AD ALTA
JOURNAL OF INTERDISCIPLINARY RESEARCH
INTEGRITY PROMOTION ISSUES AT LATVIAN CUSTOMS: LESSONS LEARNED AND
POSSIBLE SOLUTIONS
a
MARA PETERSONE,
b
KARLIS KETNERS
Riga Technical University, Kalnciema str.6, Riga, Latvia
email:
a
mara.petersone@rtu.lv,
b
karlis.ketners@rtu.lv
Abstract:
The objective of this paper is to identify problems of integrity management
for Latvian customs authority and to provide measures that should be implemented in
customs administration. First of all, the paper describes the typology of integrity
violation and corruption in customs administration and identifies the current risk
management system implementation. Next, the background of customs risk
management is been discussed. Selected research findings show examples of
integration of integrity management system with other management systems. Overall,
paper is of value for audiences that include researchers and managers of custom
administration and it can serve as guidelines and sources for references which can
stimulate further research.
Keywords: integrity, customs, public administration, corruption.
1 Introduction
An honest and clean civil service is vital to maintaining public
support for public sector and trust in the government and is an
important cornerstone of effective governance. Corruption is the
modern society problem that connected to the malicious
imposition of delegated by society power for personal or close
person’s interest. Corruption manifests itself in political process
(e.g. trading of votes), in the judicial system (bribing of judges)
and also as an economic policy sphere. Corruption is a part of
undesirable behaviour in public administration that threatens
both - social and economic development of the country, as well
as stability of the legal system, civil liberties and citizens’
loyalty to the country. Corruption is decreasing public
administration weakening its capacity and delaying decision
making. Modern democratic societies need a modern, democratic
public administration, which wil
l satisfy the public′s
requirements in the best possible manner. Public administration
must be effective and efficient; at the same time it must satisfy
the democratic requirements, fairness and justice and defend the
achievements of civilization. Tax and customs authorities are no
exception from public administration and are frequently cited as
among the most corrupted of all government agencies. Given the
vitally important role customs plays in revenue collection, trade
facilitation, national security, and the protection of society, the
presence of corruption in customs can severely limit a nation’s
economic and social prospects and national development
ambitions. In the field of tax and customs administrations main
issues that caused by staff corruption are revenue fraud in the
form of smuggling, undervaluation and underdeclaration of
income and taxable goods, misclassification of goods.
Policy distortions and weak state institutions provide an
environment that is conducting to corruption. Pervasive
regulations that are applied capriciously invite companies and
individuals to find ways, including bribing public officials, to
secure favourable interpretations. Trade and tariff restrictions
also tend to breed informal, often corrupt channels for
transactions. One of the approaches is creation of appropriate
administrative model for customs administration. In last decade,
many countries created semi-autonomous authorities (Petersone,
Ketners, 2013). The revenue authority model is designed partly
to limit direct political interference in day-to-day operations by
the Minister of Finance and partly to free the tax and customs
administration from the constraints of the civil service system. A
revenue authority is quite independent of the financing and
human resources management rules that govern the public sector
in general. A semi-autonomous revenue authority can recruit,
retain and promote qualified staff by paying salaries above civil
service pay scales, and also more easily dismiss staff. Such steps
are providing incentives for greater job motivation and less
corruption. Moreover, a single purpose agency is to integrate tax
and customs operations and focus its efforts on collecting
revenues more effectively than it is usually possible under
general civil service rules. As Latvian State Revenue Service is
an example of joint tax and customs authority it is necessary to
use additional measures. Such administrative remedies for
integrity promotion are creation of integrity risk management
model for customs administration as for specific public
administration body.
The main purpose of this paper is to outline an approach for
reduction of corruption in Latvian customs administration and to
provide framework for establishing the legal and administrative
procedures that are necessary to detect and reduce corruption.
The research object is integrity risk management, but research
subject are appropriate risk assessment, evaluation and reduction
methods, as well as corruption risk management tools. Research
is based on comparative analysis of literature and practical
experience of customs authorities. Many countries have in place
measures for dealing with corruption and unethical behaviour on
the part of public officials. Rarely are these measures considered
as a part of the whole system. At the same time, there is little
research evidence for the effectiveness of individual measures or
the system as a whole (Kolthoff, et.al., 2013).
2 Corruption factors and integrity violation at customs
administration
In case when corruption causes are combatted, it is important to
address not only general corruption factors, but also integrity
violation practices in specifically customs administration.
Generally factors of corruption in public sectors are included but
not restricted to extensive government intervention in the
economy, excessive discretionary power and interpretation
possibilities in hands of official, behavioral and cultural norms
of the officials, lack of the supervision and guidance, lack of
accountability and internal control system. In addition to these
general factors in customs and tax authorities exist far more
practices that are corruption related. Economic agents
(companies and individuals) do not like to pay taxes, so they
take every opportunity and make significant efforts to reduce
their tax burden. In case of customs authorities importer also is
interested in obtaining goods as quickly as possible, this places
customs officers in the position to collect bribes in order to
facilitate faster release of goods.
The most important factors conductive to a lack of integrity in
the customs administration are described at 1.Fig. The most
important factors connected to a lack of integrity in customs are:
Policy-related factors, such as complex tax system,
complex and restrictive foreign trade regulation, high tax
and tariff rates, exemptions that can be granted by
executive powers, complex and bureaucratic procedures,
multiple forms, steps of the proceedings;
Staff-related factors, such as discretionary power execution
in combination with lack of information and complicated
voluntary compliance, weak control systems, lack of
effective disciplinary measures, lack of professionalism.
Customs administrations are vulnerable to corruption because
the nature of its work puts its officials, even at junior levels, in
situations in which they have sole authority and responsibility; in
which they are authorized to make important decisions on the
level of duty or taxes or admissibility of imports and exports;
and in which careful supervision and accountability is difficult.
In addition, they work face-to-face with members of the trading
community who have a strong incentive to influence the
decisions made by customs officials. High tariffs and complex
regulations offer significant incentives for traders to try to reduce
import charges and speed up transactions. Fact that many
officials are low paid is often a strong incentive to accept or
solicit bribes in the execution of their duties.
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