Billions of dollars in international aid to Haiti has been lost due to corruption, and this corruption epidemic has hindered many of the good-faith efforts to provide assistance in the wake of disasters. Of the many layers of bribery, fraud, and deceit that plague aid delivery, the one that interests me the most concerns the front-line Haitian Customs officers.
My interest stems in part from personal experience: In August 2016, I was part of a small project to engineer and build a clean water system in Haiti, which required importing equipment and supplies. As a matter of law, the items we were attempting to bring into Haiti were exempt from tax on account of their use in a non-commercial setting and our association with an NGO. Yet despite the fact that this was clearly stated on the Customs form, the Customs officials insisted that we had to pay tax on the goods, told us further that we had to pay in cash directly to the Customs officer, and reduced the tax payment we engaged in bargaining. It seemed like a bribery racket, especially with the insistence on cash payment without giving us an option to make a payment to a government agency officially. Our experience was, alas, typical: Over the past few years, there have been multiple reports of individuals being extorted for cash at Haitian Customs, with officials often unwilling to follow their own guidelines, a situation that seriously hinders the timely provision of non-profit aid.
The Haitian government is aware of the problem, and in 2013 launched a general crackdown. Yet despite a handful of successes—such as the arrest of a prominent Haitian businessman who was involved with multiple Customs officers in a corruption ring that involved contraband and trafficking—the crackdown doesn’t seem to have led to a meaningful reduction of inconsistent and corrupt Customs practices. While additional reforms to the anticorruption laws and improved internal auditing would help, there are a few other steps that the Haitian government could take that would help to combat the sort of corruption that many importers, including my own team, have encountered in Haitian Customs:
- Replace the “cash-only” payment rule with a “no cash” payment rule—Making Customs taxes payable directly to a verified government body reduces the opportunities for corruption at the individual level. Moreover, Standard 4.6 of the World Customs Organization’s Revised Kyoto Convention strongly recommends that Customs should accept payment and duties in forms other than cash, in order to increase integrity. Most developed countries allow money orders, checks, electronic payments, or other non-cash options at Customs, and can be good models for Haiti to follow. Ideally, Haiti should adopt a clear “no cash” policy at Customs, with clear signs to travelers notifying them that Customs officials may not ask for payment in cash, and further notifying them of a direct line to call a lawyer in the case of an unlawful demand for cash payment. Of course, the success of this policy will depend on how strictly the government ensures the rules are followed. Alternatively, and less radically, the government could retain cash payment as an option, but still make available an avenue for non-cash payment. If the no-cash rule had existed in our case, it is unlikely we would have been subject to taxes, and even if we had been, a quick direct payment would have avoided the problem of having to return the next day with cash.
- Authorize external audits of Haitian Customs—External anticorruption agencies should work with aid agencies, and be allowed by the Haitian government to conduct rigorous and surprise audits of Haitian Customs. Further, these auditors can partner with by the Haitian government and be granted the power to initiate prosecutions of any corruption they uncover. The possibility that an aid agency entering Haiti (such as the one we were partnered with) could expose corruption with the backing of the Haitian government would go a long way in avoiding a similar scenario to the one my project faced. Although the Haitian government might be understandably reluctant to allow external bodies to audit its Customs service, aid agencies concerned about extortion by Customs officials could insist on incorporating provisions on external audit as part of the aid agreements; the threat of reduced aid entering the country might impel the government to accept greater external scrutiny of its Customs service.
- Out-source Haitian Customs—Another extremely controversial idea – though one the Haitian government has flirted with in the past – is to entirely outsource the collection of Customs duties to another country’s organization. Such an arrangement may appear to be an affront to the sovereignty of the Haitian people, yet it is worth considering this extreme solution given the gravity of the problem. Alternatively, a hybrid system could be implemented, in which 90% of the Customs workforces is Haitian, with an external organization by having a few foreign employees present at each Customs point—courtesy of the Haitian government—would oversee operations to ensure their integrity and legality.
Reducing corruption at Haitian Customs would be especially beneficial for smaller aid agencies. Often, these small agencies cannot survive due to the bribes that have to be paid, and the corruption faced at so many levels, leading them to eventually stop their aid efforts in Haiti. Not only does this reduce the total amount of resources devoted to ameliorating the Haitian crisis, but also these smaller agencies are often more effective in fostering business relationships with local Haitian entities, thus stimulating the economy in ways the larger organizations fail to do. The potential for unpredictable loss of funds at the Customs level was certainly detrimental to our hopes of returning to Haiti. With the measures outlined above, some of this front-line corruption can be smothered, and open the Haitian aid market to the smaller agencies, allowing for healthy competition that may reduce downstream corruption as well.
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Great post. I like the no cash rule because it is easy to understand for travelers into the country, unambiguous for everybody, and generates low administrative costs for Haiti. As for the second proposal, are you suggesting that a Haitian external agency conduct the audits or that a foreign body do so? I would lean towards the former, which is a reason why the third proposal strikes me as overly-invasive. What would be the end goal? How would you ease out the foreign overseers?
Agreed, very interesting ideas!
I have some reservations about the no cash rule, though. I wondered to what extent Haiti’s economy uses cash. It seems like infrastructure for credit card payments or the like would not necessarily be a high priority, and it’s possible financial institutions may not be accessible to all citizens. If it’s true that cash payments are more prevalent than elsewhere, would Haitians themselves be disadvantaged by a cash-only rule?
On the third proposal, is there a risk that either the outsourcing solution or the joint-leadership proposal would themselves be subject to illicit motives? The “Fox in the Chicken Coop” linked news story seems to suggest that the offer to outsource customs was in fact an effort to cash in on the privatization of Haitian government services. Is there a risk that the foundation of the outsourcing arrangement itself (to say nothing of its implementation) would be the result of or heavily prone to corruption?
That’s an interesting point about the Haitian dependence on cash. In which case, the other part of that idea, which is to at least allow another medium of paying customs other than cash, could be implemented. It can offer foreign aid agencies entering the country the option of direct payment to government if they suspect corruption. Maybe if aid agencies establish a norm of no-cash payments, it could deter attempts at extortion.
Regarding the third point, I think there is always risk of illicit motives. It boils down to whether it is worth exploring based on probabilities of which outcome is likelier. But I agree that such a move shouldn’t be rushed into.
Thanks Mike. I was suggesting foreign auditors that are known to be transparency-oriented in order to remedy the issue. I agree that the last two are invasive however, and are not ideal long-term solutions to the problem.
Hello! This is a very interesting post. Thanks for this, Craig. While reading your post, I began to think about “facilitation payments,” which are small unofficial payments intended to secure or expedite a product or service abroad to which the payer has a rightful claim. Examples include paying a “tax” in cash to Customs officials to enter a country or a fee to have your baggage passed without a check. The United Nations Convention Against Corruption clearly prohibits this type of payment. It refers to them as bribes and characterizes them as contributory to a general acceptance of corruption in society. Thus, in all countries that have ratified the UNCAC, and most countries around the world in general, demanding such payments is illegal.
Articles 12, 15, and 16 of the UNCAC deal with such payments. In order to avoid paying such facilitation payments, the UN Office on Drugs and Crime recommends to travelers to check if that country has ratified and enacted the provisions of the UNCAC, contact their manager or ethics office at the corporation or business in which they work, and identify a source to call for guidance and assistance when such payment is demanded. I believe the idea behind this connection or phone call to a higher up when the payment is demanded would deter the official from demanding the unofficial or illegal payment. The UNODC also advises that the individual ask the official for a receipt of the payment. Typically, the official will not be inclined to provide a receipt if the payment he or she is demanding is illegal or a violation of policy.
The Foreign Corrupt Practices Act in the United States actually contains an exception for facilitation payments or any payments to expedite performance of a routine governmental action by a foreign official, political party, or party official. The Convention, however, does not take this approach.
The payments or tax demanded by the Customs officials in Haiti appear to be facilitation payments, or at least something comparable and similar. This could be a useful framework in the process of analyzing the effectiveness of solutions to this problem. I agree that the “cash-only” payment rule could be replaced with a no cash payment rule, but am also wary of this proposal if the economy of Haiti is in fact predominantly a cash system. Perhaps implementing a requirement that receipts be provided for such payments, like the recommendation proposed by the UNODC regarding facilitation payments, would be beneficial. You suggest in your post that making “Customs taxes payable directly to a verified government body reduces the opportunities for corruption at the individual level.” I am thinking that either doing this or requiring that there be a receipt of proof of all payment to the officials would be helpful as well. Another issue to consider with this suggestion though is the idea that countries may not have the financial means to produce receipts for these payments. Though I believe the threat of having to produce a receipt would stop a lot of customs officials from demanding these payments.
Do you think that implementing a system of receipts or similar requirement would be useful in combating these corrupt, unofficial payments in Haiti?
Thanks so much for your attention to my post!