Central America

Slew of corruption cases mar nations’ reputations

Steven Dudley
The Miami Herald
October 29, 2004

When the former Costa Rican president and ex-secretary general of the Organization of American States Miguel Angel Rodriguez exited from an airplane in handcuffs earlier this month, Costa Ricans could not help but have mixed emotions.

Their country, long deemed a bastion of honesty amid a wasteland of corruption, was embarrassed as Rodriguez was carted away, accused of taking kickbacks just like many of his Latin American colleagues have been accused of taking for years.

“Of course I am suffering,” current Costa Rican President Abel Pacheco said. “But I feel very proud that Costa Rica is a democracy that functions. Costa Rica is an example for the world.”

Well, if not the world, at least Latin America, where from Brazil to Guatemala, Haiti to Mexico, high-level corruption seems to be crisscrossing the region like a cigarette boat these days.

20 charged

In all, 20 presidents and ex-presidents from 14 countries in Latin America have been charged with corruption since 1990. Five were kicked from or fled their offices before finishing their terms. One was convicted and is serving a 20-year sentence, and two are in jail awaiting trial; others may be served with international arrest warrants any day now. At least nine are still enmeshed in legal battles.

The accused run the political gamut, and the charges have ranged from kickbacks to money laundering. But the theme is the same: No one is immune from the temptation of corruption and the prosecution that may follow.

Which begs the question: Is corruption in Latin America worse now, or are these politicians simply getting caught more often? Analysts say it may be a bit of both.

The region has gone through massive economic and political upheaval in recent years. Democracies have emerged in place of military regimes, markets have opened and state industries have privatized. The flood of foreign capital has made for some hefty temptations.

‘No capital markets’

“These places are totally corrupt because they have no capital markets. They have no institutions to monitor these [privatizations],” said Bruce Bagley, a University of Miami political science professor.

Former Costa Rican President Rodriguez, for example, is accused of taking money from the French telecommunications company Alcatel, which won a government contract for 400,000 cellular telephone lines.

At the same time, however, a surge in democratic governments throughout the region has provided for more accountability, analysts say. Scrutiny by watchdog groups and an increasingly independent news media have unearthed more scandals.

Costa Rica is a particularly troubling case because of its squeaky-clean reputation. This month, when the watchdog group Transparency International released its annual corruption perception index, most Latin American countries scored poorly, with Haiti and Paraguay leading the way. Costa Rica was perceived as the third least corruptible country in Latin America behind only Chile and Uruguay, a rating that seems to belie the truth.

Presidential problems

This week, former Costa Rican president and current executive director of the Swiss-based World Economic Forum Jose Maria Figueres admitted taking up to $900,000 in dubious consulting fees from the same French telecommunications company as Rodriguez. Another former Costa Rican president, Rafael Angel Calderon, is in jail awaiting trial for allegedly accepting a kickback from a Finnish government loan destined for the purchase of medical equipment. And current President Pacheco is under investigation for not reporting hundreds of thousands of dollars in campaign contributions from Taiwan.

“Costa Rica has always gotten better press than it deserves,” observed Larry Birns, the director of the Council on Hemispheric Affairs in Washington, DC.

Economics may be one factor that drives countries like Costa Rica to hide the truth.

“Costa Rica depends a lot on tourism and doesn’t want to be painted in the same light as its neighbors,” said Stephen Johnson, a Latin American specialist for the Heritage Foundation. “When [corruption] surfaces, there’s a reticence to deal with it because people think that if you deal with it and let these kinds of things surface, then it’s bad news for the country.”

There is hope. The US government, which analysts say often used to overlook corruption, seems to be taking a particular interest in cleaning up graft abroad for both economic and national security reasons. In addition to recent legislation that led to revoking visas and freezing the US assets of foreign officials suspected of corruption, Washington issues stiff penalties to US companies that engage in corruption.

“If there’s one thing that American companies want to avoid like the plague, it’s charges of corruption,” said Arturo Valenzuela, a former Clinton administration expert on Latin America.

Firms want rules

“Increasingly, investors actually want clear rules of the game. . . . American companies take a huge risk if they go against the Foreign Corrupt Practices Act,” he said.

Both Valenzuela and Johnson see the recent revelations in a positive light.

“It may look like an epidemic of corruption, but it may be the reverse; it may be a sign of the strengthening of these [democratic] institutions and that’s a good thing,” Johnson said.

Other analysts are not so optimistic.

“There’s no clarity with regard to the mechanisms or recipes” to resolve the crisis created by the scandals, said Fernando Cepeda, a Colombian economist at the University of the Andes in Bogota. “Everyone continues to flail in the wind.”

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