banner
Ημ/νια δημοσίευσης: Παρασκευή, 20 Απριλίου 2018

Elections and corruption in Latin America

Wherever you go in Latin America, you will probably use something built by Oderbrecht, which founded in 1944 and became the biggest construction and engineering company in Latin America with top technical capabilities worldwide. However, this source of Brazilian pride was disgraceful when it seemed to be the center of the world's largest network of corruption. The $ 3.5 billion paid to corruption fines in the authorities of Brazil, Switzerland and the US is the most by any private company. So far, Odebrecht has admitted to paying about $ 800 million in bribes to more than 1,000 people to help earn about 100 contracts that helped earn $ 3.3 billion.1

Odebrecht claims it paid $ 35 million in bribe between 2007 and 2014 to various Argentine officials. The period is linked to the government of former President Cristina Fernández de Kirchner, which already faces various types of corruption. In the case of Colombia, Odebrecht said it paid $ 11 million in bribes between 2009 and 2014. However, local prosecutors believe that the actual amount is close to $ 30 million. The amounts may seem small, but the financial consequences are costly, as Odebrecht's involvement in building a road linking the country's interior with the Magdalena River and the Caribbean motorway known as Rutadel Sol meant canceling the value plan $ 850 million. The renegotiation will lead to delays in the major program for upgrading Colombian infrastructure.2

 The relationship between Venezuela and Oderbrecht is remarkable. According to the newspaper Estado, Venezuelan President Nicolas Maduro has granted the company for public works almost $ 4 billion in exchange for the $ 35 million that the company offered for his election campaign in 2013. The projects included the extension of Caracas’ metro station and a cable car project. According to the documents, Maduroexamined the payments that were not included in the Venezuelan budget and considered them "very urgent". These documents are held by prosecutors in Brazil and Venezuela and show that huge payments began less than a month after his election in April 2013.3Of course, Oderbrecht has bribed influential political figures from the Dominican Republic, Guatemala, Panama, Ecuador and Mexico in order to undertake major construction projects.4

The scandal of Oderbrecht has taken a long stretch in Brazil and Peru. The former Brazilian President LuizInácio Lula da Silva recently surrendered to the police.5 Lula’s court trips began in April 2015, more than four years after the end of his second presidential term, when authorities began investigating accusations had the ex-president exerted the influence that the Oderbrecht construction company would take on profitable contracts abroad. In March 2016, police officers invaded Lula’s home in the framework of the "Car Wash" operation and led him to the interrogation section. The charges concerned a bribery scandal surrounding Petrobras’ state oil company, which had pro-actively supported the Labor Party. In August 2017, Lula was sentenced to 12 years in prison, as the court ruled that he received $ 1.1 million from OAS, as a reward for his mediation to secure important contracts from Petrobras.6

With respect to Peru, Pedro PaboKuczynski is the first sitting president of Latin America to be forced to resign, just 19 months after taking office, due links to the Oderbrecht scandal, Latin America’s biggest scandal of corruption. Secretly recorded videos were released by Peru’s biggest opposition party,Fuerza Popular, which allegedly shows that the president’s supporters are attempting to buy political support. Indeed, they allegedly offered a share of public works in exchange for help in defeating a second inpeachment vote against Kuczynski. Thus, any possibility thatKuczysnki could survive ended7

Finally, it is still early to draw concrete conclusions from the current scandal, but some lessons are clear. Taking a strong anti-corruption stance, as Peru has done after the revelations, can be very costly. In most countries it seems that the entire political class conspired with corruption with guilty parties on both sides of the ideological divide. For some incoming governments, the scandal has been a useful tool to prevent their predecessors’ political comebacks, while some incumbent governments have been undermined by theirOdebrecht links. Its businesses into Central America, Mexico and the Caribbean were more detrimental. In that context Bolivia and Paraguay deserve a special mention for being the only significant economies bordering Brazil not to be really dragged into the affair. Thanks to the law of unintended consequences, Odebrecht may have performed a great service to the rest of Latin America. The creation and collapse of its incredible corruption network has given a blueprint ofhow to fight the graft. In addition, the fact that the oligarchs and presidents are in jail will make the Latin American political and business elites more nervous about future corruption issues.1

Vasileios Axelos

References

1)      http://latam-investor.com/2018/04/odebrecht-bribed-region/#

2)      https://www.nytimes.com/2017/02/13/world/americas/peru-colombia-venezuela-brazil-odebrecht-scandal.html

3)      https://www.japantimes.co.jp/news/2018/03/26/business/venezuelas-maduro-gave-4-billion-worth-projects-odebrecht-return-campaign-funds-brazil-paper/#.Wthpm4jwZdg

4)      http://www.bbc.co.uk/news/world-latin-america-41109132

5)      https://www.theguardian.com/world/2018/apr/07/crowds-in-sao-paulo-block-lula-from-handing-himself-in

6)      https://www.nytimes.com/2017/07/12/world/americas/brazil-lula-da-silva-corruption.html

https://www.theguardian.com/world/2018/mar/21/peru-president-pedro-pablo-kuczynski-resigns-amid-corruption-scandal

email