Chad Corruption Report

Companies operating in Chad should be aware of the very high corruption risk in the police force. Security forces routinely engage in petty corruption, violence, and extortion. The abuse of power in the police force usually goes unpunished, and in various instances, the units of the Judiciary Police did not enforce court orders against military personnel or members of their own ethnic group (HRR 2014). However, on a more positive note, in 2013, illegal hiring and promotion processes, lack of adequate training and favoritism were uncovered in a crackdown on corruption in the police force, leading to the dismissal of two ministers (TI, Aug. 2014).

Bribery and nepotism permeate the delivery of public services. Bribery is widespread due to the institutions being weak and the low salaries of civil servants (TI, Aug. 2014). Surveyed executives reported that irregular payments are commonly exchanged when companies acquire licenses or public utilities (GCR 2015-2016). The legal, regulatory and accounting systems that Chad has in place lack transparency and do not meet international standards (ICS 2015). The impact for those setting up businesses in Chad is costly and time consuming compared to that of other countries in Sub Saharan Africa (DB 2016).

Public services and infrastructure are mainly provided in urban centers, and fail to reach rural areas (BTI 2016). The low quality and lack of delivery of public services have resulted in Chad being ranked among the countries with the lowest life expectancy and highest infant and maternity mortality rates (UNDP HDI 2015).

Dealing with the Chadian land administration bears high risks of corruption for businesses. Property rights are adequately defined by Chadian law, but are not sufficiently enforced in practice (BTI 2016). Surveyed business executives reported that they do not consider their property rights well protected (GCR 2015-2016). The office of Domain and Registration (Direction de Domaine et Enregistrement) in the Ministry of Finance and Budget records property deals. However, in practice, its authority extends to urban areas only, while in remote areas land titles are handled by traditional community leaders according to customary laws (ICS 2015). Conflicts over land titles are common and companies should note the risk of fraud in property transactions (ICS 2015).

Arable land has become a scarce and sought-after resource, especially in the south of the country (BTI 2016). Chad’s court system is infiltrated by corruption, and disputes over property and land are often resolved privately; powerful elites can sometimes occupy land unrestrained (BTI 2016). In Chad there are no clear regulations concerning rights of indigenous peoples, tribes, and farmers for land use (ICS 2015), which can result in regional violence (BTI 2016).

There is a very high risk of encountering corruption in Chad’s tax administration. Companies report that bribes in connection with annual tax payments are commonplace (GCR 2015-2016). Paying taxes in Chad is complex and costly: A business executive spends on average 732 hours per year on filing, preparing and paying taxes, and has to deal with a total tax rate of 63.5 percent of profits (DB 2016).

There is a very high risk of corruption at the Chadian customs administration. Irregular payments are routinely exchanged when importing and exporting (GETR 2014). Companies find that the clearance process is inefficient and consider the lack of transparency at the border administration a competitive disadvantage (GETR 2014).

Chad is a landlocked country, and receives around 90 percent of its imports from Cameroon’s port Douala: An average of 900 trucks per week ply the 1,850-kilometer route to the Chadian capital N’Djamena (Bloomberg, Feb. 2016). Truckers reported around 20 illicit control posts along the road, where they were asked to pay bribes of CFA 5,000 and 10,000 in addition to a tax of CFA 46,000 to Chadian officials at the border (Bloomberg, Feb 2016).

Companies should note that there is a very high risk of encountering corruption in public procurement. Irregular payments or bribes in connection with the awarding of public contracts or licenses are common (GCR 2015-2016). Evidence suggests that officials involved in the tendering process are required to pass on envelopes with bribes, extracted from business executives who were awarded the public contracts, to their superiors (Macra Tadin, Jan. 2015). In one instance, an entrepreneur was asked by a procurement official to deposit the envelope with the agreed amount of approximately USD 350,000. Later, he was told that the bribe would not guarantee him the contract, thus pushing the executive to pay an even bigger bribe (Macra Tadin, Jan. 2015). Reportedly, procurement officials have delayed the process of awarding contracts to extort more bribes. Tenders dating from 2012 and 2013 were still in the pipeline in 2015 due to these methods (Macra Tadin, Jan. 2015).

Businesses report that favoritism in the decisions of government officials are common and that public funds are usually diverted (GCR 2015-2016). Nepotism and cronyism are pervasive in government procurement (TI, Aug. 2014), and procurement officials tend to favor negotiated deals rather than implement standard tender procedures (Macra Tadin, Jan. 2015). Construction, services and supplier contracts that exceed USD 10 million have to be approved by the president and the minister of the economy and finances. However, to get around these regulations contracting authorities illegally break up the tender into smaller contracts amounting to less than USD 10 million, and these payments simply require invoicing (Macra Tadin, Jan. 2015). Contracts for construction work are frequently given to people connected with government officials (BTI 2016), despite the law that prohibits government officials from engaging in commercial activities (Macra Tadin, Jan. 2015). Another example is a private company owned by a relative of the president, which was awarded the right to print passports (BTI 2016). Companies are thus strongly recommended to use a specialized due diligence tool on public procurement in order to mitigate corruption risks associated with public procurement in Chad.

Oil extraction makes up the biggest part of Chad’s economy (ICS 2015). Secrecy around oil deals with companies and the government, the result is a high risk of corruption and mismanagement (EITI, Jun. 2014). In an attempt to reduce the risk of corruption and increase transparency Chad has implemented various reforms and is now listed as compliant with the Extractive Industry Transparency Initiative.
In 2013, a judge in Canada fined Griffiths Energy CAD 10.35 million for bribing the wife of the Chadian ambassador to Canada in 2009 with CAD 2 million for access to oil fields in Chad (FCPA Blog, Jan. 2013).

Even though Chad has an abundance of natural resources, the country and its citizens frequently experience food insecurity, which can be attributed to pervasive corruption at all levels that fosters institutional instability, the misuse of land and market distortion (TI, Aug. 2014).