Algeria Country Profile

Algeria’s public services sector carries a high corruption risk for companies. Local administrations are plagued by inefficiency, corruption, and patronage (BTI 2014). Inefficient government bureaucracy represents a major constraint for business, and policies and regulations are inconsistently applied in practice (ICS 2015). Indeed, bureaucracy in the country is opaque and lacks transparent oversight (HRR 2014), and bribes are sometimes used as a means to bypass bureaucracy and to avoid government interference (ICS 2014). It is more time-consuming to start a business in Algeria than in the rest of the region, but the process is less costly; the same applies for dealing with construction permits (DB 2016).

There is a high risk of corruption for companies dealing with Algeria’s land authorities. Property rights are recognized and protected by law, but the effective protection of property rights is limited by lengthy court proceedings, the unpredictability of outcomes, political influence, and corruption (BTI 2014; ICS 2015). Companies complain about the difficulty of obtaining land; the government limits the ability of foreigners to purchase land in Algeria to avoid speculation (ICS 2015; BTI 2014). Registering property has also proved difficult for companies (BTI 2014).

The construction of Algeria’s East-West Highway, which is dubbed the most expensive highway in the world (estimated at USD 13 billion), has been plagued by corruption since its start in 2006 (FitW 2015). In mid-2015, courts jailed 14 people connected to the case, including two former workers from the public works ministry, to two years in prison; an ex-intelligence officer to three years; while a former director of highways, Mohamed Khelladi, and a Chinese company advisor, Chani Mejdoub, were sentenced to ten years in jail and fined USD 35,000 for money laundering connected to the case. Seven international companies connected to the case were fined USD 55,000 each (World Highways, May 2015).

Algeria’s tax administration sector carries a high corruption risk. Irregular payments and bribes are often exchanged when meeting tax officials (GCR 2015-2016). Paying taxes in Algeria is more time-consuming and more costly than the regional average, yet only a small proportion of businesses report that tax rates and regulations represent a significant obstacle to business (DB 2016; GCR 2015-2016).

There is a high risk of corruption in Algeria’s customs sector. The level of transparency within the border authorities is low, and demands for irregular payments are frequent (GETR 2014). Business executives perceive customs procedures as burdensome (GCR 2015-2016). Algeria has eased the process of trading across borders by upgrading the infrastructure at the port of Algiers, but the time and cost required to trade across borders remain higher than regional averages (DB 2016). Furthermore, companies report they routinely face delays of weeks and even months when clearing goods through customs (Export.gov, May 2015).

The Algerian public procurement sector carries a high corruption risk. Business executives contend that funds are often diverted to companies and individuals due to corruption and believe favoritism is widespread among procurement officials (GCR 2015-2016).

In 2015, the government launched a major corruption investigation into the state-owned company Sonatrach. The case involves the direct award of public contracts without open tenders, inflated contract prices and USD millions in bribes (US News, Feb. 2016). Several persons and companies connected to the case have been sentenced for embezzlement, money laundering, and bribery, among other offenses. The convicted include a former Sonatrach vice-president, Belkacem Boumediene, who was sentenced to five years in prison, and a former Sonatrach CEO, Mohamed Meziane, who received a five-year suspended sentence and a fine of USD 18,600. The latter’s two sons, Mohamed Reda Meziane and Bachir Fawzi Meziane received six and five years in prison respectively. A former CEO of Credit Populaire d’Algerie, Meghaoui Hashemi, and his son were sentenced to five and six years in prison respectively (FCPA Blog, Feb. 2016). Several others also received prison sentences, and three companies (German Funkwerk Plettac, Italian Saipem Contracting Algeria and German-Algerian Contel-Funkwerk) were each fined between USD 37,000 and USD 47,000 (US News, Feb. 2016).

Algeria’s natural resources and extractive industries carry a high corruption risk, and this is particularly true for the energy sector, in which high-levels of corruption are reported (FitW 2015). The government provides minimal information to the public on licensing and contracting in extractive industries, and it discloses very little on environmental assessments and resource revenues, despite natural resources recently accounting for 97% of total exports (Natural Resource Governance Institute).