monitoring report on finance, yemen

Financial Committee, Public Shadow Authority Revolution Salvation Front

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Revolution Salvation Front

Monitoring & Evaluative Report on

Performance of Ministry of Finance & its Affiliates

Issued by

Financial Committee,

Public Shadow Authority

Revolution Salvation Front (RSF)


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Spotlight:

Financial Committee is one of the shadow specialized committees established under the Public

Shadow Authority of the Salvation Front of Peaceful Revolution (RSF). It works on monitoring

corruption in the ministry of Finance MF its affiliated authorities and presenting a vision on

challenges and solutions pertaining to finance sectors. It uses legal and judicial mechanisms,

media and advocacy campaigns through benefitting from other shadow specialized committees

of RSF. The FC objectives include working on activate people's monitoring on the various

governmental institutions and sectors involved in financial administration, disclose any

violations and bad exercises, contribute to studying problems and challenges, provide solutions.

The Public Shadow Authority (PSA) is an anti-corruption commission works on monitoring

and evaluating the government performance. It was established in January 2013 by the

Revolution Salvation Front (RSF), a civil non-governmental pro-change movement

established in 2011 to struggle for social change, good governance and national participation

towards a modern democratic state . Monitoring and lobbying government, PSA activities focus

on the civic engagement of public, activists and professional specialists in the public sectors,

and in partnership with the governmental entities. It aims to combating corruption in all

government agencies and promoting standards of transparency and integrity.

Established under Public Shadow Authority are 7 effective committees tasked with monitoring

and observing activities, lobbying and raising awareness of public opinion. These 8 are the

committees on finance, justice, the legal affairs, the education, the media, the oil and minerals,

the committee on vocational education and on the rights and freedom. They have issued 8

reports since start of NC till 2011 up till now. The other two under est. committees to be

declared soon are the committee on public health and the committee on power and energy.

Each of the Shadow Committees is concerned with a government sector, analysis of

performance and provide solutions and national strategies, through legal and media advocacy

and civil resistance.

The legal committee receives complaints and wrongdoings on corruption, and human and civil

rights violations, especially defending public opinion issues before court. The number of issues

that have been filed by the committee are up to 47, most importantly is the question of peaceful

Revolution wounded people.

Challenge:

Corruption in Yemen threatens the stat's legitimacy especially in terms of increasing the civil

strife and violence. It hugely affects growth, wastes resources and small business, weakens

attempted institutional reforms, undermines the roles and function of the integrity system, aborts

the activation of the laws relating to accountability and helps corrupt officials impunity. It is

institutionalized and systematic; the political corruption is the most serious type.

Vision for Solution:

while the root causes includes the lack of real political will to fight corruption, ignorance and

poverty, unavailability of inclusive national strategy to address corruption, socio-political

instability and weakness of the government and its tools, It can be addressed by an integrated

package of reforms including establish strategic development, enhance institutional capacity

building, strengthen regulatory independent powers and rule of law and promote public

awareness and civil society of anti-corruption—that cannot be initiated, according to RSF,

without entrusting the country's helm to a new government of technocrats, the urgent priority at

the present time more than ever during the transitional period since late of 2011.

http://www.yemenat.net/news30331.html


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The Ministry of Finance:

The MF is considered as a major administrative body on which states and governments can

depend to execute their economic, monetary and financial policies and ensure achievement of a

number of objectives that are stipulated in article (2) of the MF bylaws, as " the ministry aims at

regulate and secure the state's monetary and financial affairs, monitoring revenues and

expenditure, suggesting both of pertaining financial policies and general and detailed annual

budgets along with getting them implemented within the state's overall policies. It also mainly

intends to effectively contribute to prepare an economic, social and monetary policy

development plan, working to fulfill following detailed tasks:

1- Develop finance, taxing and customs systems, and suggest procedures and legislatures

guaranteeing general resources development in line with the state's social, economic and finance

policies.

2- Steer the state's overall expenditure to ensure achieving its developmental social and

economic objectives and establish mechanisms suitable for monitoring public money, to

preclude being spent in violation to identified purposes.

3- Supervise the state's financial institutions as per valid regulations.

4- Supervise on external loans and donations - whether be monetary or material - together with

their collections and distribution on specific aspects, and on keeping records and externally-

financed projects.

5- Prepare financial, accounting and tender-related rules & regulations on scientific bases,

verifying they are duly applied by all institutions of the central government, along with the

provinces administrative units, the economic sector units and the budget-specific entities.

6- Inspecting and supervising all administrative apparatus and economic sector units, in addition

to those with independent and attached budgets, special funds on financial matters, taking

authorities of the central apparatus for accountability and monitoring CAAM into account.

7- Identify, administer and maintain the state's properties, and specify legal methods for their

exploitation.

8- Supervise the spending body and guide foreign monetary so as to be used within the state's

finance policy and the central bank law, besides the minister's duty of supervising the finance

sector.

The article No (3) of the MF's bylaws also stipulates that "the minister shall undertake the

following tasks:

1- Supervise and manage the ministry along with its departments and offices in other

governorates, and implement the state's overall policy as per valid rules and regulations.

2- Being the top head, he shall Lead the ministry in all fields and manage it in compliance with

principles of joint consultation on basic issues and individual full responsibility before the

cabinet.

3- Superintend his employees, asking for reports and is entitled to make orders to heads of the

departments they belong to , and to amend or even annul their decisions if be illegal.

4- Supervise prepare the ministry's plan among the cabinet plan and follow-up its execution, in

addition to submit reports on extent of the cabinet resolutions' putting into effectiveness.


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5- Report to the prime minister or the cabinet on big violations inside the state regime and

policies as per the law.

6- Network with the ministers concerned when the matter be of relevance to other ministries.

7- Network with provinces mayors regarding the cabinet's and the local authorities resolutions

related to the ministry, ensuring relations with the mayors, especially in terms of prepare social

and economic development plan.

The Report's Goal:

Disclosing and briefing public opinion on the Yemen's finance and how it is managed to

enhance fighting corruption.

The Report:

The Financial Committee FC of RSF's Public Shadow Authority has presented this

report on Ministry of Finance MF performance throughout period of the consensus

government CG in a press conference held in Sana'a. The third-chapter report

addressed violations and corruption inside MF along with its belonging institutions.

The first chapter presented a comparative evaluation to the national consensus

government program with respect to MF, the second monitoring on the ministry

performance, then the challenges within Tax and Customs Authorities were covered in

the third.

Introduction:

As the MF is supposed to play a significant national role of impartially monitoring all state

institutions and without any affiliations that can harm its functioning, and despite the 2011

revolution demanding for reformed state, the ministry is found to be sinking in a deep ocean of

corruption that left no hopes for surviving. The MF, under consensus government, has proved to

be swerved its patriotic-based duty and legal parameters and is overwhelmed by a partisan

behavior and loyalty and personal interests, working on discarding principles of competency,

specialization and priority regarding public post filling as provided by the civil service law No

43 for 2005.

Several administrative and financial resolutions were made in an open violation to the law and

constitution, and many corruption cases have swept remaining basics of professionalism, and in

an unprecedented manner got rid of financial and accountancy norms towards dead failure that

can cause a potential disaster.


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Chapter I

MF non-abiding by Agenda and Good Governance

The consensus government has confirmed in its program an intention to apply

good governance principles and make it among top priorities towards achieving

people aspirations for a new Yemen based on principles of rule of law, improve

competency, inquiry and transparency in public sector, besides fight corruption

and establishing equity, justice and human rights to ensure economic and

political stability as a starting point for a civil state.

The RSF's finance committee FC, however, found the policies and practices by

the ministry of finance MF violating CG's program and principles of good

governance. Several key aspects can be briefed as follows:

A- Public Financial Reforms

1- The CG's program has included that it would strengthen and monitor the

state procurement, bids and out-bids, as per law No (23) for 2007 with its

bylaws, amendments, and per relevant resolutions by the cabinet.

in this context, the RSF's finance committee has observed that the finance

minister; Sakher Alwjeh, passed several corrupt bargains without abiding by

rules and regulations or even minimum legal requirements stipulated by law of

bids and out-bids. It further noticed illegally signed power purchase contracts

and neglecting the role of monitoring bodies that sign contracts and assignments

and offer them to contractors, while the relevant law oblige the ministry to

entrust committees to pay field visits to review execution documents.

A report by the parliament showed that the tender sector was a major source of

corruption in Yemen, especially as the government contracting are not subjected

to equality-based legal contests.

2- While the CG promised in its program it will continue correcting the

general budget through improving economic and financial prospects along with

mechanisms of preparing economic frame and average expenses, the RSF's FC

found that these two budgets received no reforms, rather the situation can be

described as follows:

1- The annual deficit involved the state's general budget continues.

2- The government expenditure on investing decreased though spending

expanded.

3- The internal general debt increases.


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4- Inability to receive external donations and loans

5- There are funds beyond the budget.

6- The non-oil public resources decrease, and they heavily depend on oil

revenues.

The government pledged to make reforms in the public finance, though only in

late June 19, 2013 that it signed a loan with $5 million from WB in this respect,

to support Public Finance updating project to enhance finance sector. Such a

loan evokes several doubts, as the MF did not identify areas for spending

(whether the wrong is technical or professional). The MF is supposed to put a

schedule for such reforms and show aspects of shortcomings, and the CAAM

did not play its role, as it accepts spending from any item before checking, in

addition to the fact that it prepares no studies on reforms in question.

The RSF's FC further noted that the government does not cover external loans,

as it is clear from the following table:

The table shows that Yemen did not benefit from allocated amounts, while the

actual draw is a small percent despite the bad public services at all sectors, if

any.

3- Though the CG report includes an intention to improve and facilitate level

of finance and taxation services, there is no worth mention improvement, rather

more and more complications, as the FC found.

4- Though the CG promised to address facets of shortcomings in the

financial department pertaining to follow-up, collect the state revenues, there

remains a lot of obscurity, the collected amounts disappeared and no one knows

where they are spent. An official report said that the minister of finance had

negatively intervened in the budgets of sectors, leading them to being hindered,

and 600 million YR was adopted in the cabinet's presidency budget though was

not provided to the employees.

Sector Allocated

amount

Actual Withdraw

in 2012

Withdraw

Percent

Fish Wealth &

Agriculture $253.18 $19.92 7.9%

Public Health $ 250.25 $15,70 6%

Water & Electricity

Sector $1.o99.03 $50,05 4,5%

Education Sector $268,5 $ 28,21 10%

Transport $274,57 $21,45 7,8%

Public Work Sector $742,36 $31,08 4%

Total $2887,44 $166,41 $5,8


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5- The CG pledged to combat revenues -separating with special accounts and

to bring them to the public treasury, yet the MF violated the item No (51) of the

fiscal law no 8 for 1990 and continued adding revenues to special accounts, as

an official report said about adding fees of the oil pipeline use to private

account in the central bank and the MF moved the revenues of such account

from Ministry of Oil to a MF private account . 30 billion YR was separated

under item of emergency, 37 billion under item of obligations, 2 billion 248

million for Wafa Foundation from the budget of 2012 to be allocated for

treatment of the revolution wounded.

The FC would like to make the following notes:

1- The inter-items moving should be preceded by a suggestion by a formed

committee, followed by agreement of concerned bodies, as the MF is only an

implementing body .

2- The MF usurped authority of Ministry of Health and the ministerial

committee and hindered their assigned work.

3- MF's spending of the people revolution martyrs' allocations is

illegitimate, hence doubted.

B- Revenues:

The CG pledged to improve and contribute to non-oil revenues within the total

public revenues, especially of tax and customs and develop their legislatures in

light with new local and external updates, though it failed to develop non-oil

revenues (tax, customs and Zakat) and the increase attained in 2012 compared

with past years was not a result of government efforts, rather due to increasing

income taxes and wage expenditure as well as amending customs tariff.

1- Though the CG program includes work on applying the sales taxes law no

(19) for 2001 with amendments and mechanisms, and on prepare for implement

new income tax law No (17) for 2010, former income law no (31) was annulled.

A new law, thought to be much more reliable in correcting financial matters

adopted, has not been put fully into effect, as its content was taken from laws

belong to foreign countries with no consideration to specialty of Yemen (

political, social and cultural milieu)

2- The program further promised to improve late tax resources, solve

problems of accumulative taxes, yet the FC notices low collection of tax due to

MF inability to duly apply the sales tax law, and to discard adopting policies

limiting phenomenon of taxing evasion. It also noticed that such failure is due to

the CG's inactivation of the higher senior board administration and its ill-

developed performance, due to some reasons:

A. Absence of a highly qualified staff for correctly processing of the State-due tax

amounts, which must be done via reviewing quantity of produced goods.


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B. Lack of improving level of performance of collecting department, and of

updating its mechanisms. C. Lack of monitoring board that is intended to follow-up collections and find

regulations and principles for them, via principle of reward-and-punish. D. Randomness in tax assessments by tax admins. in districts without any reliable

principles. E. Lack of flexible staffers authorized with tax assessments, which eventually

leads to tax-entrusted peoples' shunning disclosing reality of due tax. F. The tax offices toleration through non follow-up of due tax on homes and

stores (property tax) G. Mood-driven action and favoritism in selecting Qat-tax collecting bodies and

subject it to personal interests without considering public ones. Some of Qat-tax

collectors are not employed by the state's administrative apparatus. H. The CG program further spoke about auditing and monitoring mechanisms

accounting preparations necessary for applying terms of petroleum derivatives

purchase in Gas and Oil Companies, while a tangible imbalance really exists,

and obscurity dominates the relations among MF, and the oil companies which

impose prejudiced terms caused heavy losses to the public treasury, due to lack

of clear-cut mechanisms for financial admins.

C- Public Expenditure:

1- The CG promised to apply austerity measures on existing expenditure,

and to increase expense on human development, though violations are noted to

be committed, as the 2012 expenses are 16% increase compared with 2011, 7%.

As per results of actual execution for the budget from Jan to April

2013, the existing expenditure reached 674,2 billion YR with 97% of total

spending which exceed the estimated 8%. The FC also noted retreat of investing

expenditure with 50% in 2011, 58% in 2012 compared with expenditure in

2010, which caused development expenses to decrease. It also found that

investment still paralyzed as well as dozens of projects that are neglected by the

CG plans.

2- The CG promised to study damage that inflicted buildings and

infrastructure of all institutions, due to existing crisis, and to estimate relevant

costs, however, a double-standard policy is observed regarding war

compensations, as they were granted to influential figures, and other much more

poorer, some have judicial decrees, were prevented.

Though it promised to diminish expenditure on oil and lubricants, procurement,

transport vehicles, and other operation expenses, the FC observed non-

fulfillment in such regard, and the expansion is made through central allocations

devoted to emergency cases to cover external travel allowance, the CAAM

reports do not include several violations, however.


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3- The CG pledged to abide by austerity measures on public potential through

review expenditure on petroleum derivatives and prepare a mechanism to guide

them, yet the FC noticed the GC decided, in an unstudied manner, to raise price

of diesel without taking consult of the parliament. Such a price hike must be

made gradually and based on scientific studies that identify needs and tackle

subsequent economic, developmental and social effects, as the decision can

negatively affect agriculture production and family income as a result of high

price and inflation.

Chapter II


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Monitoring Corruption

Having monitored the ministry of finance MF since late of 2011, key failure

manifested in the weak management system and capacity governing inputs and

outputs, inefficient and non-specialized key-leadership, for front the minister

himself, causing mismanagement, non-compliance with rules and regulations

governing financial and administrative activity despite the incompetence, lack

of actual control, and rampant political favoritism and bribery in employment of

financial and human resources, especially in revenues and transactions.

The big corruption cases investigated by FC includes but not limited to:

- supply of funds to exceptional bank accounts non-classified under budget to

meet special requirements in violation of the financial law and its regulations,

- adoption of large sums of money in the 2012-budget under the third item:

"expenses on subsidies, scholarships and social advantages", which are

incompatible with the objectives of the budget.

- non-compliance with laws and standards regulating appointments, promotion

and recruitment.

- customs duty illegal concessions for the sake of influence groups and

individuals, imposition supply of illegal tariffs on vehicles entering Yemen

under the temporary admission system (Alterpetk) in violation of the customs

Law.

- tax evasion, random and bureaucracy in tax collection.

- Illegally pay large sums of money approved for the treatment of wounded

people for partisan associations as caretaker despite the existence of a

ministerial committee dealing with issue of wounded protesters in 2011-

uprising.

Budget Expenses on Subsidies, Scholarships and Social Advantages

The items and allocations adopted by the minister during budgeting imply an

enhanced corruption under various (fake) names, for wasting people's potential.

The FC has observed organized corrupted public budget for 2012, as the one

approved by the minister has allocated items and expenses titled as social

advantages and scholarships and added to all state sectors and ministries what

was applicable in the former regime, which was devoted to corruption and the

public potential available for wasters.

The MF was quick to doubling budget expenditure on corruption and to waste

potential, in the central MF's approving with an increase of more than 102

million YR compared with 2011, not to mention the total gross for other


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ministries, as 572 billion 480 million YR was allocated to social interests,

equaling 20% of the 2012 public budget expenses distributed among

governmental public sectors the lion's share of which went to the MF. 184

billion 114 million YR ( the ministries accounts) allocated as social advantages

and scholarships, spent only by ministers' and people with fringe benefits'

orders.

Following is a table shows the amounts approved in 2012 budget of several

ministries, compared with 2011's (in Yemeni Ryials)

Reports show that most corruption cases of relevance are as follows:

1- The higher authority actual approval of non-itemized allocations without any

legally accredited regulations.

2- Allocating unquestionable great amounts for the security and military

institutions, as well as so-called additional allocations to control over a percent

of tax income and oil prices differential amounts, not to mention that some

public revenues are not included in public budgets.

3- The MF's monopoly of the lion's share of the state's public allocations. The

share includes portions of the central and the ministry's allocations.

4- The MF was not only keen to double budgeting of the tribal affairs authority

and the amounts provided to Sheikhs, but also to double financial amounts

specified for scholarships and advantages, with an increase of an estimated 38

million YR compared with 2011, which threatens the national economy and

may cause potential severe paralysis in case the country's economic and State

budget continue adopting such failed economic policies considered to be key

reasons of spread of poverty, crimes, law violation, hegemony of influential

people, and damage of infrastructure and public interests, in favor of

beneficiaries and influential people.

Political partisan-based recruitment, appointments and promotions

Ministry 2011 2012 Increase

1 Local

Administration 15,385,314,000.00 17,987,000,000.00 2,601,686,000.00

2 Ministry of

Information 4,553,563,000.00 13,237,000,000.00 8,683,437,000.00

3

Ministry of

Agriculture &

Irrigation

2,189,319,000.00 2,632,000,000.00 442,681,000.00

4 Ministry of

Electricity 508,165,000.00 639,000,000.00 130,835,000.00

5 Ministry of Health 12,868,309,000.00 16,765,000,000.00 3,896,691,0000.00

6 Tribal Affairs

Authority 2,305,764,000.00 2,344,000,000.00 38,236,000.00


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The partisan-based appointments, especially for senior positions, are dominant

along with fanaticism, arbitrariness, confiscating rights of corruption opponents

and lack of transparency and equal opportunities. Worse than it is a serious

threat cancelling the state, dividing it into parties and filling it with chaos.

Topped by illegal appointments in the ministry and affiliating offices, as the

finance committee FC stood on many violating decisions under umbrella of

large-scaled corruption.

The MF representatives and affiliating senior officials were observed to be

appointed on basis of mere partisan dividing. The (belonging) institutions and

departments' authorities are controlled by the minister himself, while some

employees who spoke about corruption were punished and moved to remote

areas to work there. Financial rights of individuals and entities are processed by

double-standard and state of mood instead of equity and professionalism in

addition to several negative exercises reflecting lack of intention to establish

good governance.

For instance, number of MF appointing decisions reached 83, including three

presidential decisions taken on June 22 2013 that appointed 7 representatives

and 6 assistants, the customs authority's agent, and the financial institute's dean

and vice-dean. 9 persons of the appointed are affiliates to Islah Party, 5 to the

general people's congress GPC and 2 are affiliates to the president Abdurabo.

On basis of the data gathered by the FC, there are 80 decisions issued by

Minister Sakher Alwagih, which appointed 443 employees in the ministry with

affiliating departments and customs authority. The last number includes 101 as

director generals, 54 as deputy director generals, 179 as department managers,

10 were appointed as accounting managers' deputies, 11 as procurement

managers, 41 as financial managers, 4 as store keepers, 2 as treasurers , 8 as

financial consultants whose job station is in the country's overseas embassies, 8

as heads of departments, an accounting unit manager based in the ministry, an

assistant executive manager for developing Ministry project, a customs

authority chairman's counselor, a deputy for the ministry's updating project, an

executive unit manager for financial documents project, a senior specialist in the

ministry's headquarter as well as an abroad study case.

There are several ministerial decisions by MF including public directors of

financial affairs, MF offices' accounting managers, and appointments of director

generals in the MF who do not meet public post requirements, in terms of

competency, priority, qualifications, and principle of equal opportunity among

the MF employees. The minister rather work based on partisan and

discriminating considerations. Some employees are offered between 4 and 5

new annual appointments while newly incumbents do no find job opportunities

and receive only 50% of the public directors' counterparts i.e. they are doubly

punished in the same time; first is job elimination, the other is 25 thousand YR

as wage discount on a monthly basis, which is deemed as humiliation to the MF

cadre and fighting their standards of living even pertaining to daily life

demands.


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Evaluating these decisions on appointments taken throughout care-taker

government, the FC observed that most of them attack criteria of competency

and priority and are dominated by political and regional hegemony along with

dividing among the GPC and Islah party who had lion's share of these

unprofessional appointments which violate valid regulations on filling the

positions refer to by Civil Service law no 19/ 1991 and by ministerial law no 76

for 2007, which identify recruitments for the following positions:

a- To fill ministry under-secretary positions, minimum 19 years' experience

in relevant field after holding university degree is a must, and the job must be

included in the ministry's organizing structure OR.

b- Post-graduation relevant experience of not less than 16 years in addition to

considering previous provisions No (a) when filling assistant under-secretary

general.

c- Post-graduation relevant experience of not less than 13 years to fill general

department managing position is a must, along with article no (a) provisions.

d- Post-graduation relevant experience of not less than 10 years to fill

department managing position is a must, along with article no (a) provisions.

Though upon reviewing the minister's and the State president's decisions in

question, it becomes clear that they are mostly contradict the law requirements

as well as those of principles of good governance the government always

popping off.

Some of appointment violations made include, but not limited to, the

following:

Employee

Name Position Notes

1 Yahya Saleh

Alansi

External Public

Relation

secretary general

Not included among the MF

cadre, committed big financial

violations, and is a counselor for

Hamid Alahmr.

2 Abdu Ali

Saleh Alqwas

Admni. &

financial affairs'

secretary general

His degree (bachelor in Islamic

studies) not relevant, besides

pending corruption cases before

public potential court, such as

illegal transfer of more than 2

million YR. to Wafa Foundation

3

Jamal

Mohammed

Almaliqi

The state's

accounts sector

representative

He has unsettled accumulative

material pledges during serving

as finance attaché in Egypt

4 Ahmed Qaid

Ashibani

Assistant

secretary of

public relations

sect.

Not included in the MF cadre,

recruited based on being an

Islah affiliate.

5 Mohammed Assistant under- Bachelor in 2011, violate job


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Mohammed

Alhadma

secretary experience terms as being

appointed as deputy project

manager in Feb 2013 and

(illegally) promoted to

assistant secretary general in

June of the same year.

6

Ghailan

Mohamed

Ashaif

Public Finance

Project executive

manager

Appointed as director general

while being unemployed in the

state's admin. body, besides lack

of competition advertisement as

stated in the contract signed

with the WB.

7 Hussein

Alwusabi

Coordination

director general

Holder of primary education

degree, however, law stipulates

university degree and 13 years'

experience in such position, as

well as the position title is not

included in the MF structure.

8 Fuad Abdulla

Sharhan

Accounting

manager in

Ministry of

Interior

Secondary school certificate

SSC in 1992 and received

university degree in 2012 after

being appointed, while law

stipulates 13 years' experience

10 Ottoman

Assufiani

Public Finance

project deputy

director

Holder of SSC, brought in 2010

from Central Security Apparatus

and was appointed in June 2013

as deputy director general, in

contrary to all valid regulations

and to contracts signed with the

WB.

11 Mohamed Ali

Attweel

Deputy manager

of Human

Resources

Development

Holder of SSC while law

stipulates university degree and

minimum 10 years' experience,

his position is not included in

the MF organizing structure OR,

Islah affiliate

12 Ali Awad

Hassan

Deputy General

director for

Minister's Office

Holder of Islamic studies cert.

appointed in June 2012. Though

law stipulates university degree

and 10 years' experience in

admin. management though his

position title is not included in

the OS.

13

Ismail Yahya

Mohamed

Aradi

Hajja Finance

Office director

Holder of bachelor in Islamic

law, violating principle of

specialization stated in article

no 9 of Employment Law

14 Ahmed Ali

Ali Alma'ari

Director of

Auditing &

Digital Archives

Appointed in Oct 16, 2012

though law stipulates university

degree and 10 years' experience

in such a position

15 Rashid Accounting Holder of bachelor in Arabic


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This is a small sample of appointments violating employment filling law,

which were made on basis of partisan and tribal loyalty.

Checking such decisions, the FC found the ministry represented by Sakher

Alwagih, is deeply sinking in corruption, nepotism and mood arbitrariness. It

has issued contradicting and disappointing resolutions as several appointments

monopolize public jobs, however, many who are legally entitled to employment

are banned, and senior appointments are being made in more job stations

whether inside or outside the MF.

For example, law no 140 for 2013 on appointing, in the MF, as many as 13

secretary and secretary-generals, including Abdu Ali Saleh appointed as the

MF's financial affairs secretary in contrary to job requirements, still have

pending corruption cases and being prosecuted. The lawsuit filed against him is

a public job exploitation and facilitating control over a public potential

estimated at 2 million and a half, by signing a deal with Wafa Foundation (an

Islah affiliating est.) and in cooperation with the minister of finance.

Abdulla

Musleh

Manager in

Foreign Ministry

Studies i.e. non-specialist,

appointed only in 2012 though

law stipulates relevant degree

and 10 years' experience

16 Tawfiq Ali

Saleh

Government

Accounting

general Manager

Appointed in 2013 without

considering work experience,

and promoted from a head of

department.

17

Jamal

Mohamed

abdo Alariqi

Central

Accreditation

General Manager

Violated the 13 years' work

experience

18

Qassem Ali

Ali

Almaswari

Accounting

Manager for

Ministry of

Electricity

Holder of a diploma after

preparatory in 1992. He worked

as a treasurer

19

Mohammed

Aidh

Albushari

Accounting

Manager of

Passport

Authority

Holder of SSC in 1996. His

appointment contradicts

Employment Law

20

Abdulfatah

Ibrahim

Muhie

Addeen

Accounting

Manager of the

MF since Dec 10,

2010

Attained a university certificate

only in 2013. He was dispatched

to study in Malaysia at expense

of the MF

21 Akram Yahia

Ali Qassem

Islamic Check

Dept. Manager

The job title is not included in

the OS

22 Ali Awadh

Ahmed

Deputy general

manager in the

minister's office

This is the last promotion made

in June 7 2013, was first

(illegally) appointed as a

secretary of the minister in Oct

8, 2012. He lacks job

requirements.


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This is a pivotal role played by the MF to deteriorate principles of the public job

independence and neutrality, as the process takes place in response to influential

sheiks and military or political leaders, which lead to an absence of the

principles of priority and competence stipulated by valid laws (Civil Service

Code), eliminating many well-qualified and competent cadre and damaging the

MF in terms of increasing financial burdens more and more and holding sit-ins

and outrageous assemblies by those eliminated figures .

The minister trespasses his authorities and usurped entitlement of the prime

minister through appointing directors generals of financial affairs as well as

managers and deputy mangers in the customs authority.

The list of imbalances also includes transferring as many as 74 employees from

many institutions to the ministry headquarters in 2012, most of them are

affiliates to the minister party (Islah). In March 12 2013 a general notice was

issued to stop transferring, however, it was discarded by bringing other 43

employees and most of the newly appointed figures are financial affairs'

director-generals, accounting and procurement managers who are Islah

affiliates.

Last but not least, a separation between partisanship from one hand,

administration and public employment from the other must be made, and

adopting a precedence-and-priority based appointing is urgently needed for

progress.

Control over Finance

Given the reports by the central apparatus for monitoring and accountability

CAMA, the FC observed public potential wasting, spending unlawful amounts

and embezzlements; most of which relate to past years 2010, 2011. These

reports are just dead letters as no effective action is taken, for these key reasons:

The people accountable for these violations may have disappeared, for example,

the MF representatives, who once had worked there, have been moved to other

job stations. Some significant finance documents have been concealed by

concerned figures so as to misguide the central apparatus representative and

consequently to not easily know the persons responsible for these deviations.

Throughout long period of time, influential people and perpetrators find enough

chance to hide their wrongdoing via several techniques for which no need to

mention.

Efforts to bring these violations to the public funds prosecution may be exerted

by some CAMA representatives, yet if responsible bodies did not take required

action and follow-up, the people involved do all what is possible to settle their

problems and the exerted efforts are only flogging a dead horse.

Thus the FC recommends, to ensure a successful filing of violation cases and

bringing criminals to concerned bodies of punishment, instead of deputizing


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other, even if responsible, bodies and wasting efforts, a special sector to be

tasked with follow-up, punishment and take necessary action.

For example, the CAMA provide the MF with a copy of reports, yet the latter

does not move a muscle, especially under Consensus Government.

* Manipulating rules and regulations governing financial and administrative

work that touch real ground .

* Absence of actual control and of transparency on information access and little

understanding of new concepts of finance and admin. monitoring.

* Lack of analytic studies based on scientific basics and actual needs when

discussing and approving the state's public budget, considering results of the

CAMA reports and concluding statements of past years.

Instead of dependence on analytic studies, finance resources are subject to

individual evaluations and cancel of law no 8 for 1990 with its bylaws amended

by ministerial law no 1034 for 1999 due to lack of a text to determine pillars for

identify commercial and financial activities percentage, as follows:

1- Decisions are taken centrally, leading to personalization, partisan and region-

based loyalties, and responding based on state of mood,.

2- Lack of networking which serve actual and immediate control on many

finance resource expense.

3- Lack of constantly qualifying the employees, in light with financial and

admin. world developments and advancements.

4- Ineffective financial and admin. policies due to depending on unqualified

key-staff. These are in need of well training, experience and good knowledge.

5- The new appointments recently made in Ministry of Finance by virtue of

partisan loyalties made it easy for non-competent employees, often controlled

by influential centers, to undertake significant positions.

Observing the financial and administrative performance in the MF, the

committee re-affirms the following:

a- Manipulating the laws and regulations governing financial and administrative

work and policy of follow in financial situation.

b- Absence of actual monitoring and transparency on information access, and

misunderstanding the modern concepts of admin. and financial surveillance.

c- Fail to discuss and approve the state's public budget on basis of analytic study

and actual needs, in light of results of concluding fiscal statements of past years

and the CAMA reports.


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d- Financial revenues are subject to individual evaluation rather than analytic

studies, and discarding financial law no 8 for 1999 with its bylaws partially

amended by ministerial decree no 1034 for 1999, due to lack of foundations of

identifying financial and admin. activities and percentages.

Thus, the finance committee recommends a biannually or even annually

thorough review and inspection to be executed by the CAMA's representative,

in a way that ensure effective reports are timely presented to prevent being

manipulative.

Chapter III


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MF's Affiliates: Customs and Tax

Customs Authority

Reviewing three revenues reports for 2012 by the customs authority CA, the

report's preparing committee disclosed contradictions among CA's annual report

and magazine in terms of total amounts of revenues. The RSF's finance

committee FC noticed discrepancies in CA revenues when compared with its

annual general report, which confirms incongruity between the report and

revenues in the central bank CB.

Major corruption in CA's performance can be confirmed through

following violations:

Customs Evasion:

Reviewing customs law legal provisions, the FC observed the CA tasks are

not only confined to customs outlets but extend to customs area in terms of

investigation and customs trafficking fighting, as the CA practices no legal tasks

nor procedures regarding trafficking combating. This can be shown as follows:

A- The FC reviewed an official report on direct trafficking of (cigarettes) the

customs of which were only 747,860,062 YR besides fines which is not less

than these customs and have been accumulating each year since 1999 till 2012,

though the CA should not release any new shipments unless previous

settlements are made.

B- Smuggling is directly made from customs outlets and drugs are easily

brought (to Yemen)

C- The FC received documents unveil trafficking of suspected Indian cannabis

through Aden Free Zone Customs.

Billions YRs uncollected

Reviewing an official report referred on Jan 19, 2013 to Minister of Finance

MF, including legal violations and uncollected revenues, the FC noticed there

are 11,750 customs statements with 279 billion, 913 million and 146 thousand

YRs which is not provided to Public Treasury. Another memo referred to Head

of CA by Central Apparatus for Accounting & Monitoring, including dominant

corruption in Hodeida Port's Customs and a total of 4854 customs statements

are suspended and its fees 323 billion, 8880 million, 753 thousand and 608 YRs.

Another official report referred to Head of CA disclosed violating Customs Law

provisions as well as financial law, including unpaid collection vouchers, in

addition to a memo, referred by Higher Anti-corruption Board to Finance


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Minister, saying that $13,814,338 should have been offered by Hyundai Co to

the state as customs.

The FC stood on documents unveiling violations and evading paying due

customs amounts to the public treasury. These include entrance of electricity

generators and other equipment by name of the Abyan-based Yemeni-Saudi

Cement Factory. Though the prime minister ordered to move ownership of these

equipment to Electricity Corporation EC, the ministry of finance and CA

ordered the financial guarantees that were already provided, be retransmitted

from the factory to the EC.

Corrupted Customs Outlets , Sana'a Customs an Example

An estimated 1,214,840,551 YRs is supposed to be paid to the state's public

treasury as a result of customs violations in the Sana'a Airport Customs

Authority. The FC received a report referred to Minister of Finance by a

committee entrusted with a field visit to this customs office, disclosing illegally

return of 351 financial guarantees to their owners after being expired, which

prevents the treasury from 600,467,273 YR, deliberately postpone sums

supplied to the CB's deposit accounts instead of being paid to the PT, and 204

customs statements suspended, with 99,527,442 YRs, which incurred the state

heavy loss as a result of negligence.

It also unveiled facilitating clearance to traders, against guarantees, at expense

of the PT, 605 warrants of more than 835 million YRs with more than 262

million YR are due, extending 312 cases instead of 4 justifiable cases, illegally

clearing of the quick shipments which cause delay of customs fees, etc.

Customs Exemption Corruption

The FC observed granting customs exemption by the CA to government

bodies and importers in violation to customs law No 12 for 2010, as well as an

increase of these exemptions year after another. The CA confines only to

prepare memos to the departments the role of which is to publish notices and to

register issues Against Anonymous (Customs Fugitives).

Customs Value & Invoice Manipulate

The manipulation on imported commodities' customs value is made through

price generalizations by the CA that are average-customs value of a given

container. Some of the price manipulations on items includes price instructions

issued by the head of CA to its branches, and caused several violations. The FC

reviewed many faked invoices and samples of items value, and found the public

treasury is prevented from a legal 532,000,000 million YR, in addition to

manipulating tariff items to evade paying real customs value against bribing

specific individuals.

There are also manipulations on quantities, names of goods, and "Alterpetk"

fees, and individuals' obligations are more than fiscal revenues. The FC


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discovered that amounts provided to the treasury is only 5% of the legal amount

due to violations. Corruption also found pertaining employees' allocations.

Though a compromise manual was issued by the Finance Minister, the Customs

Authority has illegal customs fees.

Some of the CA's corruption cases covers spending dozens of millions on

meetings, consultation sessions and travel allowances. They further include

double-standard dealing and discrimination against traders from the south

districts etc. The minister of finance seemingly does not carefully consider

corrupt cases in customs office as it is clear from a document referred by

Manager of Monitoring & Inspection. Several appointments within CA were

made illegally, without considering principles of fairness, expertise, Age-based

priority and equal opportunity, rather these appointments were based on

favoritism and interests-dividing policies among CAs leadership and Ministry of

Finance. Last but not least, a number of general directors were appointed

without the necessary resolutions of relevance, including Systems Department's

Abdullatif Alsanbani, Jalal Shaif in Department of X-Ray, Risk Management,

and that of Temporary admins, in addition to other appointments. The Arabic

original text contains multiple figures of CA's violations which are not covered

in this briefing.

Tax Authority

Tax Authority TA normally works on achieving several economic, financial,

and social objectives through regulating economic resources, though the matter

is different in Yemen, as tax assessment is not often based on key indices of the

gross national production with its derivatives, which results in disregarding tax

performance when putting economic policies. Some of its embodiments are:

a- Narrow gap between societal purchase income, having tax performance

contributed to enlarging such gap within citizens with limited income,

businessmen and traders as collected wage taxes reached 110.3 million YR with

64%, and tax profits collected from public and private institutions and Corps.

were 56.8 million with 33%, which indicates bearing much more taxes by

individuals, in contrary to principle of tax equity.

b- Most tax collections focused on a limited number of assigned entities

compared with tax groups, as commercial tax profits CTP collected from private

money companies has reached only 20 entity with an amount of 8.9 million

(55,2%) from the total collection involved such sector which is 2417 taxpayers.

As for public and private units, the CTP involved 10 units with an amount of

16.7 million YR (79,5%) out of the tax collections from the sector's 200 payers

c- The wage taxes involving the private sector employees targeted 36 taxpayers

with 10,2 million YR (54%) out of wage tax collections from the sector's 38163

payers.


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d- As for taxes collected throughout the year, the amounts gathered from the

state's administrative apparatus and the private, cooperative and public sector's

economic units were 112,2 million (65,3%) while collections from commercial

and industrial private sector (finance companies ) were only 54,8 million YR,

with 31,9%, which indicates an expanded tax evasion in commercial and

industrial activities for this sector.

Causes of Tax linking Expansion in Private Sector's Commercial and Industrial

Activities

1- Continued according tax profits exemptions to most taxpayers in petroleum

services sector, based on contracts of production sharing "Parent Oil Company",

though some of them do not keep regular records, which leads to wasting tax

resources coming from the activities that are not subject to those exemptions.

2- shortcomings involve tax collecting, linking and accountability in

a way that allow such evasion. Some of its reflections are as follows:

- Tax confessions in favor of Tax Authority and its branches 87,108 with 17,4%

compared with the targeted achievement.

- 27,499 taxpayers were inquired and tax linking with 4% of the total target

695,952 taxpayers, which causes increasing danger of tax evasion for the cases

not subject to tax accountability.

Key Violations and Corruption Cases

It is worth mention the TA's reject a demand by Ahmed Saif Hashid dated Oct-

21-2012 on having information on telecom companies tax for the years

2011,2012,2013. The TA rejected the demand under pretext that the information

of commercial nature are excluded from the right of information accessibility

and the companies in question had already published their annual budgets in

official and private media, which openly contradicts the right of information

access, based on provisions 4,5,15 of law no (13) for 2012 which stipulates the

right of information accessibility regarding telecom companies tax is guaranteed

for citizens. It was issued after several media outlets talked about the

companies' rejecting paying due tax for many past years.

Though the TA refused to talk about its statements, the RSF's finance

committee – from the collected data- has noticed the following:

* the TA has neither reliable databases nor it keeps complete accounting

records for taxpayers in the republic of Yemen, and cannot obtain its payable

rights, from big individuals and traders, accumulated throughout dozens of tax

years, as well as from great contracting and construction co. with their sheikhs

owners.


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* Violating principles of tax equity and clarity, as it is clear from the multiple

stagnant files (archived with no processing), with the settled files in a TA public

department reaching (only) 27% out of the total taxpayers, which indicates, in

general, a fragile and ineffective tax performance.

* Taxes are centrally collected with 90% and a range of 4-5% of the total tax

from a province to another, which also indicates weak performance of the TA's

public offices in provinces and their district-based branches.

* Though multiple taxpayers assessed great deal of amounts and their names

are recorded in the assessing books, they are neither included in statements of

collecting departments, nor within end-of-year due balances.

* The lack of specific mechanisms by the provinces' executive offices, to be

followed in effective monitoring on collecting due taxing.

* Ineffective role played by the tax offices in provinces to identify annual

successive mistakes in local collected taxes, as the ratio of tax non-assessing for

the most significant local collection in all districts exceeded (-50%) which is a

critical offence in local tax collection.

* Clear-cut difference within procedures levied and applied when estimating

and assessing tax of similar activities.

* Disregarding determining value of customs data of taxpayers in most

provinces who are not included in restricting public departments and branches,

with hundreds of billions, whose tax difference estimated value is millions Yrs.

* The TA depends on employees and collectors receiving wages on daily basis,

which causes the TA to make critical deviations involving results of the

workers' monthly performed programs.

* The tax offices are active in main cities as well as collection shortcoming in

terms of equality between cities and districts taxpayers, as taxing in provinces is

estimated according to moods and its ratio is little in suburbs, not to mention the

absence of applying principle of law specialty on all provinces equally

* Loss of notifications (assessment 3 sample) granted to a number of collectors,

and no legal action is taken regarding who owns the receipts in most affiliated

offices.

* The implementing offices' actual expenditure is exaggeration (budget+ private

accounts) constituting (30% to 49%) of the revenues collected via offices,

which is approximately one third of the revenues in some offices and vary in the

other.


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* Close to one-third of tax revenues are granted to collectors without

considering applying the principles regulating revenues and spending from

them.

monitoring report on finance, yemen

Documents