Spotlight on Public Corruption in Latin America

Spotlight on Public Corruption in Latin America

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January 9, 2018
Spotlight on Public Corruption in Latin America
Introduction
Figure 1. Latin American Respondents’ Perceptions
Many perceive Latin America to be in the midst of a
of Corrupt Groups and Institutions
growing corruption crisis. Transparency International’s
Corruption Perception Index (CPI) for 2016 found that
respondents in most Latin American countries believed
corruption was increasing. This perception is fueling civil
society efforts to combat corrupt behavior and demand
government accountability. Corruption is also likely to be a
central theme in elections across the region in 2018. Many
Latin American politicians are running on anti-corruption
platforms, often abandoning traditional parties sullied by
corruption allegations and embracing antiestablishment
platforms.
Numerous elected officials have been removed from office

in the past decade due to corruption scandals. In 2015,
Public-sector corruption is often a prominent part of a
Guatemalan President Otto Perez-Molina and his vice
larger corruption problem that handicaps Latin American
president were arrested and imprisoned for conducting
growth through lost productivity and skewed incentives. It
multiple corruption scams. In Brazil, a sprawling corruption
can erode public services, and many analysts increasingly
investigation under way since 2014 has implicated much of
see it as a cause of deepening inequality. In the 2016 CPI,
the political class, leading to the imprisonment of the
nearly a third of all Latin American respondents said they
president of the Chamber of Deputies and contributing to
had paid a bribe for a public service such as health care or
the impeachment of President Dilma Rousseff in 2016.
education in the past 12 months.
Perceptions of growing corruption may reflect a greater
Recent Incidents of High-Profile Public Corruption
awareness of corrupt behavior rather than an increase in
The range of corrupt practices is broad, and the types
actual corruption. This heightened awareness may be due to
mentioned here have received recent attention. Several
the growing use of social media to report violations and
scandals reaching multiple countries in the region have
inform the citizenry, as well as to greater scrutiny by
underscored a sense of urgency and perhaps increased the
domestic media and investigative reporters, international
viability of anti-corruption campaigns while also spawning
investors, and, in some cases, congressional bodies.
protest and, in some cases, instability.
Moreover, the region’s growing middle class, with its rising
expectations, seeks more from its politicians. Corruption in
In Mexico, for example, the costs of corruption have been
the judicial system can undermine the rule of law and
estimated to reach as much as 5% of gross domestic product
heighten impunity, leading to more crime because of lax or
each year. Mexico’s long-dominant Institutional
absent enforcement.
Revolutionary Party is now so linked with corruption that it
is likely to be hobbled in the mid-2018 national elections.
Latin American Regional Findings
Some analysts maintain that state involvement in corruption
Transparency International’s 2016 survey, in the 20 Latin
has undermined Mexico’s state and federal governments,
American countries polled, found that the corruption taint is
where eight current and former state governors are under
particularly acute for politicians, political parties, police,
investigation for corruption and allegations of vast
and other public servants; respondents deemed those groups
enrichment schemes. Mexico never resolved the suspicion
“all or most corrupt” (see Figure 1). Citizens reported
of official involvement in the 2014 disappearance of 43
being most concerned about the use of public office for
students in the state of Guerrero. Mexican authorities
private gain (graft, influence peddling, extortion, bribe
arrested local government officials and local and national
solicitation, money laundering, obstruction of justice,
police for collaborating with a drug gang in the killings, but
nepotism, or violation of political finance regulations).
no explanation of the crime has been provided and an
international investigation was thwarted. (For more, see
Corruption scandals affecting top-level politicians have
CRS Report R42917, Mexico: Background and U.S.
touched every region of Latin America. Corruption charges
Relations.)
tainted the second administration of Chilean President
Michele Bachelet, whose son allegedly used his position to
Brazilian construction firm Odebrecht, in a landmark plea
secure a $9.2 million bank loan. Former President of El
deal, admitted to paying $735 million in bribes to
Salvador Mauricio Funes (2009-2014) was found guilty of
politicians and office holders throughout the region to
illicit enrichment in a Salvadoran court.
secure public contracts over more than two decades. In
December 2017, Ecuador’s vice president, Jorge Glas, was
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Spotlight on Public Corruption in Latin America
convicted of taking bribes from Odebrecht executives
Guatemalan legal system but to receive its funding through
exceeding $13 million when he served under former
international donations.
President Rafael Correa. In Peru, President Pedro Pablo
Kuczynski was accused of accepting Odebrecht bribes and
In 2016, the Honduran government worked with the
faced impeachment by the opposition-led Peruvian
Organization of American States to establish the Mission to
Congress; he narrowly survived a vote in December 2017.
Support the Fight Against Corruption and Impunity in
The Odebrecht scandal also has shaken parties and
Honduras (MACCIH). More limited in some ways than
presidents in Colombia, Panama, and other nations, such as
CICIG, MACCIH’s initial efforts have focused on
Mexico.
strengthening Honduras’s anti-corruption legal framework.
MACCIH does not have independent investigative or
Allegations of corruption blossomed in 2015 around FIFA,
prosecutorial powers, but MACCIH officials work
international soccer’s governing body. Scores of FIFA
alongside Honduran officials on integrated investigative
officials in Latin America and elsewhere have been indicted
and criminal prosecution teams.
for “institutionalizing graft.” In 2017, U.S. prosecutors
brought cases against top FIFA officials, winning
In response to corruption concerns, U.S. foreign assistance
indictments against officials in Paraguay and Brazil.
has long required vetting to prevent assistance from going
to foreign security force units that are reasonably suspected
Anti-corruption Activism and Efforts at Prevention
of human rights violations. To target governmental
The 2016 CPI survey reported that a majority of Latin
corruption, U.S. aid to Central America in FY2016,
American respondents considered their government’s anti-
including for El Salvador, Honduras, and Guatemala, was
corruption measures unsuccessful. However, civil society
conditioned on measures to induce recipient governments to
activists continue to push for anti-corruption reforms, and
carry out complementary reforms. Analysts maintain that
they have been successful in some instances. The
without this buy-in from recipient governments,
disappearance and execution of the 43 Mexican students in
development and security programs tend not to achieve
Guerrero sparked an anti-corruption movement that
their goals.
pressured Mexican President Enrique Peña Nieto to back
the introduction of a National Anti-Corruption System.
Venezuela scored lowest among the 20 countries surveyed
Despite passage of an anti-corruption law in 2015, the
in the region in the 2016 CPI survey. The U.S. Congress
Mexican Congress has not appointed an independent
has supported the application of sanctions against
prosecutor. In late 2017, civil society leaders of the Anti-
Venezuelan officials to address official misconduct,
Corruption National Advisory Board, who oversee the law,
including charges of undermining democracy, human right
stated that the Mexican government had nearly completely
abuses, and drug-related money laundering. U.S. sanctions
obstructed their role.
have targeted top Venezuelan officials, such as the
president and the minister of education. (For more, see CRS
Several South American countries with well-established
In Focus IF10715, Venezuela: Overview of U.S. Sanctions.)
judicial systems have made progress in combatting
corruption. One example is Brazil’s extensive prosecution
Some Considerations for Congress
of corrupt legislators. However, there have also been
Many U.S. policymakers remain concerned with a weak
significant failures. In summer 2017, the head of
rule of law in Latin America and corrupt practices that harm
Colombia’s anti-corruption unit and his top lawyer were
economies and subvert judicial and political processes. The
arrested for taking bribes. The two officials are wanted in
chairman of the Western Hemisphere Subcommittee of the
the United States for money laundering. In Colombia, the
House Foreign Affairs Committee observed in a July 2017
issue of judicial corruption has led to demands to institute
hearing, “We ... need to see countries in the region tackle
judicial system reform following a major scandal involving
corruption and impunity as well as affirm regional efforts to
payoffs to members of Colombia’s Constitutional Court in
support democracy.” Members of Congress might consider
return for favorable decisions. It has also made corruption a
oversight of the following:
top issue for many Colombian voters in the upcoming

legislative and presidential elections scheduled for March
Effectiveness of U.S. assistance to strengthen the rule of
and May 2018.
law, the efficacy of sanction regimes to curb excesses,
and U.S. support to international institutions such as
Other countries have turned to international organizations
MACCIH and CICIG;
to fight corruption and impunity. The International
 Assessment of U.S. efforts to support justice system
Commission Against Impunity in Guatemala (CICIG),
reforms and improve policing practices;
backed by the U.N., was formed to recommend legal

reforms and to help Guatemala dismantle illegal groups and
Measures to bolster regional stability in light of the
growing mobilization of Latin American citizens to
clandestine structures responsible for organized crime and
human rights violations. Many experts agree CICIG has
tackle corruption in the public sector.
made significant progress in its goals. In 2015, Guatemala’s
For more, see CRS country reports, such as CRS Report
Public Ministry arrested about 600 public officials for
R42580, Guatemala: Political and Socioeconomic
alleged corruption and abuse of office. Its work led to the
Conditions and U.S. Relations, and CRS Report RL34027,
impeachment and dismissal of the former president and vice
Honduras: Background and U.S. Relations.
president on corruption charges. CICIG’s unique hybrid
June S. Beittel, Analyst in Latin American Affairs
character allows it to operate completely within the
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Spotlight on Public Corruption in Latin America

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