Sunday, February 24, 2008

Corruption in Muscat Municipality

I’ve already blogged about many of the ways business works here – quite legally – in favour of the already rich and well connected in Oman. But what about the shadier ways? My friends have been telling me about one of the ways, in Muscat Municipality. They pointed out how many of the Directors – despite only earning an official salary of circa 1400 rials/month (around $4200 net) – have multiple houses (and I mean like 6), all valued at more than $1 million, with no mortgages. And really nice cars. How? Well, because they say they are totally bent.

Now, contract tenders are usually well regulated by State Audit, with public opening of tenders, lowest tender accepted, etc. (tho' more on how to beat that system later). But, when the Municipality buys all the materials they need to build stuff, and it's a lot of construction material, ie cement, concrete blocks etc, apparently inventory control is pretty loose. And so some of the materials are diverted to build other things, not exactly in line with Municipality business, like houses. Another way is that roads and mains power access will be built coincidentally to land owned by Directors, increasing the value substantially.

This is perhaps one of the biggest problems with Oman not having an income tax on personal income. In the west it is a key method of law inforcement, as untaxed income is illegal, and can usually be easily proved. That's how they caught Al Capone. Not for murder, but tax evasion. A significant benefit to Oman of income tax would be the ability to audit such income and to verify its legality.
'So, Mr undersecretary, you earn X right?' 'Right...' 'So this Porsche Cayenne, and the 3 houses, where did you get the money for that?' 'Oh, ummmm ummmm..'

But of course my friends can't be correct, can they. Corruption at the highest levels of Muscat Municipality? I have no evidence what-so-ever. So it can't be true, no matter what the rumours say.


  1. corruption might be found at all the Omani governmental institutes. But at least when it comes to Muscat Municipality , we are seeing something. :) .. Yes, they might get thousands or millions of rials from some projects. But, at least we see these projects in the end. Unlike other ministries and other officials. We don't really get to see what benefits are they bringing to this country...

  2. The Tender Law in Oman does not actually require the Tender Board to select the lowest offer, even if that offer satisfies the requirements of the specifications in the tender documents because of the point system used to select the best technically and financially presented offer, so an extremely great offer technically could be selected even though it is much higher in value than the rest of the offers that did all as well satisfy the minimum requirements of the tender docs. That is fully legal in Oman.

  3. I've seen how it works when a high ranking Muscat Municipality official built a massive house next to the one I was renting in MQ a few years ago.

    Typically, the official would design a house and start construction with some third or forth grade contractor and a small time consultant. Then you notice that Muscat Municipalities come to the site to supervise the construction, sometimes every day. Then you notice that sometimes the construction workers aren't from the same company whose name is on the board. Sometimes they blatantly come in a bus with the name of the big time construction company that they actually work for (these days there's a house being built for a big time government official in Ghobra (not Muscat Municipality) which is being built by Galfar construction workers even though the name on the board is of an known third grade company). As the project progresses you notice the different subcontractors are all companies that are either working on Muscat Municipality projects at the same time, or those who have recently completed a project for them. Some would contribute in-kind. Like for example the company that supplies the interlock tiles for a road project will also bring some for the house as well. The company that's paving a road for the municipality will also come pave in front of the house, and so on. Sometimes it's a really slow process, you build whenever you get a contractor who is willing to put some workers in your house. But you're getting a house more or less for free.

    It's so blatant it's not even funny.

  4. I agree with the fact that these people are bent and getting something for free, however, I moved here specifically because I didnt want to pay any tax on my income, I want to save. I will move if this country implements taxation on personal income, and my employer doesnt pay the difference.

  5. Amjad, well, I guess that's looking on the positive side! But its money that is effectively being stolen from the Omani people. I don't agree thats a good thing when so many things need doing and the country is far from rich.

    Blue Chi. Good point. But taking a non-lowest tender is very difficult in practice. There are other ways around it. More on that soon.

    Muscati - Welcome back! And thanks for the info. Very interesting. But why is nothing being done at all? Is everyone bent? Including State Audit and the ROP?

    AL - well, it would depend on the limit thats set, and the tax rate. It could just be made illegal to not declare income over, say, 1000 rials/mnth, even if it was untaxed. And I tax on income of say more than 100,000 rials / annum doesn't seem too unreasonable. Especially if the money is used to increase social security for the very poorest, or perhaps to provide a dowry for first marriages for those who have low income.

  6. The real issue is extent of corruption in high offices. I would say on a scale of 10, if the corruption levels are below 3, then it is quite okay, even for Muscat Municipality. Basically, people at high positions are quite used to ‘cuts’ and ‘gifts’ in this market, and I have seen people at purchase departments minting monies through clandestine means.

    Finally, a Porsche Cayenne doesn’t mean the top official would buy it by way of cash. It can be also a gift doled out by the dealer in return for a big favour.

  7. The problem with implementing taxation here, is, just like everything else, its all a big load of good thoughts and well-wishes. It's all very well and good having a state audit department, ROP, etc, but what is the use of these people if they dont enforce anything. People under-reporting their income is an age-old problem and people here will say they earn the maximum allowed before taxation, or a heavier bracket for example. And they will get away with it because it will never be enforced, and even if it is, these high-earners probably have the wasta to make it go away.

    This country is corrupt, no matter which way you shape it. It's a shame really that on one actually does anything about it. Talk is worthless without something to back it up.

  8. AL,

    I agree. Unfortunately the only driver for that sort of change is HM, given the lack of riots in the streets over corruption.

    And it seems HM is much more insulated these days from ordinary people. And they wouldn't have any hard evidence to show him anyhow.

    So its hard to see how it will change. Which is a real pity with so much poverty remaining here.

  9. Leave us Alone!
    We are happy as we are and better of any way. Those who had oportunity to work in Oman, u should be thankful than disturb us. We thank Allah for All, specific: Our peaceful country and our leader and Gulf leaders. we r far better of than developed country 'The peace we enjoy'. Long leave our Sultan any May our prayers be granted on this Friday. Ameen.

  10. Another big problem is the mafia of building owners who rented their building to innocent tanents.
    Their building gets old and old and they don't want to refurbish or maintain the building. The biggest problem is the lifts, when it get spoiled, they only try to repair the faulty part instead of replacing the part. And during that time the residents face a lot of problem by using stairs. There is no alternate. The old people are the worst affectee. when resident complain the property manager or building owner they treat like shit and said that other building lifts are also bad, why you are complaining. There is no complaint center, so they do as they like to do. No mercey on old people. Muncipality must have to take strict action specialy the building owns by Hassan bin jumma baker in alkhuwair.


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