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#Governance, Risk and Compliance

UN Democracy Day: Latin America’s growing intolerance of corruption


corruption , Corruption , Corruption Perception Index , Latin America , UN Democracy Day

Since 2008, the UN has held its day in honour and promotion of democracy on 15 September. For a cluster of nations across Latin America, this is a date that holds a special reverence, marking their independence from colonial rule: Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica all celebrate their independence day on 15 September (with Mexico’s the following day, and Chile’s three days later).

An apposite time, then, to evaluate the health of democracy across Latin America. As the only continent on earth without a monarchy, you’d be forgiven for assuming Latin America the ideal environment for democracy to flourish. On the contrary: democracy has come under sustained assault in several areas. Take Venezuela. The UN High Commissioner for Human Rights Zeid Ra’ad Al Hussein recently described democracy in the country as ‘barely alive’.

The Miami Heard alleges that £11 billion has likely been paid by Venezuela’s state-owned oil company PDVSA to politicians between 2005 and 2011. Sanctions were imposed in July on President Maduro by the US after a further deterioration of the democratic process. In 2016 Maduro was the recipient of a dubious accolade: Person of the Year by the Organized Crime and Corruption Reporting Project (OCCRP) for his ‘negligence, incompetence and corruption’.

In possession of the world’s largest reserves of oil, Maduro presides over a nation whose currency has lost a staggering 99% of its value since 2014. The GAN portal, an anti-corruption resource for businesses, described corruption as ‘a major obstacle for businesses operating or planning to invest in Venezuela’. Significantly there is no law against bribing foreign officials in Venezuela.

Corruption Perception Index

No other nation in the region ranked lower on Transparency International’s Corruption Perception Index (CPI) and only nine countries separated Venezuela from rock bottom (Iraq was higher placed). Across Latin America the average CPI score was a disappointing 44 out of 100, with below 50 scores representing a government’s failure to adequately fight corruption.

Then consider Brazil, the region’s largest and most populated country (79 in the CPI). The country has been plagued by a succession of corruption scandals over the last decade, chief among them the investigation into corrupt politicians and business leaders known as Operação Lava Jato (Operation Car Wash), which has had a debilitating impact on the economy and has shattered the already fragile relationship between the governed and those that govern. Jail terms for leading businessmen – including a 19-year sentence for ex-CEO of Odebrecht for bribery – has somewhat punctured the bubble of Brazil’s economic growth.

These two unsettling examples belie a brighter truth: that the very exposure of such corruption and the negative public response to it provide an opportunity to tackle it. As part of its focus on the Americas, Transparency International felt moved to describe the last 12 months as a step forward for anti-corruption. Citing the Odebrecht settlement with US investigators, and the leak of the Panama papers, as scenarios where ‘sometimes bad news is good news’.

It is a trend that has continued into 2017. Colombian anti-corruption prosecutor Luis Gustavo Moreno Rivera is in prison awaiting extradition to the US on money laundering charges. Visiting Miami in June, Rivera had been recorded by US authorities agreeing to take money in exchange for subverting investigations. Rivera’s arrest and impending extradition sets an example that sends a warning to others across the continent.   

 

La Celeste 

Then there is the example of Uruguay, the highest ranked Latin American country on the CPI. Widely hailed as one of the most progressive nations on earth – with moves such as the full legalisation of cannabis in July – and in possession of a range of anti money laundering and anti-bribery and corruption laws that the courts do not hesitate to employ, the country is frequently held up as a model example to some of its scandal-struck neighbours (the New York Times described it as a ‘quiet democratic miracle’).  

Uruguay’s stability and success suggests that the more democratic a country, the less likely it is to suffer from corruption. Ostensibly, the data seems to support this hypothesis: the most democratic countries in the world (as measured by the Economist’s Democracy Index) are also those at the top of the leader board of Transparency International’s CPI. But the truth is much harder to pin down. As pointed out by Simone Jones in May, uber-democratic states like Denmark and New Zealand are far from immune from bribery and corruption, whilst some of the most autocratic government’s on the planet, such as that of the United Arab Emirates, report a low level of corruption (24 in the CPI).

Such a phenomenon was explored by Phillip B. Heymann in his paper ‘Democracy and Corruption’. He posited the theory that corruption was easier to expose in a democracy:

‘the freedom of speech, press, and political challenge that comes with democracy allows opponents of a corrupt administration to make much of its corruption. A military government or the government of a totalitarian communist regime simply does not tolerate this’.

In other words, only a democracy can expose corruption on the scale seen in Latin America; prosecutions and impeachments, like we have seen in Brazil, are not possible under a dictatorship. The very fact that corruption can be and is being uncovered is a step in the right direction.

Democracy’s relationship with corruption is perhaps more complex than typically imagined. But there can be little doubt that democracies possess a more solid foundation – an independent judiciary or free press – from which corruption can be exposed and fought. With South American’s at the helm of Transparency International and FATF (José Ugaz, from Peru, and Santiago Otamendi, from Argentina, respectively) never has the ground been more fertile for an assault on corruption in Latin America.  

 

Transparency International’s Corruption Perception Index 2016 (Latin America only)

Country

CPI ranking

Uruguay

21

Chile

24

Costa Rica

41

Cuba

60

Brazil

79

Panama

87

Colombia

90

Argentina

95

El Salvador

95

Peru

101

Bolivia

113

Dominican Republic

120

Ecuador

120

Honduras

123

Mexico

123

Paraguay

123

Guatemala

136

Nicaragua

145

Venezuela

166


Find out more here ► 

 


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