17 January 2011

To maintain integrity-rich behaviour in agencies, it is important, not only that there is leadership about standards, but that everybody knows what is expected of them – “the way we do things around here”. Standards must be integrated into the ordinary course of business. If trust elements are weak, opportunities arise that some people will inevitably exploit.

A major fraud ring organised by a senior customs officer has been uncovered in Turkey. It exploited that country’s poor focus within government agencies, on the trust elements.

In Turkey, 1 in 3 people smoke – the highest rate anywhere. Tax on cigarettes is high. Government revenue is unusually dependent on the cigarette tax. Smuggling cigarettes has better rewards than trafficking drugs. It corrupts customs officers.

High import taxes heighten the relevance of customs officers acting lawfully. In some countries special disclosure regimes have been put in place to support custom officer integrity. The OECD will publish data relating to these disclosures in mid 2011.

An interesting development late last year was that Fiji put a massive tax increase on bottled water – from 0.65 cents to 15 cents a litre, a 45 fold increase). That meant one manufacturer – of Fiji Water – threatened to withdraw from the market, although its US owners soon relented. But it means that the smuggling of bottled water may become an issue!