage in Saudi Arabia. The land registration system, though currently in the process of reform, remains opaque and underdeveloped, and public access to it is limited.

Business Corruption

According to Bertelsmann Foundation 2010, even though property rights are largely guaranteed in Saudi Arabia, when put within the larger context of corruption (cases involving members of the royal family), property deeds can be obtained outside the application of the law. Similarly, foreigners de facto own hundreds of thousands of SMEs, while the official Saudi owner collects a monthly fee from them. 

According to the US Department of State 2011, there have been no property expropriation actions in the recent past or policy shifts that would indicate such actions in the near future.

Political Corruption

According to Freedom House 2010, property rights can be compromised when members of the royal family force their way in on business deals or companies of commoners by intimidating them and making them cede ownership stakes or forcing foreign companies to operate through them instead of their commoner partners. Also Bertelsmann Foundation 2010 notes that it is assumed by the public that the royal family manipulates property rights, among other things.

According to a November 2008 article by Arab News, illegal land grabs are a frequent problem around Jeddah. Reportedly, well-connected individuals, such as public notaries, issue illegal property deeds to smaller investors who are often not aware of proper procedure to purchase real estate. Several notaries have been prosecuted in 2008 for their involvement in illegal sale of government land. Moreover, a municipality inspector has revealed that bribes are often accepted by municipality employees for turning a blind eye to the irregularities. However, in many cases the municipality will demolish constructions build on the illegally acquired land, and violent clashes have occurred between municipality workers and citizens inhabiting the illegal buildings.

Frequency

The World Bank & IFC: Doing Business 2011:
- Registering property in Saudi Arabia requires a company to go through 2 administrative steps, taking an average of 2 days at no cost of the property value, making Saudi Arabia the best performing country based on the ease with which companies can secure rights to property.

World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give the protection of property rights in Saudi Arabia, including financial assets, a score of 5.4 on a 7-point scale (1 'very weak' and 7 'very strong').

Business Corruption

According to Freedom House 2010, the tax assessment process in Saudi Arabia continues to be slow and cumbersome, and the calculation of religious tax (zakat) on local companies in particular often lacks transparency.

According to MENA-OECD Investment Programme 2006, in Saudi Arabia the Companies Law and the Department of Zakat Income Tax require an annual audit for most types of companies. All companies registered in accordance with the Companies Law are required to file their audited financial statements with the Ministry of Commerce within six months of their financial year end. Publicly listed companies are required to file audited quarterly financial statements. In general, state-induced audits can be an invitation to corrupt tax officials to solicit bribes from companies. However, no reports of corruption in relation to audits in Saudi Arabia are available.

Frequency

The World Bank & IFC: Doing Business 2011:
- A medium-sized company operating in Saudi Arabia must on average make 14 payments to the tax authorities every year and spend 79 hours preparing, filing, and paying taxes at a total tax rate of 14.5% of profits.

- Based on the administrative burden of paying taxes, Saudi Arabia performs better than most OECD countries.

Business Corruption

Customs administration is considered to be prone to corruption by companies as well as individual citizens. According to the World Economic Forum Global Enabling Trade Report 2010, bureaucracy related to trade across borders opens the way for public officials to demand bribes in Saudi Arabia. For example, trade may be impeded by customs procedures that may lack efficiency, and exporting and importing may require time-consuming paperwork to clear goods at the border. Corruption and bribery in these processes are not uncommon.

Despite legal provisions set out in the Basic Law which guarantee the privacy of homes and mail correspondence, the US Department of State 2010 reports that customs officials often open mail and shipments to search for contraband, including material deemed pornographic or which appears to be non-Sunni Islamic religious material.

A prominent Saudi businessman interviewed by Arab News in 2009 reported that petty corruption was rampant in customs services, and revealed that most of his customs-related work involved paying bribes. He further stated that the amount of the bribe increased in relation to the financial interest in the procedure, i.e. the larger the cargo, the larger the bribe paid.

Political Corruption

According to the US Department of State 2008, the government arrested and punished police and border guards involved in smuggling and corruption in 2008.

Asharq Al-Awsat reports in a July 2009 article that the Saudi Border Guard confiscated large quantities of drugs, alcohol, weapons and ammunition and arrested 1084 smugglers during the second quarter of 2008. The Saudi government has signed a contract with the European Aeronautic Defence and Space Company to build an 8.500 km fence along the Saudi Arabian borders to prevent illegal immigrants and smugglers from entering the country.

Frequency

The World Bank & IFC: Doing Business 2011:
- A standard export shipment of goods requires 5 documents and takes 13 days at a cost of USD 580 per container.

- A standard import shipment of goods requires 5 documents and takes 17 days at a cost of USD 686 per container.

- This makes the costs and procedures involved in importing and exporting in Saudi Arabia slightly more time-consuming than the average for OECD countries, but almost twice as cheap.

World Economic Forum: The Global Enabling Trade Report 2010:
- Business executives give the efficiency of customs procedures (formalities regulating the entry and exit of merchandise) in Saudi Arabia score of 4.8 on a 7-point scale (1 'extremely inefficient' and 7 'extremely efficient').

- Business executives give the transparency of border administration (the pervasiveness of undocumented extra payments or bribes connected with imports and exports) a score of 4.3 on a 7-point scale (1 'common' and 7 'never occurs').

Business Corruption

According to Bertelsmann Foundation 2010, foreign companies have identified government procurement as an area in which senior officials or elite individuals have a personal stake and bribes are often requested by officials. It is also reported that such bribery is often disguised as 'commissions'. However, new procurement legislation in 2006, combined with the introduction of electronic tendering at a number of ministries, has reportedly improved transparency within government procurement, according to the US Department of State 2011. Despite this progress, Freedom House 2010 reports that rent-seeking and corruption are not uncommon in government procurement processes. In order to mitigate the corruption risks associated with public procurement in Saudi Arabia, investors are advised to exert caution when bidding on public tenders, and are therefore recommended to use a specialised public procurement due diligence tool.

Read more on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Political Corruption

According to several sources, including the Bertelsmann Foundation 2010 and the US Department of State 2008, Saudi royal family members and members of the Saudi political elite with personal ties and stakes in the Saudi economy are perceived to abuse contracts and profit illegally from contract awards. The strong public perception of corruption in Saudi public procurement may stem partly from the widely publicised corruption scandal involving Britain's biggest and most influential arms company, BAE Systems, and Saudi officials. The BAE case is very complex and has a long history behind it. In short, the case dates back to the Al-Yamamah arms deal with the Saudi government in the mid-1980s. In November 2004, a British investigation by the Serious Fraud Office (SFO) was initiated and focused on suspected false accounting in the Al-Yamamah defence contract, which provided for the sale of military aircraft and related services worth around GBP 40 billion. The media reported the existence of a secret fund established by BAE to channel benefits to Saudi agents in the contract. Media alleged that unofficial payments exceeding GBP 1 billion had been paid to a senior Saudi official in relation to the contract, and that the UK Ministry of Defence was involved in covering up the payments. BAE has repeatedly denied any wrongdoing. In December 2006, the investigation of BAE's Saudi deals was stopped after alleged threats from the Saudi ruling family and the intervention of then British Prime Minister Tony Blair. Tony Blair claimed 'national security' was at stake. For more information on the BAE scandal, see the British newspaper, the Guardian's comprehensive collection of BAE-Saudi-related articles, or watch this one-hour Frontline documentary on the BAE case.

According to the US Department of State 2011, the awarding of major government contracts has become more transparent in recent years. Defence contractors report that, since the exposure of the BAE scandal (although not the official reason), there has been a change in the bidding process, and there is now an open bidding process for defence contracts. Nevertheless, in 2008, Arab News requested an investigation into corruption involving contracts for the construction of roads, revealing a project for which the government paid about USD 186 million and ultimately performed for only USD 4.9 million. However, according to the US Department of State 2010, there was no investigation of the case.

Read more on public procurement under '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 5.1 on a 7-point scale (1 'very common' and 7 'never occurs').

- Business executives give Saudi government officials' favouritism towards well-connected companies and individuals when deciding upon policies and contracts a score of 4.6 on a 7-point scale (1 'always show favouritism' and 7 'never show favouritism').

Business Corruption

Several major UK newspapers, including the Financial Times, The Times, the Guardian, and The Daily Telegraph, assert that the al-Yamamah-BAE deal (discussed under 'Public Procurement and Contracting' in the Corruption Levels section) was essentially based on an 'oil-for-arms' deal in which Royal Dutch Shell and BP played what has been described as a money laundering role. Reportedly, the core of the deal set up by the UK government, the Saudi royal family, BAE, Royal Dutch Shell and BP was a barter agreement that secured USD tens of billions in oil contracts for nearly two decades. After selling the oil and with the consent of the Saudi and UK governments, Royal Dutch Shell and BP deposited the proceeds in an escrow account at the Bank of England from which BAE was paid in stages in accordance with meeting project milestones. It used some proceeds to pay commissions to middlemen who had helped facilitate the transaction.

Further information and extensive documentation is available at Shell News and Royal Dutch Shell online.

Political Corruption

According to Freedom House 2010, high-level or political corruption within the Saudi natural resources sector is not uncommon, and Saudi Arabian oil income seems to have led to increased opportunities for rent-seeking on the part of public officials.

In March 2011, the Saudi oil ministry was accused of corruption, as reported in a March 2011 article by Emirates 247. Namely, it was proved by the Saudi authorities that the oil ministry and the Maaden, a semi-governmental establishment involved in searching for gold and other metals, had collaborated in 'advancing private financial interest' at the expense of public health interests.

In May 2010, King Abdullah ordered the prosecution of over 40 officials on corruption charges for their mismanagement of widespread flooding in Jeddah in November 2009, which resulted in the deaths of 122 people, according to Freedom House 2011.

• Legislation: The concepts of transparency, anti-bribery and good governance are not at all new to Saudi Arabian legislation. They are in fact deeply-rooted in the constitutional foundation derived from the Qur'an and the Sunnah, which constitute Sharia Law. Especially bribery is taken extremely seriously in Islam, and is referred to as a sin in the Qur'an. Saudi Arabia's Law for Combating Bribery was issued in 1992 by Royal Decree No. M/36. The law covers public-to-public and public-to-private bribery, but not private-to-private bribery. It criminalises various aspects of corruption, including abuse of authority and office for personal interest, as well as active and passive bribery. Violation of the law can result in prison sentences up to 10 years and fines of a maximum of RSA 1 million. Read a summary of the Law for Combating Bribery here. In May 2002, the Saudi Arabian Monetary Agency issued new guidelines for detecting money laundering activities and a Law on Combating Money Laundering was enacted in August 2003. In an attempt to reduce corruption within government agencies, the Basic Law of Governance 1992 (Art. 79 & 80) stipulates that all state assets and agencies are subject to audits in order to ensure the proper performance and to allow the investigation in administrative and financial mismanagement. However, according to an assessment by Freedom House 2010, enforcement of anti-corruption laws is limited in Saudi Arabia and occurs mostly behind closed doors. Similarly, punishment of individuals involved in corruption is selective and usually includes lower-level figures indicted for relatively minor offences. Public officials are not subject to financial disclosure laws and no laws provide public access to government information, including ministerial budgets. The country has signed but still not ratified the United Nations Convention against Corruption (UNCAC).

• Government Strategies: In 2007, the Council of Ministers approved a National Strategy to Protect Integrity and Combat Corruption with the aim of enhancing and organising the Saudi fight against corruption through various initiatives. For example, the strategy seeks to establish a national unit for fighting corruption and to facilitate a review of the regulations relating to fighting corruption by concerned departments. It also seeks to develop internal control systems in finance and administration, including increased support to investigation, judicial and control departments by providing them with funds, manpower, training and technology. Moreover, it also offers state cooperation with academic institutes to carry out studies and research, as well as strengthening religious teaching concentrating on integrity and corruption fighting, through media, debates and educational institutions. It also explicitly states that it invites civil society organisations to play a role in fighting corruption, but so far there have been no signs of civil society's involvement in anti-corruption issues.

• Anti-Corruption Agency: The National Strategy to Protect Integrity and Combat Corruption calls for the establishment of a National Commission for Combating Corruption (NCCC), which will fall under the king's direct supervision. Its main operations will include monitoring the strategy's implementation and documenting its results, as well as coordinating the private and government sectors in planning and monitoring anti-corruption programmes and reforms. As reported by Asharq al-Awsat and the Saudi Gazette, the Consultative Council (Majlis al-Shura) has on several occasions stressed the importance of establishing the Commission. There was no progress in regards to the setting up of the Commission as of June 2011. A set of state agencies (see below) already participate in the fight against corruption in Saudi Arabia. According to Freedom House 2010, Saudi Arabia's anti-corruption bodies are in practice not held accountable to the public. Moreover, the report stresses that little is heard about their operation, and some observers describe them as fairly inactive.

• Prosecution and Investigation Commission (PIC): The PIC investigates cases of corruption against public service officials and reports to the Council of Ministers. It monitors the performance of all government employees and investigating those accused of bribery, forgery and abuse of public funds in order to ensure good administrative performance. The US Department of State 2010 reports that the PIC considered over 12,400 cases involving public service officials and agencies during the first half of 2008. The PIC identified instances of forgery, bribery, and public mistreatment, among others. During this period, the Court of Grievances delivered over 2,690 verdicts and more than 1,320 disciplinary cases against public officials and agencies.

• Auditor General: The General Auditing Bureau (GAB) was established in 1954 within the jurisdiction of the Council of Ministers. In 1971, a Royal Decree led to the GAB being established in its present form. The GAB is tasked with public auditing in Saudi Arabia and is one of the lead agencies in the fight against corruption. The GAB is responsible for the execution of post-auditing of state revenues, expenditures, current and fixed assets and to oversee the proper use and maintenance of these resources. Moreover, it carries out both performance and financial audits. To act on the findings of the GAB, an Auditing and Investigation Commission (AIC) has been established. The AIC's jurisdiction covers the audit and investigation of all matters concerning public officials' abuse of office. The objective is to ensure an effective and efficient level of administrative performance, both within public agencies and public corporations. The AIC's jurisdiction also covers crimes of forgery, bribery and embezzlement of government funds. The GAB reports its findings and results directly to the king. In addition, the head of the GAB can only be discharged by the king. The GAB produces annual reports, but these are not published and, according to Freedom House 2010, are available only to a selected few government functionaries. According to the report, the GAB, whose senior officials are appointed by the king, has little control over royal agencies. Similarly, according to the Bertelsmann Foundation 2008, the GAB has no effective leverage over some Saudi large institutions like the Ministries of Interior and Defence, which remain unaccountable in practice. Moreover, the National Society for Human Rights, a Saudi Arabian NGO, reported in March 2009 that the GAB was incapable of carrying out its surveillance role over government agencies and recommended that it should be given more authority to question and investigate top government officials.

• Ombudsman: Saudi Arabia does not have an Ombudsman institution. However, in 2004, a Human Rights Commission (HRC) was established by the government. The HRC receives complaints from agencies and citizens concerning human rights violations. The HRC also has a special body to follow up on alleged violations of women's rights. Nevertheless, according to Freedom House 2010, informal channels of complaint, often through princes, are usually preferred to formal ones in Saudi Arabia.

• E-Governance: E-governance is generally well-developed in Saudi Arabia, with most ministries and government departments offering information online in English about their work (view a collection of government websites here). Through large investments in the country's e-Government Program - Yasser, Saudi Arabia has made good progress in reducing barriers to trade by clarifying investment rules and regulation online and offering online services. For example, the Saudi Government Electronic Portal offers a wide range of electronic services (e.g. visa applications and e-payment procedures) to citizens, companies and public officials. Of major importance for anyone wishing to invest in Saudi Arabia is the Saudi Arabian General Investment Authority (SAGIA), which functions as a one-stop shop for investors and provides crucial and comprehensive information on almost everything related to foreign investment in the country. The US Department of State 2008 predicts that investment conditions will improve in Saudi Arabia as SAGIA becomes more engaged in identifying and reducing barriers to foreign investment. In early October 2009, the Jeddah Chamber of Commerce and Industry (JCCI) opened the Jeddah Economic Gateway, a new website established to provide updated economic, commercial and investment data to the local and international business sectors.

• Public Procurement: Many of the corruption scandals exposed in Saudi Arabia in recent decades have been related to irregularities in large-scale government contracts. However, the US Department of State 2011 reports that the Government Tendering and Procurement Regulations of 2006 has improved transparency within the government procurement regime through publication of tenders. Tenders can now be found on several ministerial websites, although most of them are only published in Arabic. Similarly, according to Freedom House 2010, revised bidding rules and the introduction of electronic tendering at a number of ministries is intended to increase the transparency of procurement in Saudi Arabia in specific instances. Nevertheless, Freedom House 2010 reports further that tendering practices can differ significantly from one agency to the next. The Saudi procurement regulations contain provisions that foresee the disqualification of bidders found guilty of bribery connected with public procurement or of non-compliance with regulations prohibiting intermediation. Under those provisions, companies that have committed acts of bribery in order to win a public contract or which have failed to comply with the disclosure and other legal requirements relating to intermediation, risk having the contract withdrawn or of being temporarily or indefinitely barred from participating in future public procurement contracts. 

• Whistle-Blowing: The Board of Grievances, an entity under the Ministry of Justice, is the only formalised mechanism available to act on claims of public abuse of power. The Law for Combating Bribery incentivises people to act as whistleblowers and report acts of bribery by rewarding them monetarily, provided they are not themselves participants in the crime. Reports on administrative corruption can be given to the Ministry of Interior by phone, fax or e-mail. Citizens can report abuses by security forces at any police station and to the governmental Human Rights Commission. According to the US Department of State 2008, however, no information is available on the number of complaints filed or on the results of any complaints in 2008.

• General Comments on the Public Anti-Corruption Initiatives: While generally having a sufficient legislative framework to address corruption in the public sector, anti-corruption initiatives in Saudi Arabia are still relatively new. With the acknowledgement of corruption as a significant problem in the country and the approval of the National Strategy to Protect Honesty and Combat Corruption in 2007, King Abdullah laid the foundation for the first systematised fight against corruption in Saudi history. However, while anti-graft agencies have been established with mandates to fight corruption in the public sector, there are no visible signs of any significant changes in the political setup, which is frequently criticised for allowing members of the royal family and high-ranking officials to abuse public funds with impunity. Thus, observers are still sceptical of whether there exists a genuine political will to fight corruption that should allow for a truly independent judiciary and for the General Auditing Bureau to carry out its work without political interference. In order to talk about any success of the Saudi anti-corruption strategies, there needs to be a significant improvement in the transparency and accountability of the use of public funds. For example, recommendations made by the Center for Democracy and human Rights in Saudi Arabia include that government revenue should go directly to an independent national treasury managed by elected officials, scrutinised by independent accounting companies, and backed by a system of checks and balances and open public records. In addition, observers cite the need for a truly free press and the involvement of a non-restricted civil society to enhance the fight against corruption in Saudi Arabia.

• Media: According to the Basic Law, the role of media is to educate the masses and promote national unity, but it does not provide for freedom of speech or the press. In addition, Freedom House 2010 evaluates Saudi Arabia's media environment to be among the most repressive in the region. Several major media outlets are owned by members of the royal family and individuals are not permitted to criticise the royal family publicly. Private media outlets can legally be banned or publication temporarily halted if the content is deemed offensive to the country's religious establishment or the ruling authorities. Distribution of foreign print media is reportedly often subject to delays and censorship. According to the US Department of State 2010, criticism of specific government bodies or actions typically involves negative repercussions for those doing the criticising. According to Freedom House 2011, the government has also taken steps to limit the influence of new media, blocking access to over 400,000 websites that are considered immoral or politically sensitive. In general, all Internet traffic is administered by a single provider (a ministry), which controls access to the Web and censors websites with information deemed 'contrary to Islamic values'. In September 2008, the head of the Supreme Judiciary Council issued an edict allowing the killing of the owners of satellite television channels if they air immoral content. Moreover, a prominent blogger who criticised corruption in the country and persistently called for political reform was imprisoned without charges from December 2007 to April 2008 for comments made on his blog. Freedom House 2011 describes Saudi Arabia's media environment as 'not free' and ranks it 178th out of 196 countries, while Reporters Without Borders 2011 ranks the country 157th out of 178 countries.

• Civil Society: According to Freedom House 2010, civil society traditions in Saudi Arabia are weak, as society remains organised on a kinship basis and most civil society groups that have emerged within recent years are state generated and supported. Freedom House 2011 reports that the royal family has a tradition of consulting with select members of Saudi society; however, this process is not equally open to all citizens, and criticism of the political system and the royal family is fully restricted. The royal family forbids the formation of political parties, and an organised political opposition exists only outside of the country, with many activists based in London. For that very same reason, no civil society organisations are formally active in the fight against corruption.

• Center for Democracy and Human Rights in Saudi Arabia (CDHR): The CDHR is an American-based non-profit educational organisation that is focused exclusively on the Saudi government's domestic and foreign policies and their implications and ramifications for the Saudi people and the international community. CDHR gathers information from a wide range of sources about current events in Saudi Arabia and analyses and interprets their impact on Saudi society, the Greater Middle East and the international community. Among many issues, CDHR promotes political reform and transparency and accountability in the use of Saudi public funds.

• National Society for Human Rights (NSHR): The NSHR is a financially and administratively independent non-governmental organisation that works to protect and defend human rights in a way that do not contradict Islamic Law. The NSHR receives complaints about human rights violations, organises conferences and workshops and issues reports on the status of human rights in Saudi Arabia that are available on the organisation's website.

The websites listed below provide useful facts about Saudi Arabia as well as contacts and tools for companies operating in Saudi Arabia:

• International Finance Corporation: Saudi Arabia SME Toolkit (in Arabic)
  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: Saudi Arabia Country Profile

Sources for further reading:

• Freedom House: Freedom in the World - Saudi Arabia 2011.
• US Department of State: Investment Climate Statement - Saudi Arabia 2011.
• US Department of State: Human Rights Report - Saudi Arabia 2010.
• Freedom House: Countries at the Crossroads - Saudi Arabia 2010.
• Bertelsmann Foundation: Saudi Arabia Country Report 2010.

UNCAC Status: Signed 9 January 2004. Not Ratified.

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:

• United Nations Convention against Transnational Organized Crime: Signed 12 December 2000. Ratified September 18 January 2005.
  Read Transparency International's summary and assessment of the convention.
• (The Kingdom of Saudi Arabia does not consider itself obligated by paragraph 2 of article 35 of the Convention, which provide that any dispute between two or more States concerning the interpretation or application of this Convention that has not been settled by negotiation shall be submitted to arbitration or to the International Court of Justice at the request of any of the parties thereto.)

Transparency CPI: 2011: 57/182 (Score: 4.4)

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: +0.15

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: August 2011

Data verified by: Global Advice Network

General Information Sources

• The World Bank & IFC: Doing Business 2011.
• Freedom House: Freedom in the World - Saudi Arabia 2011.
• US Department of State: Investment Climate Statement - Saudi Arabia 2011.
• World Economic Forum: The Global Competitiveness Report 2010-2011.
• US Department of State: Human Rights Report - Saudi Arabia 2010.
• Freedom House: Countries at the Crossroads - Saudi Arabia 2010.
• The Bertelsmann Foundation: Transformation Index - Saudi Arabia 2010.
• Arab News: 'Bribery tops Kingdom's crime list', 1 April 2010.
• Freedom House: Freedom in the World - Saudi Arabia 2009.
• US Department of State: Human Rights Report - Saudi Arabia 2009.
• Saudi Gazette: 'Shoura wants anti-corruption committee', 17 December 2009.
• Arab News: 'Want to eliminate bribery? Kill 'Understanding'!', 1 October 2009.
• Martin Hvidt, Center for Mellemøststudier: Økonomisk Udvikling i Saudi Arabien, January 2009.
• The Bertelsmann Foundation: Transformation Index - Saudi Arabia 2008.
• US Department of State: Investment Climate Statement - Saudi Arabia 2008.
• US Department of State: Human Rights Report - Saudi Arabia 2008.
• Carnegie Endowment for International Peace - Arab Political Systems:Baseline Information and Reforms - Saudi Arabia 2008.
• Gulf News: 'The Minister of Health Dr. Hamad al Mane' on Wednesday revealed that a local company tried to bribe a ministerial employee', 13 August 2008.
• U4 Anti-Corruption Research Centre: U4 Expert Answer - Islamic Approaches to Corruption, June 2007.
• Gulf Times: 'Saudi Arabia to Crack down on Corruption', 21 March 2007.
• Carnegie Endowment for International Peace, Sufyan Alissa: Arab States: Corruption and Reform, February 2007.
• MENA-OECD Investment Programme: Investment Climate and Regulation of International Investment in MENA Countries 2006.
• The Guardian: The BAE Files (regularly updated).
• The Center for Democracy and Human Rights in Saudi Arabia: 'Saudi Anti-Corruption Plan Misses Mark'.

Corruption Levels Sources

Judicial System

• The World Bank & IFC: Doing Business 2011.
• Freedom House: Freedom in the World - Saudi Arabia 2011.
• US Department of State: Investment Climate Statement - Saudi Arabia 2011.
• World Economic Forum: The Global Competitiveness Report 2010-2011.
• US Department of State: Human Rights Report - Saudi Arabia 2010.
• The Bertelsmann Foundation: Transformation Index - Saudi Arabia 2010.
• Freedom House: Countries at the Crossroads - Saudi Arabia 2010.
• US Department of State: Human Rights Report - Saudi Arabia 2009.
• Freedom House: Freedom in the World - Saudi Arabia 2009.
• Carnegie Endowment for International Peace - Arab Reform Bulletin: 'Judicial Reform and the Principle of Independence', May 2009.
• US Department of State: Investment Climate Statement - Saudi Arabia 2008.
• US Department of State: Human Rights Report - Saudi Arabia 2008.
• The Bertelsmann Foundation: Transformation Index - Saudi Arabia 2008.

Police

• World Economic Forum: The Global Competitiveness Report 2010-2011.
• US Department of State: Human Rights Report - Saudi Arabia 2010.
• Freedom House: Countries at the Crossroads - Saudi Arabia 2010.
• US Department of State: Human Rights Report - Saudi Arabia 2009.
• US Department of State: Human Rights Report - Saudi Arabia 2008.

Licences, Infrastructure and Public Utilities

• The World Bank & IFC: Doing Business 2011.
• US Department of State: Investment Climate Statement - Saudi Arabia 2011.
• World Economic Forum: The Global Competitiveness Report 2010-2011.
• US Department of State: Human Rights Report - Saudi Arabia 2010.
• Freedom House: Countries at the Crossroads - Saudi Arabia 2010.
• Saudi Gazette: 'Corruption files opened in Jeddah flood disaster', 31 December 2009.
• The Guardian: 'Jeddah flood deaths shame Saudi royals', 3 December 2009.
• AFP: 'Saudis blast govt after deadly Jeddah flood', 28 November 2009.
• Arab News: 'Want to eliminate bribery? Kill 'Understanding'!', 1 October 2009.
• Arab News: 'Shoura member denies personal grudge charge', 12 July 2008.

Land Administration

• The World Bank & IFC: Doing Business 2011.
• US Department of State: Investment Climate Statement - Saudi Arabia 2011.
• World Economic Forum: The Global Competitiveness Report 2010-2011.
• US Department of State: Human Rights Report - Saudi Arabia 2010.
• Freedom House: Countries at the Crossroads - Saudi Arabia 2010.
• The Bertelsmann Foundation: Transformation Index - Saudi Arabia 2010.
• Arab News: 'Govt panel investigating notaries in real estate deals', 4 February 2010.
• Arab News: 'Land sharks make a killing out of illegal properties', 17 November 2008.
• US Department of State: Investment Climate Statement - Saudi Arabia 2008.

Tax Administration

• The World Bank & IFC: Doing Business 2011.
• US Department of State: Human Rights Report - Saudi Arabia 2010.
• Freedom House: Countries at the Crossroads - Saudi Arabia 2010.
• MENA-OECD Investment Programme: Business Ethics and Anti-Bribery Policies in Selected Middle East and North African Countries 2006.

Customs Administration

• The World Bank & IFC: Doing Business 2011.
• US Department of State: Investment Climate Statement - Saudi Arabia 2011.
• US Department of State: Human Rights Report - Saudi Arabia 2010.
• World Economic Forum: Global Enabling Trade Report 2010.
• US Department of State: Human Rights Report - Saudi Arabia 2009.
• Arab News: 'Want to eliminate bribery? Kill 'Understanding'!', 1 October 2009.
• Asharq Al-Awsat: 'Saudi Authorities Arrest Over 65,000 Illegal Immigrants in Three Months', 20 July 2009.
• US Department of State: Human Rights Report - Saudi Arabia 2008.

Public Procurement and Contracting

• US Department of State: Investment Climate Statement - Saudi Arabia 2011.
• World Economic Forum: The Global Competitiveness Report 2010-2011.
• US Department of State: Human Rights Report - Saudi Arabia 2010.
• Freedom House: Countries at the Crossroads - Saudi Arabia 2010.
• US Department of State: Human Rights Report - Saudi Arabia 2009.
• The Bertelsmann Foundation: Transformation Index - Saudi Arabia 2010.
• Transparency International: Global Corruption Report 2008.
• US Department of State: Investment Climate Statement - Saudi Arabia 2008.
• US Department of State: Human Rights Report - Saudi Arabia 2008.
• The Bertelsmann Foundation: Transformation Index - Saudi Arabia 2008.
• US Department of State: Human Rights Report - Saudi Arabia 2007.
• The Guardian: The BAE Files (regularly updated).

Environment, Natural Resources and Extractive Industry

• Emirates 24/7: 'Saudi oil ministry faces corruption charges', 23 March 2011.
  
• Freedom House: Freedom in the World - Saudi Arabia 2011.
• Freedom House: Countries at the Crossroads - Saudi Arabia 2010.
• Royal Dutch Shell: Shell, Saudi Arabia, Arms-for-Oil, Corruption, & Radioactive Contamination, 5 December 2008.
• Financial Times: 'Barter fund used to pay commissions to middlemen', 8 June 2007.
• The Guardian: 'The al-Yamamah deal', 7 June 2007.
• The Times: 'Al-Yamamah an echo of 1980s sleaze', 21 February 2007.
• The Daily Telegraph: 'BAE lands arms deal for a new generation', 19 August 2006.
• Shell News: Shell early connection with the Saudi Arabia al-Yamamah BAE arms scandal.

Public Anti-Corruption Initiatives Sources

• Freedom House: Freedom in the World - Saudi Arabia 2011.
• US Department of State: Investment Climate Statement - Saudi Arabia 2011.
• US Department of State: Human Rights Report - Saudi Arabia 2010.
• Freedom House: Countries at the Crossroads - Saudi Arabia 2010.
• Asharq Al-Awsat: 'رئيس مجلس الشورى: الهيئة الوطنية لمكافحة الفساد يجب أن ترى النور.. قريبا', March 10, 2010.
• Arab News: 'JCCI opens Jeddah Economic Portal', 4 October 2009.
• Zawya: 'Saudi auditor seeks king's help to boost fiscal accountability', 26 April 2009.
• Alharbi Ali Khalaf S.: An Overview of the Saudi Arabian Criminal Justice Procedures Against Corruption in the Public Sector, March 2009.
• US Department of State: Human Rights Report - Saudi Arabia 2008.
• The Bertelsmann Foundation: Transformation Index - Saudi Arabia 2008.
• Carnegie Endowment for International Peace - Arab Political Systems: Baseline Information and Reforms - Saudi Arabia 2008.
• Saudi Statement to the 10th Crans Montana International Summit on Transnational Crime: The Main Efforts of Saudi Arabia on Combating Corruption, 13-14 November 2008.
• U4 Anti-Corruption Research Centre: U4 Expert Answer - Islamic Approaches to Corruption, June 2007.
• MENA-OECD Investment Programme: Business Ethics and Anti-Bribery Policies in Selected Middle East and North African Countries 2006.
• The General Auditing Bureau: Building Trust in Government for further Participation and Transparency.
• The Center for Democracy and Human Rights in Saudi Arabia: 'Saudi Anti-Corruption Plan Misses Mark'.

Private Anti-Corruption Initiatives Sources

• Freedom House: Freedom in the World - Saudi Arabia 2011.
• US Department of State: Human Rights Report - Saudi Arabia 2010.
• Freedom House: Freedom of the Press - Saudi Arabia 2010.
• Reporters Without Borders: Saudi Arabia Country Report 2010.
• Freedom House: Countries at the Crossroads - Saudi Arabia 2010.
• Freedom House: Freedom in the World - Saudi Arabia 2009.
• Freedom House: Freedom of the Press Index 2009.
• Reporters Without Borders: Worldwide Press Freedom Index 2009.
• US Department of State: Human Rights Report - Saudi Arabia 2009.
• Freedom House: Freedom of the Press - Saudi Arabia 2009.
• US Department of State: Human Rights Report - Saudi Arabia 2008.
• The Independent: 'Blogger who dared to expose corruption is arrested', 3 January 2008.
• Transparency International: Global Corruption Report 2007.