Spotlight: Brazil's construction giant's graft case shows scourge of systematic corruption in LatAm

by Luis Brito, Pei Jianrong and Juan Manuel

MEXICO CITY, Dec. 22 (Xinhua) -- The year 2017 shed light on a multinational bribery scheme masterminded by Brazilian construction giant Odebrecht, revealing that Latin America still faces the significant challenge of tackling systematic corruption.

"It's a shame to hear about a new scandal each week in some Latin American country because of some politicians linked to Odebrecht," said Jorge Sanchez Tello, an associate researcher at the Financial Studies Foundation at Autonomous Technological Institute of Mexico.

Brazilian prosecutors uncovered Odebrecht's vast network of bribe payments, which went to top officials in about 10 Latin American countries in exchange for lucrative public works contracts. By investigating public-sector corruption, the prosecutors found the region lacking a strong rule of law.

Peruvian President Pablo Kuczynski just survived an impeachment vote on Thursday after the Congress failed to pass a motion against him over Odebrecht-related graft allegations. Kuczynski himself denied any wrongdoing.

Due to the Odebrecht corruption scandal, Kuczynski's predecessors Ollanta Humala is being held in preventive custody and Alejandro Toledo, facing an arrest warrant, is currently a fugitive in the United States.

Ecuador's suspended vice-president Jorge Glas was sentenced last week to six years in prison for having accepted up to 13.5 million U.S. dollars from the company in connection with five public works projects.

Prosecutors in Colombia, Venezuela, Mexico and other countries are also in investigation.

"This is precisely due to Latin America not having built a state of law," said Sanchez. "Latin America has had governments that were leftists, right wing, centrist, populist and technocrats, but the corruption is still there because there has been no one in the past 50 years who has really wanted to create institutions to enforce the law."

Weak institutions let politicians or officials get away after using their privileged positions to siphon off public funds or benefit from shady business deals.

Odebrecht even had its own dedicated corporate department to manage the bribes it paid to win public contracts, said company executives in plea bargains with U.S. prosecutors.

Corruption can curb foreign investment as transnational companies look elsewhere to compete in transparent bidding. It can also stem tax revenues, as citizens distrustful of the government are loath to pay their taxes, said Sanchez.

Hugo Beteta, subregional director of the United Nations Economic Commission for Latin America and the Caribbean in Mexico, said strengthening the rule of law is essential to economic development.

"Institutions that fight corruption are essential for investment, for growth, and for policies to function and be socially sustainable," he said.

"Corruption in Latin America is no longer a sporadic phenomenon, but a systematic one," said Guo Cunhai, assistant researcher at the Institute of Latin American Studies of China's Academy of Social Sciences.

According to Guo, "the series of corruption scandals in Latin America will intensify political disturbances in the region, which will make it tougher to establish new economic policies designed to spur Latin American development, and it will certainly leave a negative impact on Latin America's economy."

The expert also said "While many Latin American countries have a relatively robust legal framework, the application of the law is still quite weak in certain countries."

Another major problem is the glacial speed of justice in Latin America, where legal cases can drag on for years.

When public-sector officials are denounced, they rarely if ever pay the consequences, said Peru's Comptroller General Nelson Shack recently.

"From 2009 to 2017, during the administration of the two comptrollers that preceded me, more than 16,000 officials were charged with crimes; of those, only 61 were convicted," said Shack.

Argentine political analyst Rosendo Fraga said corruption cases take an average of 14 years to make their way through the judicial system, leading the public to lose interest in the outcome and eventually to prioritize other issues, such as economic growth and crime, over combating corruption. Enditem