{"id":6221,"date":"2017-07-26T18:39:47","date_gmt":"2017-07-26T22:39:47","guid":{"rendered":"http:\/\/latinamericasecurityreport.com\/?p=6221"},"modified":"2017-07-28T18:42:04","modified_gmt":"2017-07-28T22:42:04","slug":"what-perus-new-president-can-learn-from-brazils-fight-against-corruption","status":"publish","type":"post","link":"https:\/\/latinamericasecurityreport.com\/?p=6221","title":{"rendered":"What Peru\u2019s New President Can Learn from Brazil\u2019s Fight Against Corruption"},"content":{"rendered":"
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Peru\u2019s new power team. PPK is in the middle. Janine Costa\/Reuters<\/figcaption><\/figure>\n

From the U.K.\u2018s Brexit vote to the U.S. presidential race, a handful of campaigns and elections around the world dominate news cycle after news cycle.<\/p>\n

One election that has gotten less attention than it deserves is the one in Peru, which recently picked a new president<\/a>. He\u2019s set to take office this week.<\/p>\n

Pedro Pablo Kuczynski<\/a>, an Oxford- and Princeton-trained economist with ample experience in government who is informally known as PPK, will be sworn in on July 28 after narrowly winning the second June contest<\/a>.<\/p>\n

His rival, Keiko Fujimori, the politically adept daughter of a notoriously corrupt<\/a> former president who is serving a sentence of 25 years in jail, won the first round<\/a> of elections on Alberto Fujimori\u2019s legacy of establishing order<\/a>.<\/p>\n

Although she distanced herself from the sketchier aspects of her father\u2019s record, the balancing act eventually failed after it became known that one of her closest allies was being investigated<\/a> on suspicion of money laundering. The scandal reminded voters<\/a> of the unfortunate events from the elder Fujimori\u2019s time in office.<\/p>\n

As he takes the helm, PPK would do well to remember that he won the presidency, in large part, because of how sick<\/a> Peruvians are of corruption (all of PPK\u2019s recent predecessors face corruption accusations).<\/p>\n

PPK should, therefore, prioritize the issue. To do so, he can look to neighboring Brazil, where corruption is successfully being prosecuted, as an example of how to tackle the problem through institutional channels.<\/p>\n

My own research shows that corruption control<\/a> in Latin America is within reach as long as the corrupt face a real risk of being punished. Full disclosure: I am currently engaged in a formal collaboration with two anti-corruption forces in Peru \u2013 a civil society group and the Office of the Comptroller General \u2013 that have the manpower and technical capacity to support an anti-corruption drive, essential conditions of what led to Brazil\u2019s success.<\/p>\n

A scandal-plagued region<\/strong><\/p>\n

Latin America\u2019s scandals are as numerous as they are noxious. Here are just a few of the more recent ones.<\/p>\n

In Argentina, several of former President Cristina Fernandez de Kirchner\u2019s associates are facing corruption charges<\/a>. Among them, her secretary of public works was caught trying to stash<\/a> large sums of cash at a convent.<\/p>\n

In Mexico, President Enrique Pe\u00f1a Nieto and his family were found to be living<\/a> in a home built and owned by Grupo Higa, a construction firm that had obtained over 80 contracts<\/a> from the government. The home has since been returned<\/a> to the construction company in question.<\/p>\n

Chile, a country that often tops Latin America\u2019s performance indicators (see, for example, this report<\/a>), also witnessed an apparent conflict of interest. President Michelle Bachelet\u2019s son was accused<\/a> in 2015 of leveraging political connections to obtain a US$10 million bank loan that his wife used to buy land and sell it for a large profit. The loan was granted<\/a> a day after his mother was reelected in 2014.<\/p>\n

In Guatemala, a United Nations-backed agency played a pivotal role<\/a> in uncovering a multi-million dollar customs fraud case involving President Otto Perez Molina. Perez Molina resigned and so joined Fujimori on the list of Latin American presidents who have been removed from office because of corruption.<\/p>\n

Brazil stands apart<\/strong><\/p>\n

A discussion about failed presidencies inevitably brings us to recent events in Brazil, the host of the soon to be inaugurated Summer Olympics. Recently elected President Dilma Rousseff was removed from office in May and is currently in the midst of an impeachment trial in the Senate.<\/p>\n

While her trial examines<\/a> misreporting of government accounts, the biggest scandal in Brazil is actually the unrelated Lavo Jato Scheme. According to allegations, Lava Jato involved skimming a fraction of the value of state-run oil company Petrobras\u2019s contracts from 2004 to 2014 in order to fund<\/a> personal and party accounts. Billions appear to have been paid in bribes<\/a> to Petrobras officials and politicians.<\/p>\n

Numerous individuals, including 13 senators, 22 federal deputies and two governors, are under investigation<\/a> \u2013 including Eduardo Cunha<\/a>, the lawmaker who led the effort to impeach Rousseff. He recently resigned from his job as speaker<\/a> of the lower house.<\/p>\n

What sets Brazil apart from its neighbors, however, is how forcefully its institutions \u2013 particularly federal prosecutors and the judiciary \u2013 have reacted to corruption. Ironically, the scandals are a positive sign \u2013 they show that there is an effort to ensure accountability. So far, authorities have made more than 160 arrests<\/a> and convicted over 100 individuals. Among those sent to jail is Marcelo Odebrecht<\/a>, the former CEO of South America\u2019s largest construction company. Jorge Zelada, a former director of Petrobras, was convicted<\/a> of money-laundering and corruption. The former treasurer of the Worker\u2019s Party, Joao Vaccari Neto, was handed a 15-year sentence<\/a>.<\/p>\n

Thus, Brazil seems to get the prosecutorial aspect of corruption control right, which is more than can be said about other Latin American regimes, where corruption cases appear to outnumber successful prosecutions.<\/p>\n

Costs of corruption<\/strong><\/p>\n

Peru has not been as persistent or successful in prosecuting corruption.<\/p>\n

A major exception to this was the case of Alberto Fujimori, who ran Peru from 1990 to 2000. After fleeing to Japan following a rigged election, he was extradited and jailed in 2009 for his responsibility<\/a> in ordering an illegal search, the killing of people by pro-government militias and bribing media outlets<\/a>.<\/p>\n

But that is a relatively rare example of justice being served. If only based on accusations, grand corruption remains a problem in Peru.<\/p>\n

Presidents Alan Garcia<\/a> and Alejandro Toledo<\/a> have been questioned on account of home purchases in two of Lima\u2019s wealthiest neighborhoods. Many also take issue with Garcia\u2019s decision to pardon<\/a> 400 convicted drug traffickers in what has been dubbed the narco indultos<\/em> (pardons) case.<\/p>\n

The late Alfonso Quiroz, a respected historian<\/a>, estimated<\/a> that the corruption of Fujimori\u2019s regime cost Peru $1.5 billion to $4 billion. More recently, some have suggested that corruption costs the country<\/a> more than $3.5 billion a year.<\/p>\n

These figures may lack precision, but there is little doubt that corruption affects all levels of the Peruvian state.<\/p>\n

At the subnational level, in 2014, 22 out of 25 outgoing regional presidents were being investigated<\/a> for embezzlement \u2013 one of them was even accused of murdering a local politician and stealing millions from phantom public works<\/a>. This same governor was said to have ties<\/a> with a former campaign advisor to outgoing President Ollanta Humala.<\/p>\n

President Humala\u2019s troubles did not end there. He faced questions<\/a> about allegedly taking bribes from Odebrecht, the Brazilian engineering firm at the heart of the Petrobras scandal. His wife also came under investigation<\/a> on charges of money laundering. The investigation focusing on the first lady was called off a year ago<\/a>, but not before some of her spending<\/a> on luxury items had come into question.<\/p>\n

Confronting corruption<\/strong><\/p>\n

The advantage of comparing Brazil and Peru is that it illustrates the extent to which the former\u2019s effort seems to contrast with the region\u2019s standard response to corruption.<\/p>\n

Whether on the street<\/a> or in the courts of justice, Brazilians have confronted corruption<\/a> in a deliberate manner. If the heads of the corrupt were hung on display as trophies, Brazil\u2019s exhibition hall would be packed with fresh catches.<\/p>\n

Meanwhile, for all the corruption allegations brewing in Peru, there is a sense that many of the corrupt are exempt from punishment. In a 2015 report about human rights<\/a>, the U.S. Department of State declared: Peruvian law \u201cprovides criminal penalties for officials engaged in corruption; however, the government did not always implement the law effectively, and officials often engaged in corrupt practices with impunity.\u201d<\/p>\n

This foreign message was not without a receptive local audience.<\/p>\n

The State Department\u2019s report was picked up<\/a> by the Peruvian press, and its thesis found support in the fact that the country\u2019s Office of the Comptroller General initiated thousands of criminal charges, but the judiciary has followed up<\/a> with only a few hundred sentences. Even accounting for potential flaws<\/a> in the cases against the accused, the enforcement gap is evident.<\/p>\n