Middle East & North Africa
Jordan risk report
Corruption is an obstacle for businesses operating or planning to invest in Jordan. A system of wasta (middlemen) is common throughout the country and is considered part of doing business, thus making transactions opaque and hindering competitiveness. Other obstacles to business include high levels of bureaucracy, red tape, and vague regulations. Jordan's Penal Code criminalizes corruption, including abuse of office, bribery, money laundering and extortion, but the government didn't implement the law effectively. Corrupt public officials are not systematically punished, and high-ranking civil servants are rarely prosecuted. Demands of facilitation payments and bribery may be encountered but are less frequent than in other Middle Eastern countries.
Judicial system Moderate risk
The judicial institution presents moderate corruption risks to business. Irregular payments and bribes are sometimes exchanged in return for obtaining favorable judicial decisions (GCR 2015-2016). Less than one in five Jordanians perceive most or all judges to be corrupt (GCB 2016). The independence of the judiciary is guaranteed in Jordan's constitution, but allegations of influence of special interests and nepotism abound (HRR 2016). While Jordan's civilian courts are open and procedurally sound (FitW 2016), judicial inefficiency has led to a large backlog of cases and authorities do not always adhere to court orders (HRR 2016). The lack of specialized investment knowledge and commercial courts has put additional strain on the judges' capacity to review cases (ICS 2016). Businesses report that Jordan's legal system is reasonably efficient in settling disputes, but they report less confidence in their ability to challenge regulations in court (GCR 2016-2017). Furthermore, a lack of transparency with regards to the settlement of disputes and executive interference with judicial decisions and functions have been observed (BTI 2016; HRR 2016). In 2016, a special Prosecution Department has been installed in the judicial body to prosecute all cases referred to it (Lexology, Sept. 2016).
Enforcing a contract takes slightly longer than the regional average (DB 2017). Jordanian law stipulates that foreign investors can seek third-party arbitration or an internationally recognized dispute settlement body (ICS 2016). Ruling by international courts and arbitration committees can be upheld in Jordan through successfully filing an "Enforcement of Ruling" motion in a local court (ICS 2016). Jordan is a member of the International Centre for the Settlement of Investment Disputes (ICSID) and the New York Convention of 1958.
Police Low risk
Companies dealing with the police face low to moderate corruption risks. Notwithstanding, Jordan's police is not free from corruption and impunity is widespread among police officials (HRR 2016). Abuse of functions and corruption within the security apparatus are rarely investigated, and there are few convictions when investigations occur (HRR 2016). In addition, there are widespread allegations of impunity among police officials (HRR 2016). Companies are highly confident in the police force's ability to protect businesses from crime and to uphold law and order (GCR 2016-2017). Further, companies do not attribute a lot of costs to crime and violence (GCR 2016-2017), and only about one in ten businesses pay for security, which is far below the regional average (ES 2013). The security forces reportedly demonstrate high levels of professionalism in maintaining public security (ICS 2016). Few people in Jordan perceive the police as a whole to be corrupt (GCB 2016).
Public services Low risk
The public services sector carries low to moderate corruption risks for companies. Bribes and irregular payments are sometimes exchanged when applying for public utilities (GCR 2015-2016). The most endemic form of corruption found within Jordan's public administration is the use of wasta (i.e., connections) to advance personal business interests, which is regarded by many Jordanians as simply part of doing business (ICS 2016). Public sector positions are often assigned based on wasta (BTI 2016). These practices have resulted in overstaffing, under-qualified staff, poor quality public services and unnecessary and inefficient administrative procedures (BTI 2016). 'Hidden costs' are reported due to bureaucratic red tape, vague regulations and conflicting jurisdictions (ICS 2016). A relatively small percentage of businesses expect to give gifts to public officials to ‘get things done’ or to obtain an operating license (ES 2013). Despite the aforementioned obstacles, the process of obtaining licenses is not particularly burdensome, and starting a business in Jordan is less costly and less time consuming than the regional average (DB 2017).
Land administration Very low risk
Jordan's land and construction sector are generally free from corruption and thus carries low risks for business. None of the surveyed companies expect to give gifts to public officials to obtain construction permits (ES 2013). Private property is well defined and protected through sound legal processes, and there are no serious limitations to the acquisition, sale or use of property (ICS 2016). Registering property is less time-consuming but more costly than the regional average (DB 2017).
Allegations exist that in, the past, a number of key ministers used their political power to 'capture' and buy land at highly discounted prices, to then sell it to multinational corporations at above-market rates, significantly driving up the price of the land (The Politics of Corruption in Dictatorships 2015). In one corruption case referred to the courts by the Jordanian Integrity and Anti-Corruption Commission (JIACC), the mayor of a major Jordanian municipality and the district committee approved a deduction of more than USD 73 thousand (JD 52,000) parking lot fee to the benefit of a housing company owned by the brother of the mayor (Jordan Times, Feb. 2017). The JIACC’s prosecutor general also to the courts files revealing land sale fraud involving 99 people, of whom 12 are still in custody (Jordan Times, Feb. 2017).
Tax administration High risk
Companies may encounter corruption when dealing with Jordan's tax authorities. Bribes and irregular payments are often exchanged in meetings with tax officials (GCR 2015-2016). About one in six businesses expect to give gifts in meetings with tax officials (ES 2013). Tax regulations and rates are cited as competitive disadvantages to doing business (GCR 2016-2017), and irregularities regarding taxation are frequently observed (BTI 2016). Well over one-quarter of surveyed households perceive tax authorities to be corrupt (The National Integrity System Jordan 2017).
Customs administration Low risk
Dealing with Jordan's customs administration carries a low to moderate risk of corruption. The transparency at the border administration is ranked as fairly high, while irregular payments in relation to exports and imports sometimes take place (GETR 2016, GCR 2015-2016). Less than one percent of surveyed companies expect to give gifts to public officials to obtain an import license (ES 2013). The time and cost required to deal with exports and imports in Jordan are significantly lower than regional averages (DB 2017). Importing and exporting has been made easier by streamlining customs clearance procedures in 2016 (DB 2017). Jordan is a party to the OECD Declaration on International Investment and Multinational Enterprises (ICS 2016).
Public procurement Very high risk
Companies contend with high corruption risks when dealing with public procurement in Jordan, which suffers from lack of transparency and objectivity (SIGMA 2016). Companies believe practices of favoritism among procurement officials are common (GCR 2016-2017). Business executives also report that bribes and irregular payments are often exchanged in the process of awarding public contracts and licenses (GCR 2015-2016). Competitive disadvantages in the procurement process, include inconsistencies in the application of award criteria on bidders, disregard of procedures for changing tender documents during the tender, and unsatisfactory responses to inquiries regarding tenders (SIGMA 2016). Inconsistencies between public procurement legislation and local practice have been mainly linked to the absence of sufficient operational capacity, professionalism, and inadequate integrity safeguards (SIGMA 2016). The law does not allow preferential treatment for state-owned enterprises (ICS 2016). Unsuccessful bidders may challenge the procurement decision through the courts (OECD 2013).
Corruption in Jordan's extractive industries does exist, but little information is publicly available. For instance, abuse of water resources in Jordan’s agricultural sector and mismanagement of water by Jordanian families with close ties to the king and government have led to water scarcity to become a central environmental issue (BTI 2016). A deal for oil exploration between Jordan and Korea's Global Energy corporation was rejected by the Lower House of Jordan's parliament after allegations of bribery and influence peddling surfaced (Jordan Times, Apr. 2015).
Jordan has a comprehensive legal anti-corruption framework in place, however, implementation is lacking (HRR 2016). The Penal Code of Jordan criminalizes extortion, active and passive bribery, bribing a foreign official, abuse of office, embezzlement and money laundering. Gifts and facilitation payments are also prohibited under the law. Criminal liability for companies is recognized under the Penal Code of Jordan. Jordan established the Integrity and Anti-Corruption Commission (IACC) in 2016. The IACC law criminalizes actions related to wasta and nepotism. The Anti-Money Laundering Law complies with Middle East/North Africa Financial Action Task Force (MENAFATF) standards. A new competition law is currently under Parliamentary review and aims to attract foreign investment and protect small and medium-sized businesses from restrictive anti-competitive practices (ICS 2016). The Financial Disclosure Law stipulates that certain government officials must disclose their assets in a sealed envelope to be opened by the chief justice in case of a complaint. The Jordanian Code of Conduct in the Public Sector requires ministers to submit a financial disclosure statement and forbids them to hold seats on the board of private companies, to take part in commercial or financial business, or to receive any salary from a third party. Access to information is somewhat restricted by the State Secret and Documents Law. Jordan passed a law to protect whistleblowers in 2014; the law calls for the creation of a special unit to provide for protections (Transparency International, 2016). The IACC law does include provisions for a Legal Witness Programme, affording them protection at their residences, keeping their identities anonymous, and provide modern technology for the process of giving their testimony, but the program's effectiveness has not been tested yet (Lexology, Sept. 2016). A national anti-corruption strategy was launched in 2013, but effective implementation of any of its objectives is impeded by a lack of institutional checks and balances and by limited access to information and journalistic reporting (FitW 2016).
Jordan has ratified the UN Convention Against Corruption.
Jordan's constitution provides for freedoms of speech and press, but the government does not respect these provisions in practice (HRR 2016). Journalists often face harassment and are forbidden from covering controversial issues (FotP 2016). Physical attacks against journalists have decreased in recent years (FotP 2016). The law forbids reporting on corruption "without sufficient proof of wrongdoing" and criminalizes defamation, thus leading to an environment of self-censorship among journalists (FotP 2016). Security officials reportedly try to influence reporters through bribes, threats, and political pressure (HRR 2016). News websites must register with the government, which retains the freedom to block foreign or domestic websites that do not comply with content restrictions (HRR 2016; FotP 2016). Journalists found guilty of offenses involving speech or association can be prosecuted under the Penal Code and various other criminal laws or tried by the quasi-military State Security Court (FotP 2016; HRR 2016). Jordan’s press environment is described as 'not free' (FotP 2016).
Jordan's constitution provides for freedom of assembly, but the government restricts these rights in practice (HRR 2016). Despite the high number of NGOs in Jordan, civil society traditions are weak, and a large proportion of NGOs is created and controlled by the royal family (BTI 2016). The weaknesses of non-governmental actors including the media, is an often observed weakness in the fight against corruption in Jordan (Transparency International, 2017). The government is legally allowed to control the internal affairs of civil society organizations and decide on whether or not to accept foreign funding, and it allegedly infiltrated NGOs to have access to the organizations’ internal meetings (HRR 2016). The energy from the Arab Spring has dissipated and NGOs generally remain excluded from the policy-making process, and political leaders frequently ignore civil society’s interests or demands (BTI 2016).
- World Bank: Doing Business 2017.
- Transparency International: The National Integrity System Jordan, 27 January 2017.
- Jordan Times: "More Cases Referred to Court by Anti-Graft Body", 19 February 2017.
- World Economic Forum: Global Competitiveness Report 2016-2017.
- World Economic Forum: Global Enabling Trade Report 2016.
- Bertelsmann Foundation: Transformation Index - Jordan 2016.
- OECD SIGMA: Corruption Risk Assessment of the Public Procurement System in Jordan - November 2016
- Freedom House: Freedom in the World – Jordan Country Profile 2016.
- Freedom House: Freedom of the Press 2016.
- US Department of State: Country Report on Human Rights Practices - Jordan 2016.
- US Department of State: Investment Climate Statement - Jordan 2016.
- Transparency International: Jordan Whistleblowing Overview 2016.
- World Economic Forum: Global Competitiveness Report 2015-2016.
- Lexology: "The New Integrity and Anti-Corruption Committee, Jordan", 30 September 2016.
- Yadav, Vineeta and Bumba, Mukherjee: "The Politics of Corruption in Dictatorships 2015".
- Jordan Times: "Deputies Reject Draft Oil Exploration Deal with Korean Company", 14 April 2015.
- Amman Net: 'Walid Kurdi, Jordan's Number One Most Wanted, Back in the Spotlight', 13 February 2014.
- World Bank Group: Enterprise Surveys 2013.
- OECD: Investment Policy Review Jordan 2013.
- European Bank for Reconstruction and Development: Public Procurement Sector Assessment 2013.
- Transparency International: Whistleblower Protection and the UN Convention Against Corruption 2013.
- UNDP: 'Jordan advances in establishing an integrity charter', 16 November 2013.