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| Widespread Graft Expanded After Tunisian Revolt, Study Says | |
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| LONDON — The World Bank has uncovered new evidence of large-scale corruption and tax evasion by firms owned by the family of the former Tunisian president Zine el-Abidine Ben Ali during his dictatorship, and also warned that graft has intensified since the revolution that ousted him four years ago, officials said Wednesday. | LONDON — The World Bank has uncovered new evidence of large-scale corruption and tax evasion by firms owned by the family of the former Tunisian president Zine el-Abidine Ben Ali during his dictatorship, and also warned that graft has intensified since the revolution that ousted him four years ago, officials said Wednesday. |
| A new research paper by World Bank economists released Thursday shows that companies owned by relatives and close allies of Mr. Ben Ali defrauded the state of $1 billion to $2.6 billion over a seven-year period by avoiding import tariffs. Researchers investigated the dealings of 206 companies between 2002 and 2009. | A new research paper by World Bank economists released Thursday shows that companies owned by relatives and close allies of Mr. Ben Ali defrauded the state of $1 billion to $2.6 billion over a seven-year period by avoiding import tariffs. Researchers investigated the dealings of 206 companies between 2002 and 2009. |
| The findings represent one example of the cronyism that typified Mr. Ben Ali’s 23 years in power and that was one of the main drivers behind the uprising that overthrew him in 2011. Protesters vented their anger against Mr. Ben Ali’s family, and in particular his wife, Leila Trabelsi, a former hairdresser, and her businessmen brothers who had rapidly amassed great wealth. | The findings represent one example of the cronyism that typified Mr. Ben Ali’s 23 years in power and that was one of the main drivers behind the uprising that overthrew him in 2011. Protesters vented their anger against Mr. Ben Ali’s family, and in particular his wife, Leila Trabelsi, a former hairdresser, and her businessmen brothers who had rapidly amassed great wealth. |
| The scale of the corruption remains a concern not only for the money it has cost the Tunisian state, but also for the continuing damage that an unreformed and inequitable system does to the economy and to business in general. | The scale of the corruption remains a concern not only for the money it has cost the Tunisian state, but also for the continuing damage that an unreformed and inequitable system does to the economy and to business in general. |
| Hundreds of the family’s companies that were confiscated after the revolution are now publicly traded. The family had amassed assets of $13 billion, according to officials in charge of the confiscation. | Hundreds of the family’s companies that were confiscated after the revolution are now publicly traded. The family had amassed assets of $13 billion, according to officials in charge of the confiscation. |
| Tunisia’s anticorruption commissions, who have examined reams of documents impounded in the presidential palace, concluded that the entire system of governance under Mr. Ben Ali was corrupt and referred nearly 400 cases to the courts. | Tunisia’s anticorruption commissions, who have examined reams of documents impounded in the presidential palace, concluded that the entire system of governance under Mr. Ben Ali was corrupt and referred nearly 400 cases to the courts. |
| Samir Annabi, who has led the National Anti-Corruption Authority for the past three years, said he was shocked by the extent of the graft and the legal manner in which Mr. Ben Ali had instituted it. “I knew there was corruption, but not how it was in every field, and every part of the country,” he said in a recent interview in Tunis. “The system itself was corrupt, the entire way of governing the country.” | Samir Annabi, who has led the National Anti-Corruption Authority for the past three years, said he was shocked by the extent of the graft and the legal manner in which Mr. Ben Ali had instituted it. “I knew there was corruption, but not how it was in every field, and every part of the country,” he said in a recent interview in Tunis. “The system itself was corrupt, the entire way of governing the country.” |
| The World Bank had to review its own reporting on Tunisia, since for years its appraisals of the country’s economic performance had been upbeat. Bank officials attribute their misreading of the level of the corruption to a lack of information available under the authoritarian government. | The World Bank had to review its own reporting on Tunisia, since for years its appraisals of the country’s economic performance had been upbeat. Bank officials attribute their misreading of the level of the corruption to a lack of information available under the authoritarian government. |
| The World Bank detailed how the system worked in a first report on corruption under Mr. Ben Ali last year titled “All in the Family.” Firms owned by Mr. Ben Ali and his family dominated the telecommunications and air transportation industries, as well as real estate and other sectors of transportation, and were extremely lucrative, the report found. | The World Bank detailed how the system worked in a first report on corruption under Mr. Ben Ali last year titled “All in the Family.” Firms owned by Mr. Ben Ali and his family dominated the telecommunications and air transportation industries, as well as real estate and other sectors of transportation, and were extremely lucrative, the report found. |
| By controlling the regulatory system of licensing and investment, the presidential family maintained a virtual monopoly in the sectors they chose, preventing competitors from entering the market and outperforming others in every aspect: employment, market share, profits and growth. Of the firms owned by the family that were confiscated, 220 accounted for 21 percent of all net private-sector profits in Tunisia, the report said. | By controlling the regulatory system of licensing and investment, the presidential family maintained a virtual monopoly in the sectors they chose, preventing competitors from entering the market and outperforming others in every aspect: employment, market share, profits and growth. Of the firms owned by the family that were confiscated, 220 accounted for 21 percent of all net private-sector profits in Tunisia, the report said. |
| One example of the blatant use of regulations to remove competitors was the closing of a long-established private school, the Bouebdelli School, by the Education Ministry for not complying with registration regulations. The school was perceived to be in direct competition with the International School of Carthage, which was founded by the first lady, Ms. Trabelsi, the report said. | One example of the blatant use of regulations to remove competitors was the closing of a long-established private school, the Bouebdelli School, by the Education Ministry for not complying with registration regulations. The school was perceived to be in direct competition with the International School of Carthage, which was founded by the first lady, Ms. Trabelsi, the report said. |
| Foreign investment was also strictly regulated. McDonald’s was refused entry into the Tunisian market because it was unwilling to grant the sole license to a franchisee with family connections, according to the report. Presidential decrees, meanwhile, were issued that favored family members’ business activities. | Foreign investment was also strictly regulated. McDonald’s was refused entry into the Tunisian market because it was unwilling to grant the sole license to a franchisee with family connections, according to the report. Presidential decrees, meanwhile, were issued that favored family members’ business activities. |
| In the latest research, economists studied a specific group of companies whose import dealings could be matched against international records. They identified 206 companies that were known importers from the 662 businesses confiscated from the Ben Ali family. | In the latest research, economists studied a specific group of companies whose import dealings could be matched against international records. They identified 206 companies that were known importers from the 662 businesses confiscated from the Ben Ali family. |
| They found that the companies had reported unit prices of goods arriving from abroad that were much lower than the prices declared by the companies exporting the same goods to Tunisia. Competitors’ companies did not show the same trend, and state-owned companies tended to show overpricing of goods, suggesting a different type of misreporting or corruption. Since the confiscation and change of ownership, those companies no longer show such discrepancies, the report says. | They found that the companies had reported unit prices of goods arriving from abroad that were much lower than the prices declared by the companies exporting the same goods to Tunisia. Competitors’ companies did not show the same trend, and state-owned companies tended to show overpricing of goods, suggesting a different type of misreporting or corruption. Since the confiscation and change of ownership, those companies no longer show such discrepancies, the report says. |
| The underpricing of imports allowed the Ben Ali firms to circumvent taxes that amounted accumulatively to at least $1.2 billion over seven years, and as much as $2.6 billion. Data suggests that “in 2009 alone connected firms evaded approximately $217 million worth of taxes more than other firms would have,” the report states. Such estimates are conservative, Bob Rijkers, the main author of the report, said in a telephone interview. | The underpricing of imports allowed the Ben Ali firms to circumvent taxes that amounted accumulatively to at least $1.2 billion over seven years, and as much as $2.6 billion. Data suggests that “in 2009 alone connected firms evaded approximately $217 million worth of taxes more than other firms would have,” the report states. Such estimates are conservative, Bob Rijkers, the main author of the report, said in a telephone interview. |
| “This number of 1.2 billion is illustrative of one practice among many,” Mr. Rijkers said. “And what is surprising is that this is just one mechanism and one vehicle for rent creation that they utilized, and this already is enormously costly.” | “This number of 1.2 billion is illustrative of one practice among many,” Mr. Rijkers said. “And what is surprising is that this is just one mechanism and one vehicle for rent creation that they utilized, and this already is enormously costly.” |
| The damage of corruption to Tunisia has been immeasurable, not only in unpaid billions but in the stifled growth and the suppression of dynamic and talented entrepreneurs in favor of a system that rewarded those with connections, he said. | The damage of corruption to Tunisia has been immeasurable, not only in unpaid billions but in the stifled growth and the suppression of dynamic and talented entrepreneurs in favor of a system that rewarded those with connections, he said. |