Corruption in Yemen

Yemeni President Hadi with Secretary Clinton

Under Saleh, power was alleged to be distributed to the president's relatives and members of his clan, who came to dominate the military, tribes, government, and economy.[2]

A 2013 report argued that Saleh utilized his massive to garner cooperation between the nation's tribal elite. This system operated to the benefit of the Yemeni elite at the expense of the poor majority. The report noted that the elite rarely keep their looted wealth within the nation, further bearing down on Yemen's populace.[8]

A UN panel told the Security Council in February 2015 that Saleh was thought to have accumulated up to $60 billion through corruption during his tenure.[6] He had carried out these activities in collaboration with friends, family, and associates, including at least five prominent businessmen, and his stolen assets had reportedly been "hidden in at least twenty countries with the help of business associates and front companies." An estate of $60 billion would make Saleh the fifth richest man in the world.[6]

Today, despite the changes that have taken place, Yemen's economy is criticized as still being dominated by a tiny elite consisting of military, tribal, political, and business leaders, with around ten families and groups of business associates controlling over 80% of the country's imports, manufacturing, processing, banking, telecommunications, and goods transport. Yemen's future, stated a 2013 report by Chatham House, will be determined by "whether its elite remains more concerned by the threats posed by rival factions within the elite, or prioritizes its response to popular anger arising from the failure to allocate resources more widely."[2]

The Carnegie Endowment for International Peace (CEIP) has pointed out that a custom known as wasta', or favoritism, ensures that favors or job appointments are routinely given to persons who have relatives in positions of power or who pay sufficient bribes to public officials.[3]

According to the World Food Programme, "over 10 million Yemenis – 46 per cent of the population – do not have enough to eat," a problem that is worsened by "the self-enriching behaviour of the country's elites, who are depleting Yemen's resources, sending illicitly earned and untaxed profits abroad, and often actively resisting much-needed structural reforms."[2] Nepotism, according to IRIN News, is routinely present in public aid projects, and its presence is more often a hindrance.[7]

Elections have been characterized by Freedom House as "vote buying, the partisanship of public officials and the military, and exploitation of state control over key media platforms."[9] According to Chatham House, a national debate about corruption was occasioned by the 2006 election campaign, but this debate did not lead to any systemic changes.[2] Also, "parliamentary elections have been repeatedly postponed," with the 2009 elections put off to 2011 and then put off again.[9]

According to Chatham House, corruption is reportedly widespread in the Yemeni military, a state of affairs partially caused by the virtual absence of civilian oversight. In 2013, the Transparency International Government Defence Anti-Corruption Index ranked Yemen's defense establishments as one of the world's most corrupt. Since at least 2010, the army has consisted of "a series of factional alliances that more resembled a collection of feudal warlords than a modern, centrally managed military," because "Saleh was wary of creating a centralized military capable of mounting a coup."[2]

A "parastatal" entity called YECO, which procures military equipment and is run by active-duty officers, owns a great deal of land and "various parastatal enterprises," mostly in what used to be South Yemen, according to Chatham House. YECO is active in various sectors, including real estate, tourism, construction, oil and gas, pharmaceuticals, transport and agriculture. The military is permitted to seize land for its own use, and can do so either directly or via YECO. It has been suggested that this land is often given to officers or sold to developers for private profit. Both Saleh and Ali Mohsin had "extensive patronage networks inside YECO."[2]

Bribes have been characterized as not only widespread but "necessary" in Yemen, given the poor economic conditions that compel subject police and other civil servants to try to live on salaries that "barely meet subsistence levels." As Philippe Le Billon of the University of British Columbia has put it, petty corruption of this sort is often the only way civil servants can make ends meet.[7]

In Yemen, a person who is not entitled to a passport can easily secure one in exchange for a bribe. This causes trouble for Yemenis who have legitimate passports and who wish to work in other Gulf countries. These Yemenis' resultant inability to get jobs abroad limits remittances and thus weakens the Yemeni economy.[3]

The process by which land is sold and registered is reportedly murky and lacking in transparency, and these systematic weaknesses provide opportunities for widespread corruption.[2]

During the Saleh era, the oil and gas industry was supposedly "the main source of export revenue and government finance." Saleh personally approved "all major deals and production-sharing agreements" with foreign oil firms. The government-owned Yemen Oil and Gas Corporation "dominated the import and distribution of petroleum products, and delegated monopoly privileges to a major operator, Tawfiq Abdulraheem ," who was close to Saleh . Corruption in this sector principally involved the awarding of service contracts and import/export deals. In addition, "Saleh allocated state-subsidized fuel products on a quota basis to his relatives and political allies, who were free to charge a substantial mark-up to wholesale domestic buyers, or trade their allocated quota overseas at international market prices." Saleh also allowed certain businessmen "to claim subsidies on non-existent fuel imports, on the basis of falsified import documents." This practice cost the national treasury dearly, although YECO profited greatly from it. "Oil-related corruption was also endemic in the military, with officers benefiting directly from fuel allocated to their units and using military transport infrastructure to move it both within Yemen and to foreign markets."[2]

The Wall Street Journal reported in 2010 that the US Justice Department was investigating Schlumberger, an oil firm, for corruption connected to its activities in Yemen. In 2002, Schlumberger had bid on a contract with state-run PEPA via a local agent, Zonic Investments, run by Tawfiq Saleh Abdullah Saleh, and paid a "signing bonus" of $500,000 to an offshore subsidiary of Zonic in addition to disbursing an additional $1.38 million to PEPA. Also, two PEPA officials rented cars to Schlumberger at artificially high prices, and Dhakwan Petroleum and Mineral Services, owned by Ali Mohsin, which imported and exported equipment for Schlumberg, received $280,000 for processing paperwork. The Journal stated that when Schlumberger sought to end its arrangement with Dhakwan, "it became impossible for it to import equipment into Yemen."[2]

Fuel subsidies in Yemen, according to the IMF, open substantial opportunities for corruption. These subsidies chiefly benefit rich Yemenis, encourage excess consumption, and provide opportunities for smuggling.[3]

At a typical hospital, according to IRIN News, doctors and other staff are, according to one employee, mostly hired on the basis of connections to the local sheikh, without regard to qualifications. Many of those who are hired are either "ghost workers" – i.e., do not exist – or do not actually show up for work. The latter receive their own paychecks, while the sheikh takes those for the "ghost workers." Medical funding rarely makes it past the employees dividing it between themselves.[7]

Another medical professional described a similar situation in a hospital in Sanaʽa, where a fellow aid worker paid graft on a daily basis in cooperation with the Yemeni military officer in charge of the facility. The corrupt activity at this hospital involved over-billing an aid agency. IRIN News's interviewee chose not to report the corruption because he feared that doing so could thwart investors, which would cause the hospital to fall apart.[7] Colleagues agreed that whistleblowing in this case would likely be pointless, given the military's impunity. Moreover, these medical professionals risked losing their jobs, or worse, for defying authority.[7]

Yemen's central bank has raised much of its capital from private banks "by selling treasury bills and bonds into the domestic market at generous interest rates." This resulted, allegedly, in excellent profits for elite businessmen who held most of the government's debt but deterred other businesspersons from applying for loans.[2]

"Yemen's reputation for corruption," IRIN News has maintained, is a chief factor why Yemen received limited aid. IRIN stated that in 2006, a London group that had granted $4.7 billion in aid to Yemen saw only about 10 percent of that funding pass through corruption obstacles and contribute to aid.[7]

In 2011, the Norwegian Agency for Development Cooperation (NORAD) found that current efforts to reduce corruption in the foreign aid to Yemen rely too much on internationally driven "technical-legal" processes that lack sufficient local consent. Also, current anti-corruption approaches tend to be legal framework, which has little impact on the localized groups that lack rule of law.[7]

Hamid al-Ahmar, Sheikh Abdullah's son, sponsored the National Dialogue Conference (NDC), a "grassroots consultation exercise," beginning in 2009. Its goal was "to draw up a national 'salvation plan' for Yemen." At the same time, civil-society activists took up "a more aggressive stance, staging regular sit-ins in front of the parliament building." One of those activists, Tawwakul Karman, went on to share the 2011 Nobel Peace Prize.[2] The Conference, which brought together "a wide range of participants,"[3] allowed people to "air their grievances publicly" but did not enable them to "significantly challenge the informal networks of power that have proved remarkably resilient to change in the past."[2] NDC participants recognized that the nation's wealth had been looted by a privileged elite. The Good Governance Working Group, whose task was to develop an approach to fighting corruption, called for a law protecting journalists, whistleblowers, and witnesses.[7]