Corruption in Latin America:

A Desk Assessment

Norma Parker, Team Leader

Gerardo Berthin, Roberto de Michele and Yemile Mizrahi

Americas’ Accountability Anti-Corruption Project

Casals and Associates, Inc.
U.S. Agency for International Development (USAID)

June 14, 2004

Washington, D.C.

Funded under Contract AEP-I-00-00-00010-00. Task Order No. 1 Transparency and Accountability.
 Table of Contents

Abbreviations ................................................................................................................................. i
Executive Summary ..................................................................................................................... iii
I. Overview..................................................................................................................................... 1
A. Introduction............................................................................................................................ 1
B. Purpose of Desk Assessment.................................................................................................. 2
C. Methodology .......................................................................................................................... 2
D. Acknowledgements................................................................................................................ 3
II. Corruption in Latin America and its Consequences ............................................................ 3
A. The Extent of the Problem .................................................................................................... 3
B. Major Consequences of Corruption ...................................................................................... 8
III. Changes in the Fight against Corruption and the Promotion of Transparency
in Latin America ......................................................................................................................... 11
A. What has Changed in the Last Decade?............................................................................... 11
B. Major Achievements in the Anti-Corruption Front.............................................................. 15
IV. Lessons in the Fight against Corruption and Challenges for the Future........................ 19
A. Some Emerging Lessons...................................................................................................... 21
B. Challenges for the Future .................................................................................................... 26
V. Measuring Corruption and Evaluating Anti-corruption Initiatives ................................. 29
VI. Legal Mechanisms ................................................................................................................ 35
A. No Safe Haven .................................................................................................................... 36
B. Conventions......................................................................................................................... 36
C. Compliance with the Requirements of the OAS Convention ............................................. 38
D. Is the Mechanism Working to Reduce Corruption?............................................................ 39
VII. Donors: Summary of their Anti-Corruption Efforts and their Role ............................. 40
VIII. Strategic and Policy Options for Programming, 2004-2009.......................................... 41
A. Non-Project Activities.......................................................................................................... 42
B. Strategic Activities ............................................................................................................... 44
Annex 1: Statement of Work Desk Assessment of Corruption in Latin America ................ 52
Annex 2: List of Interviews ........................................................................................................ 56
Annex 3: Bibliography................................................................................................................ 58
Annex 4: Analysis of the OAS and UN Conventions ............................................................... 69
Annex 5: Power Point Presentation........................................................................................... 82
 Abbreviations

AAA Americas’ Accountability/Anti-Corruption Project

ACWB Anti-Corruption Without Borders
APEDE Asociación Panameña de Ejecutivos de Empresas
BNP Bolivian National Police
CAF Corporación Andina de Fomento/Andean Development Corporation
CAFTA Central America Free Trade Agreement
CAPEL Centro de Asesoría y Promoción Electoral
CARICOM Caribbean Community
CCCC Comisión de Control Cívico de la Corrupción, Ecuador
CEJA Justice Studies Center of the Americas/Centro de Estudios de las Américas
CELAP Latin American Journalism Center/Centro Latinoamericano de Periodismo
CEMIS The Multimodal, Industrial and Services Center in Panama
CIDE Research and Teaching Center for Economics/Centro de Investigación y Docencia
Económicas in Mexico
CLAD Centro Latinoamericano de Administración para el Desarrollo
CLD Corporación Latinoamericana para el Desarrollo, Ecuador
CPI Corruption Perception Index
CSO Civil Society Organization
DAC Development Assistance Committee of the OECD
DCD Development Co-Operation Directorate
DCHA Democracy, Conflict and Humanitarian Assistance
FEMICA Federation of Central American Municipalities/Federación de Municipios del
Istmo Centroamericano
FLACMA Latin American Federation of Cities, Municipalities and Associations/Federación
Latinoamericana de Ciudades, Municipios y Asociaciones
FLACSO Latin American Faculty of Social Sciences/Facultad Latinoamericana de Ciencias
Sociales
GDP Gross Domestic Product
G-8 Group of 8
GOVNET DAC Network on Good Governance and Capacity Development
IACC Inter-American Convention against Corruption
ICMA International City/County Management Association
ICGFM International Consortium on Governmental Financial Management
ICITAP International Criminal Investigative Training Assistance Program
IDB Inter-American Development Bank
IDEA International Institute for Democracy and Electoral Assistance
IDIF Instituto de Investigación Forense, Bolivia
IFMS Integrated Financial Management System
IMF International Monetary Fund
INCAE Central American Institute of Business Administration/Instituto Centroamericano
de Administracion de Empresas
INL International Narcotics and Legal Matters Bureau (Department of State)

i
LAC/RSD USAID Latin America & Caribbean Bureau's Office of Regional Sustainable
Development
MCA Millennium Challenge Account
MERCOSUR South Common Market/Mercado Común del Sur
NGO Non-Governmental Organization
OAS Organization of American States
OECD Organization for Economic Cooperation and Development
OPR Office of Professional Responsibility
PARLACEN Central American Parliament/Parlamento Centroamericano
PFC Periodistas Frente a la Corrupción
PRD Partido de la Revolución Democrática, Mexico
PTJ Policía Técnica Judicial, Bolivia
SAI Supreme Audit Institutions
SECODAM Secretaría de Contraloría y Desarrollo Administrativo, Mexico
TAM Technical Assistance Module
TI Transparency International
TILAC Transparency International Latin America and the Caribbean
UN United Nations
UNDP United Nations Development Program
UPD Unit for the Promotion of Democracy, OAS
USAID United States Agency for International Development
USG United States Government
WB World Bank
WBI World Bank Institute
WHA/PPC State Department/Bureau of Western Hemisphere Affairs, Office of Policy,
Planning and Coordination

ii
 Executive Summary

Purpose of Desk Assessment

This desk assessment provides a baseline overview of corruption in Latin America. It provides
the United States Agency for International Development’s (USAID) LAC Bureau inputs for an
effective, realistic, and comprehensive regional approach over the five- year strategy period,
2004-2009. Although not exhaustive, it serves as a starting point to document recent trends,
programming approaches and potential entry points for anti-corruption activities in Latin
America.

It draws on the literature reviewed, Casals and Associates experiences and on a series of
interviews in Washington D.C.. The purpose of the assessment is to provide a basic description
of the existing trends, levels and patterns of corruption, the areas where anti-corruption activities
seem to be working, methodologies and advances in measuring corruption and the impact of
anti-corruption activities. The assessment will highlight areas of opportunities and recommend
feasible approaches.

Given time and resources limitations, the assessment is limited in its scope (see Annex 1, Scope
of Work). As such, it not intended to be an impact or capacity assessment; much less an
evaluation of specific programs and/or projects. Rather, it describes (based on secondary
information available in compliance with the Scope of Work (SOW) and time constraints) the
state of corruption in Latin America after a decade of activities and transition and highlights
major illustrative areas that merit regional anti-corruption attention. It maps out priorities and
strategic options.

Findings in Brief

Corruption in Latin America is widespread, but measuring its extent is inherently challenging.
The incidence of corruption in Latin America varies from country to country, ranging from
“normal” to “widespread” to “systemic.” If it is normal, it may be relatively easy to identify the
problem, sanction and close the opportunities that allowed corruption to occur. Once it is
widespread and becomes systemic, however, the likelihood of detection and sanction decreases,
and incentives are created for corruption to increase further. Moreover, where there is systemic
corruption, the institutions, rules, and norms of behavior have already been adapted to a corrupt
modus operandi, with public sector officials and employees and other actors (i.e., business
sector) often following the examples. In these cases, corruption can be highly damaging to the
stability of democratic institutions, erosive to the rule of law and corrosive to economic growth
and competitiveness.

Several factors in Latin America give rise to corruption. First, a civil service that is still in
transition after a series of reforms, where low levels of accountability, transparency and
efficiency often lead to incentives to abuse power. In addition, cumbersome legislation,
overlapping responsibilities of different government agencies, legal confusion, all contribute to
increase the discretionary power of public officials. Also, oversight and control institutions

iii
remain weak, despite the creation of anti-corruption commissions/agencies, ombudsmen
(defensorías) and justice system oversight entities (Consejos de la Judicatura), the
implementation of anti-corruption legislation, and the efforts of the international donor
community to strengthen government institutions in charge of control. Further, most of the
countries lack an effective judicial system to prosecute and sanction corrupt officials. Finally,
absence of political will, weak social controls, and mixed attitudes about corruption.

International donors, including USAID, and international non-governmental organizations (like

Transparency International) are addressing corruption directly or indirectly by working to create
an environment that is not conducive to corruption.
Over the past decade, the donor community has financed a wide variety of programs in Latin
America geared at improving public sector management (integrated financial management
systems, civil service reforms, introduction of information and communication technology in
government, modernization of tax administration and customs agencies) and promoting greater
accountability and transparency in government (access to information legislation, judicial
reforms, procurement reforms, training prosecutors, strengthening civil society organizations,
training journalists).

The results of all these efforts appear to be mixed. Although more research and empirical
analysis is necessary to evaluate the impact of these projects, the record seems to be filled with
examples of programs that succeed at first but that are undermined by subsequent governments
or by economic or political crisis and/or constraints.

Many donors now recognize, that a well designed anti-corruption reform strategy requires a
long-term vision and a clear understanding that fundamental change can begin to take place now,
but only come to fruition within one or two generations. In as much as it is difficult to ascertain,
with current data and instruments, whether corruption has declined or increased in Latin
America, progress has been documented on a number of fronts. For example:

• Countries in the region today have greater access to a wide variety of technological, legal,
institutional and administrative tools to combat corruption;
• Awareness about the problem of corruption has significantly increased in Latin America,
both among policymakers and society;
• The analytical tools to understand and measure corruption have substantially improved
and become more sophisticated;
• New actors have emerged on the anti-corruption front, both at the national and regional
levels;
• As a result of an increased understanding of the nature, causes, and effects of corruption,
multilateral organizations and international financial and development agencies have
refined their anti-corruption strategies and made them more systemic, holistic, and long-
term, emphasizing prevention, strengthening of oversight and supreme audit institutions,
public participation and coalition building and enforcement;
• Today anti-corruption assistance covers a much wider range of program approaches than
a decade ago;
• New Legal instruments and conventions, such as the OAS Inter-American Convention
against Corruption and the UN convention against corruption;

iv
 • Political corruption is beginning to be addressed; and
• Unlike the past, when high-ranking officials resigned and avoided prosecution, today a
number of corrupt public officials in different Latin American countries have been
effectively prosecuted.

Even though there has been a lack of any systematic effort by the donor and civil society
communities to synthesize and analyze the impact of anti-corruption experience in Latin
America, there are some lessons learned about the conditions and components necessary for
initiatives to succeed.

The literature review on what is working and what is not working in anti-corruption in the region
yields four general lessons:

1. There are no quick fixes. Addressing corruption is a complex political endeavor

requiring governance and economic wide reform. Long-term commitment is required to
gain public confidence in efforts to prevent and control corruption;
2. The need to balance between prioritizing short-term, immediate visible targets that create
momentum but merely scratch the surface of the problem with deeper, more difficult, as
well as time and resource intensive systemic reform that attack the root causes of
corruption;
3. Anti-corruption activities can be encouraged and fostered by outside partners and donors,
but the drive and the leadership must come from within; and
4. Anti-corruption strategies, whether national or regional, require a long-term vision and
clear understanding that fundamental change can begin to take place now, but only come
to fruition within one or two generations. Nonetheless, visible early victories, such as
successful prosecution of high-level officials, may be critical for building credibility and
generating sustained pressure for reform.

In addition, documentation from experiences in the field and the literature review suggest that
the effectiveness of anti-corruption activities does not depend on one single factor but on a
convergence of factors. For example:

• Political will and commitment from national leaders are critical to implement and sustain
anti-corruption efforts.
• Wide popular support and ownership are necessary to advance anti-corruption efforts.
• For anti-corruption programs to be effective they must be tailored to each country’s
unique history, economic and institutional conditions. A base line assessment of the
nature, extent and root causes of corruption in a given country is a critical first step to
plan, guide and implement programs.
• Transparency and access to information are also indispensable tools for enabling the
public to identify and report corruption.
• Donor coordination and information sharing, to exchange and learn lessons, experiences,
successes and practices and avoid duplication of efforts.

In contrast to a decade ago, today in Latin America it is feasible to measure progress in other
development areas like health, poverty and productivity, with universally accepted objective and

v
subjective measures. There is as yet any universally accepted standard for measuring corruption.
Because current measures are still imprecise, it is difficult to know with certitude whether
corruption is declining or increasing. In the absence of more reliable and hard data on corruption,
donors will find it difficult to target anti-corruption activities and more importantly without this
information donors would not be able to determine what impact, if any, their anti-corruption
efforts are generating.

As the Assessment Team researched for literature on corruption trends, best practices and lessons
in the region, it found an enormous amount and variety. Some information, like general
assessments and studies, as well as theoretical and conceptual material was relatively easy to
find, although information on corruption is often woven into the governance, business
development and/or institutional development literature. Impact assessment and other evaluation
assessments were much harder to access; what was found was selective and non-comparative.
For example, the Team was unable to find a recent comprehensive regional or even sub-regional
assessment of corruption in Latin America. From the literature review and interviews it is
apparent that:

• Donors are just beginning to adapt their information systems to the need to have access
to more hard data and information on corruption in Latin America;
• Few countries in Latin America have any form of evaluation of anti-corruption policies
and programs, from which positive and negative lessons about implementation can be
learned.
• Information and documents, if they exist, on the effects of the anti-corruption efforts in
Latin America have not been made public;
• There are few comparative evaluations that examine experiences of similar types of anti-
corruption programs and/or activities in Latin America; and
• There are few efforts, nationally and regionally, to create and maintain a common
updated data base of indicators and information to assist analysis, research and
evaluation of corruption and anti-corruption programs.

Few anti-corruption programs in Latin America have been evaluated systematically. Such
analysis could be used in developing future program and strategic plans. These evaluations
could also help donors, governments and civil society organizations to refine anti-corruption
objectives and performance measures. Similarly, while much progress has been made in
estimating the global economic costs of corruption, much remains to be done in terms of
measuring the impact of corruption on economic development, particularly in the Latin
American region.

vi
Strategic and Policy Options for Programming

Based on the regional trends identified in this desk assessment, the following strategic options
are recommended for consideration by the LAC Bureau. In Part A, the Assessment Team
proposes a set of Non-Project Activities at the regional level, or sub regional level that would
help to further progress in reducing corruption in Latin America. These interventions are meant
to compliment bilateral or mission funded initiatives.

In addition, the Assessment Team proposes seven strategic options in Part B, along with
illustrative activities, for consideration by the LAC Bureau.

• Strategic Option 1: Increase awareness of the problem and mainstream anti-corruption

programs within development strategies and programs.
• Strategic Option 2: Reduce the tolerance for corruption and help to strengthen the
political will to undertake reforms to fight corruption.
• Strategic Option 3: Assist countries in the implementation of the Inter-American
Convention against Corruption.
• Strategic Option 4: Promote private sector engagement
• Strategic Option 5: Establish a fund to support innovative pilot activities in Missions.
• Strategic Option 6: Support regional institutions in their fight against corruption.
• Strategic Option 7: Strengthening investigative capacity of agencies in dealing with
complex crimes, such as corrupt activities (money laundering and illicit enrichment).

Each strategic option suggests possible partners for implementation of the illustrative activities.
They are meant to be a menu of strictly regional activities, with the understanding that the
Bureau will not be able to fund all the options presented.

vii
I. Overview

A. Introduction

Widespread corruption is seen as one of the most significant threats to deepening

democratization in Latin America.1 The issue of corruption is a matter of increasing importance
to the United States, other governments, inter-governmental organizations and civil society
organizations (CSOs) around the globe. The United States Government (USG) actively advances
bilateral and multilateral efforts to reduce corruption, promote transparency, and improve
governance. President George W. Bush, Secretary of State Collin Powell, Secretary of
Commerce Don Evans and Administrator Andrew S. Natsios have stated that the fight against
corruption is an important foreign policy objective.2 The destabilizing effect that corruption has
on political systems and democracy threatens vital American interests.

The USG has recently stressed corruption as an impediment to sustainable development and
investment in people, as demonstrated by the high hurdle insisted upon by President Bush in late
2002 that effective control of corruption must be a vital factor to qualify for funding from the
Millennium Challenge Account (MCA). Similarly, the USG has been engaged in Free Trade
Agreements with various countries in the region, to promote political and economic reform and
establish conditions to enforce anti-corruption laws and ensure a basic level of accountability and
transparency. Furthermore, since 1994, the Summit of the Americas under the leadership of the
USG, has been promoting democratic values and practices. The maintenance and strengthening
of the rule of law, accountability and transparency are a shared hemispheric goal and
commitment, and constitute a central political priority of the Summits of the Americas Process.
Corruption was also taken into account at the G-8 Evian Summit in 2003, where under the USG
leadership a Declaration in Fighting Corruption and Improving Transparency was issued.3

The Organization of American States (OAS) Inter-American Convention against Corruption

(IACC) has been signed and ratified by almost every country in the Americas.4 In fact, the
IACC mandate is hemispheric and provides a common framework for identifying areas of
assistance.5 Since its ratification governments in the region are legally committed to implement
significant policies aimed at reducing corruption and enhancing transparency. This commitment
was also reflected in the most recent OAS General Assembly meeting held in Ecuador in June
2004, where 34 countries issued the “Declaración de Quito sobre el Desarrollo social y
democracia frente a la incidencia de la corrupción.”
1
United Nations Development Programme (UNDP). Report on Democracy in Latin America. New York: UNDP,
2004; Latinobarometro. Informe Latinobarometro 2003. Santiago: Latinobarometro, 2003;
Mitchell A. Seligson. “Corruption and Democratization in Latin America,” (mimeo), 2002; and Kurt Wayland,
“The Politics of Corruption in Latin America,” Journal of Democracy, Volume 9, Number 2 (April):108-121.
2
Report to Congress Pursuant to the International Anti-corruption and Good Governance Act (Public Law 106-
309), May 2004.
3
Ibid.
4
Cuba, Haiti and Barbados have not ratified the Convention. St. Lucia, St. Vincent & Grenadines, Suriname and
Trinidad and Tobago have only signed in accession.
5
Roberto de Michele. “Follow-up Mechanism of the Inter-American Convention against Corruption, a Preliminary
Assessment: is the Glass Half Empty? Southwestern Journal of Law and Trade in the Americas, Volume 10,
(Summer 2004):101-125.

1
B. Purpose of Desk Assessment

This desk assessment provides a baseline overview of corruption in Latin America. It provides
the United States Agency for International Development’s (USAID) LAC Bureau inputs for an
effective, realistic, and comprehensive regional approach over the five- year strategy period,
2004-2009. Although not exhaustive, it serves as a starting point to document recent trends,
programming approaches and potential entry points for anti-corruption activities in Latin
America.

It draws on the literature reviewed, Casals and Associates (C&A) experiences and on a series of
interviews in Washington D.C.. The purpose of the assessment is to provide a basic description
of the existing trends, levels and patterns of corruption, the areas where anti-corruption activities
seem to be working, methodologies and advances in measuring corruption and the impact of
anti-corruption activities. The assessment will highlight areas of opportunities and recommend
feasible approaches.

Given time and resources limitations, the assessment is limited in its scope (see Annex 1, Scope
of Work). As such, it not intended to be an impact or capacity assessment; much less an
evaluation of specific programs and/or projects. Rather, it describes (based on secondary
information available in compliance with the Scope of Work (SOW) and time constraints) the
state of corruption in Latin America after a decade of activities and transition and highlights
major illustrative areas that merit regional anti-corruption attention. It maps out priorities and
strategic options.

The report is divided into parts:

• Section II provides an overview of the main corruption trends in Latin America,

including its consequences.
• Section III describes the changes during the last decade in fighting corruption in Latin
America, including achievements and set-backs.
• Section IV is an overview of lessons learned and of challenges ahead.
• Section V looks at measuring corruption.
• Section VI provides an extensive analysis of the Inter-American Convention against
Corruption.
• Section VII offers a brief summary of major donors’ anti-corruption activities.
• Section VIII provides strategic options.

C. Methodology

The assessment developed by the Americas’ Accountability Anti-corruption Project (AAA),

which is funded by USAID under contract with Casals and Associates, Inc. (C&A), was carried
out in three phases. First, a team of Democracy and Governance anti-corruption specialists
conducted an initial desk study to synthesize information available in written documents.
Second, the team conducted a series of interviews in Washington D.C. with USAID partners and
experts. And last but not least, based on the information collected, the Team produced the

2
assessment. Throughout the process, the team met several times to outline themes, review and
discuss information and finalize the report.

A key methodological feature of this assessment was its consultative process. From April 20 to
May 6 2004, the C&A Team reviewed more than 100 policy, strategy, and policy documents
(Annex 3, Bibliography) and conducted more than a dozen interviews with key informants and
experts in Washington, D.C. (Annex 2, List of Interviews). This information was supplemented
by email interviews with missions where C&A has in-country staff and with those partners who
responded to emails sent out by USAID/LAC Bureau in April and May 2004.6

The C&A Team members included Norma Parker, Team Leader; Yemile Mizrahi, Democracy
and Governance Specialist; Roberto de Michele, Anti-Corruption Specialist; Gerardo Berthin,
AAA Democracy and Governance Adviser and Deputy Project Director; and Patricio
Maldonado, AAA Project Director.

D. Acknowledgements

The C&A Team wishes to acknowledge the assistance and guidance provided by the USAID
Latin America Bureau Office Of Democracy and Governance Programs (LAC/RSD) and the
Democracy, Conflict and Humanitarian Assistance (DCHA) Bureau; the State Department's
Bureau of Western Hemisphere Affairs, Office of Policy Planning and Coordination
(WHA/PPC); and the Director of Anti-Corruption and Governance Initiatives of the Bureau for
International Narcotics and Law Enforcement Affairs (INL) of the U.S. State Department. The
Team thanks the key informants for their time and for sharing valuable insights. Last but not
least, the Team also wishes to acknowledge the help provided by AAA staff, in particular Sylvia
Rodriguez; and C&A field project staff in Colombia, Guatemala, Honduras and Bolivia. At a
latter stage, Sergio Diaz-Briquets, George Wachtenheim and Joe Balcer of C&A provided
valuable comments and inputs.

II. Corruption in Latin America and its Consequences

A. The Extent of the Problem

International donors believe that corruption is a challenge to political stability, hampers

economic growth and prevents public services from reaching those most in need. In recent
years, Latin America has provided multiple examples of alleged high-level corruption, aside
from the more visible daily petty corruption. For example:
• In early 2002 on primetime television, waving cash in his hand, Panamanian
Congressman Carlos Afú charged that a leader of his party distributed envelopes
containing $6,000 to legislators in exchange for their votes in favor of ratifying a contract
for the development of a multipurpose free-trade export zone near the Caribbean entrance
of the Panama Canal;
• In December 2003, former Nicaraguan President Arnoldo Alemán was sentenced to 20
years in prison for corruption. Alemán was found guilty on charges including money-
6
The assessment includes information on Spanish-speaking Latin America, including the Dominican Republic but
not the rest of the Caribbean.

3
 laundering, fraud, embezzlement and electoral crimes, judicial officials said. He was
accused of helping to divert nearly $100 million of state funds into his party's election
campaign.
• In February 2004, Brazilian president, Luis Inacio Lula da Silva, was forced to fire a
close government adviser following corruption allegations. A magazine accused
Waldomiro Diniz of demanding illegal campaign contributions from a businessman in
Rio de Janeiro;
• In January 2004, prosecutors in Guatemala opened a formal investigation of former
President Alfonso Portillo, former Vice President Juan Francisco Reyes, and four other
associates to determine if millions of Dollars of government funds found their way into
Panamanian bank accounts;
• In Mexico, in March 2004, a video was made public showing a businessman and property
developer, Carlos Ahumada, handing over wads of cash to the mayor's personal secretary
and to the leader of his Democratic Revolution Party (PRD) in the city council.
• In April 2004, the mayor of Ilave, Peru, Fernando Robles Cayomamani, was lynched by a
group of protesters who accused him of corruption; and
• In April 2004, an Argentine judge ordered the arrest of the governor of Santiago del
Estero Province, Mercedes “Nina” Aragones and her husband, former Governor Carlos
Juarez. Both were accused of corruption, abuse of power and murder. The call for their
arrest came hours after Congress approved direct rule of the province by the federal
government.

These are just some examples that contribute to the perception that corruption in much of Latin
America is pervasive.7 While no country is immune to corruption, there is a difference between
what Robert Klitgaard calls “normal corruption,” a condition that is not widespread and that can
be controlled by an anti-corruption apparatus, which includes a legal system, accounting and
auditing, budgets, competitive procurement and citizen oversight and “systematic corruption,”
where corruption is widespread and the apparatus for restraining and combating corruption is
ineffective if not itself penetrated by corruption.8 The latter appears to be the case in many
Latin American countries.

Although there is considerable variation in the degree of corruption from country to country,
there is growing consensus among scholars, practitioners and donors that corruption constitutes a
central challenge to democracy and social and economic development. Today corruption is seen
not only as a consequence of weak governance, but also as a cause of poverty and
underdevelopment.

7
Robert Klitgaard. “Successes and Failures in Combating Corruption,” address to APEDE, Panama, March 19,
2004; Gerardo Berthin and Patricio Maldonado. “Transparency and Developing Legal Frameworks to Combat
Corruption in Latin America,” Southwestern Journal of Law and Trade in the Americas, Volume 10 (Summer
2004):101-120; Development Cooperation Directorate (DCD/Development Assistance Committee (DAC).
“Synthesis of Lessons Learned of Donor Practices in Fighting Corruption,” June 23, 2003; Daniel Kaufmann.
“Rethinking Governance: Empirical Lessons Challenge Orthodoxy,” (Mimeo), Washington, D.C., the World Bank,
March 2003; and (Seligson, 2002).
8
(Klitgaard, 2004).

4
During the last decade, the international donor community (bilateral and multilateral) has placed
greater emphasis on the need to fight corruption as an important part of their development
agenda and lending strategies. Growing awareness of corruption has influenced the rhetoric of
Latin American leaders, even when their commitment to confront the problem remains
questionable. In contrast to a decade ago, it is common today for Latin American election
candidates to include anti-corruption slogans and strategies in their campaigns. Some current
officials have won elections by promising to battle corruption. Similarly, civil society
organizations (CSOs), non-governmental organizations (NGOs) and the media have been
increasingly active in promoting transparency, lobbying for reforms and informing citizens.

In sharp contrast to the past, when corruption was perceived mostly as a cultural trait that could
only be combated through long term educational and ethics campaigns, today, a growing
consensus is emerging that corruption is as much a product of a rational behavior that responds
to incentives.9 As such, it thrives where the opportunities for corrupt behavior are high, the
probabilities of being caught are small, and the consequences for illicit behavior are low or
nonexistent.

Although it is difficult to generalize about corruption in Latin America, the countries of the
region share some characteristics that are perceived to give rise to corruption. These include:

• Civil Service in transition. In most Latin American countries, the transition to a

more professional career civil service that rewards merit more than patronage is still a
work in progress. In spite of legislation and reform, the public sector remains highly
susceptible to influence peddling. While some progress has been made (i.e., public
servant laws, administrative procedure laws, improving horizontal and vertical
coordination in the public sectors, regulatory institutions, e-procurement and e-
government initiatives),10 there is still a need to further strengthen the civil service to
make it more accountable, transparent and efficient and to reduce incentives for the
abuse of power.

• Cumbersome legislation, overlapping responsibilities of different government

agencies, legal confusion, all contribute to increase the discretionary power of public
officials. This also blurs the lines of policy direction and accountability and also
creates unnecessarily large bureaucratic barriers, which can serve to multiply
opportunities for bribes. Cumbersome legislation, overlapping responsibilities of
9
(Klitgaard, 2004); (Kaufmann 2003); and Transparency International, Sourcebook, 2000. London: TI, 2000.
10
For a discussion on progress in civil service reform in Latin America see United Nations Development Programme
(UNDP). Lessons on Public Administration Reform. New York: UNDP, 2004; Luciano Tomassini and Marianela
Armijo, “Reforma del Estado en América Latina: Experiencias y Desafíos,” Santiago de Chile: Editorial LOM,
2002; Gerardo Berthin. Gobierno y Gobernabilidad Electrónica: Estrategias y Lecciones para el Desarrollo
Humano. La Paz: Programa de las Naciones Unidas para el Desarrollo (PNUD), 2003; Sunil Mani. Government
Innovation and Technology Policy: An International Comparative Analysis. Cheltenham, UK: Edwar Elgar, 2002;
World Bank/Center for Democracy and Technology/Infodev. The e-government Handbook for Developing
Countries. Washington, D.C., 2002; C. Polidano. “Administrative Reform in Core Civil Services: Application and
Applicability of the New Public Management.” In Willy McCourt and Martin Minogue, eds., The Internalization of
New Public Management: Reinventing the Third World State. Cheltenham: Edward Elgar, 2001; and Koldo
Echebarria and Francisco Longo. “La Nueva Gestión Pública en la Reforma del Núcleo Estratégico del Gobierno:
Experiencias Latinoamericanas,” CLAD, 2000.

5
 different government agencies and legal confusion weakens the capacity of
governments to detect, deter and punish corruption.

• Complex and excessive bureaucratic procedures and regulations to obtain

permits, licenses, registration. In many countries in Latin America, the business
community, foreign and domestic investors and citizens face an impenetrable wall of
rules that bars them from legally establishing social and economic activities. In a
number of countries, it is tremendously difficult to obtain legal documents (i.e.,
import and export permits, construction licenses, identification cards, birth
certificates, driving licenses), pay taxes, acquire legal housing, enter into formal
business agreements, obtain credit and find legal jobs.11 Complex and excessive
bureaucratic procedures and regulations encourage petty corruption, and adversely
affect on potential business development, particularly small and medium enterprises.

• Weakness of the control and oversight institutions. Oversight and control

institutions remain weak, despite the creation of anti-corruption
commissions/agencies, ombudsmen (defensorías) and justice system oversight
entities (Consejos de la Judicatura), the implementation of anti-corruption
legislation, and the efforts of the international donor community to strengthen
government institutions in charge of control. Most of these mechanisms are
dependent on the Executive Branch of government and are under funded and under
staffed to effectively fulfill their functions.12

• Ineffective Legislatures, particularly in overseeing the executive branch of

government. Most Latin American legislatures are technically weaker than the
executive branch and thus unable to exert their oversight functions effectively. For
example, legislatures are generally unable to debate budget issues effectively and
budget formulation is often flawed by ambiguity between the executive and
legislative roles. Thus, the preparation and approval of the budget, and the
monitoring and oversight of public expenditures is adversely affected, resulting
executive branch discretion in the use of public funds. Moreover, in many countries,
legislatures are too subordinated to the executive, fragmented, and/or dominated by
special interests, which further reduces their capacity to produce significant and
effective legislation.13

• Dysfunctional judicial systems that are inefficient and are not independent. In
spite of judicial reforms (i.e., penal codes, re-training of judges and the creation of
oversight institutions),14 judicial systems in many Latin American countries do not

11
This has been well documented in Hernando de Soto. The Mystery of Capital. New York: Basic Books, 2000.
12
Susan Rose Ackerman. Corruption and Government: Causes, Consequences, Reform. New York: Cambridge
University Press, 1999; Kaufman, op.cit, 2003; DCD/DAC/GOVNET, 2003.
13
World Bank PREM Notes on the Public Sector. “Strengthening Oversight by Legislatures,” Number 74 (October
2002); and United States Agency for International Development (USAID). “Assessment Report on Assisting
Legislatures in Developing Countries,” Washington, D.C., 1998.
14
For a discussion on progress and set-backs in justice reform in Latin America see, Justice Studies Center of the
Americas (CEJA). Report of Judicial Systems of the Americas 2002-2003. Santiago: CEJA, 2003; Roberto
Gargarella. “Too Far Removed from the People: Access to Justice for the Poor, the Case of Latin America,”

6
 prosecute and sanction corrupt officials. Judges still retain enormous discretion;
money can buy favorable court decisions; there is limited training and resources, and
cases are “lost” or delayed. Systems seem to be overwhelmed and people,
particularly the poor, are deterred from using them. The judiciary is unable to apply
criminal law effectively, thus contributing to impunity. At the same, systems do not
protect civil and property rights, contributing to a weakening of the rule of law and
adversely affecting potential economic activity (investment and competitiveness).

• Weak social controls, poor articulation and lack of voice. Even though in the past
decade the number of CSOs that work in the area of transparency has grown, most of
their efforts have concentrated on awareness raising activities, less so in forming
coalitions, generating greater pressure to prosecute corrupt officials and in
successfully implementing social auditing activities.15 At the national and regional
levels, CSO networks remain fragmented; lack adequate technical capacity to process
and analyze information released by the government; and have limited capacity to
translate advocacy activities into broad (governmental and non-governmental)
coalition building strategies for change. Moreover, in some cases governmental and
political interests have captured many of these organizations, in effect neutralizing
their capacity to voice dissenting and critical opinions.

• More awareness but mixed attitudes about corruption. According to interviews,

corruption assessments and donor documents, public attitudes of corruption remain
somewhat illusive. On the one hand, perceptions about corruption as a problem
persist, although only less than one-third of Latin Americans think that there has been
progress in reducing corruption.16 On the other hand, even though people in Latin
America perceive that corruption is widespread, corruption is not identified as the
most important problem. According to the UNDP survey, more than 60% of citizens
in Latin America regard economic problems as more important than corruption and
according to the Latinobarometro survey half of Latin Americans are more fearful of
losing their jobs than of engaging in corruptive acts.17 Both of these perceptions
suggest that most people in Latin America still do not link corruption to the broader
capacity of governments to promote economic growth and job opportunities and
deliver social services; economic uncertainties are just too overwhelming. Perhaps
this explains why tolerance for corruption still remains relatively high in the region.

• Absence of political will to control corruption. Donors, international groups and

practitioners generally agree that political will is required to implement and sustain

(Mimeo), UNDP, 2002; and Cristina Bibesheimer and J. Mark Tayne. IDB Experience in Justice Reform: Lessons
Learned and Elements for Policy Formulation. Washington, D.C.: IDB, 2001.
15
(DCD/DAC, 2003); Transparency International “Corruption Fighters’ Tool Kit 2002-2003. Civil Society
Experience and Emerging Strategies,” Berlin: TI, 2003; and Enrique Peruzzotti and Catalina Smulovitz. Civil
Society, the Media and Internet as Tools for Creating Accountability to Poor and Disadvantaged Groups in Latin
America. New York: UNDP Occasional Paper Series, No. 13, 2002; and Transparency International. TI
Sourcebook 2000. London: TI, 2000.
16
(Latinobarometro, 2003)
17
(UNDP, 2004) and Ibid.

7
 anti-corruption reform efforts.18 Even though most candidates seeking office today
promise to combat corruption and include anti-corruption programs in their
campaigns, once in office few have been able to follow-up on their campaign
promises. Maintaining political will has proven difficult for many leaders for among
other reasons: 1) opposition from those with vested interests in the status quo; 2)
raising expectations too high on reducing corruption; 3) no practical or immediate
consequence for not keeping with electoral promises; and 4) inability of leaders to
work with the opposition, build consensus and mobilize support.

B. Major Consequences of Corruption

The incidence of corruption in Latin America varies from country to country, ranging from
“normal” to “widespread” to “systemic.” If it is normal, it may be relatively easy to identify the
problem, sanction and close the opportunities that allowed corruption to occur. Once it is
widespread and becomes systemic, however, the likelihood of detection and sanction decreases,
and incentives are created for corruption to increase further. Moreover, where there is systemic
corruption, the institutions, rules, and norms of behavior have already been adapted to a corrupt
modus operandi, with public sector officials and employees and other actors (i.e., business
sector) often following the examples.19 In these cases, corruption can be highly damaging to the
stability of democratic institutions, erosive to the rule of law and corrosive to economic growth
and competitiveness.

In the governance dimension some of the costs of systemic corruption are beginning to emerge.
After more than two decades of the return of democracy in Latin America, a majority of Latin
Americans are losing support for their democratic governments and institutions. According to
two recent reports, most people in the region are dissatisfied with their governments’
performance.20 Even though much progress has been achieved in the electoral front --elections
are generally clean in the region and recognized as the legitimate means of access to power--
fifty five percent of the people surveyed in 18 countries said they would support the replacement
of democratic government with an authoritarian one, if they could resolve social and economic
problems; fifty eight percent agreed the president should go beyond the law if he has to; fifty six
percent said economic development is more important than maintaining democracy.21 Latin
America democracy has not been able to take root because it has largely failed to address long-
term problems related to poverty and inequality.

Moreover, most governments have stalled in their attempts to move to truly representative
democracy. Political parties, one of the most important institutions of democratic governments,
are losing credibility, as they have not been effective in aggregating, articulating, representing,
and becoming accountable to their constituencies. Most people feel that parties are aloof,
unresponsive to their daily concerns and needs and a central part of the corruption problem.22
18
(DCD/DAC, 2003); and United States Agency for International Development (USAID). Field Perspectives: A
report on the Field Mission Anti-Corruption Survey. February 2003.
19
(Klitgaard, 2004); and (Kaufmann, 2003).
20
(UNDP, 2004); and (Latinobarometro, 2003).
21
(UNDP. 2004).
22
Ibid; Americas’ Accountability Anti-Corruption (AAA) Project. Political Party Finance in Argentina, Chile,
Costa Rica and Mexico: Lessons for Latin America. Alexandria, VA: Kwik Copy Printing/AAA Project, 2004;

8
Furthermore, leaders with a mandate to respond to citizens' concerns are overwhelmed with
growing and unsatisfied demands and confront an explosive mix of weak institutions and
distrustful populations.23 More importantly, there is an emerging consensus in the region that
their governments are falling prey to widespread corruption.

In the economic area the costs of systemic corruption are also beginning to be dimensioned. In
recent years, many studies have presented powerful empirical evidence on the economic and
social costs of corruption.24 They have shown how systemic corruption can hinder domestic and
foreign investment, restrict trade, distort the size of the composition of government expenditures,
weaken the financial system and strengthen the informal economy. Most importantly, systemic
corruption can reduce economic growth and competitiveness. This in turn, adversely affects the
levels of poverty and income inequality. Nonetheless, unbundling corruption can help reveal
variation across countries in the region in terms of the extent of systemic corruption and its costs.
As is suggested in Figure 1, there seems to be a level of correlation between perceptions of
corruption and economic growth and competitiveness. The country with the lowest perception of
corruption in Latin America, Chile, has a high growth competitiveness index, while Paraguay,
which has the highest perception of corruption in the region has a low growth competitiveness
index.

National Democratic Institute for International Affairs. The Public Funding of Political Parties: An International
Comparative Study. Johannesburg: NDI, 1998; and Kurt Wayland. “The Politics of Corruption in Latin America,”
Journal of Democracy, Volume 9, Number 2 (April 1998):108-121.
23
Inter-American Dialogue. Against the Odds: Democracy in Latin America. Washington, D.C: Inter-American
Dialogue, March 2004.
24
For example, Jeffrey D. Sachs and Joaquin Vial. “Can Latin America Compete?” In World Economic Forum, The
Latin American Competitiveness Report, 2001-2002. New York: Oxford University Press, 2003 (pp. 10-28); Inter-
American Development Bank. The Business of Growth: Striving for Competitiveness in Latin America. Washington
D.C.: IDB Economic and Social Progress in Latin America, 2001; Shang-Jin Wei. “Bribery in the Economies:
Grease or Sand?” Harvard University, NBER, and the World Bank, February 3, 2000 (mimeo); Edgardo J. Campos,
Donald Lien and Sanjay Pradhan. “The Impact of Corruption on Investment: Predictability Matters.” World
Development, Volume 27, Number 6 (1999):1059-1067; and Sanjeev Gupta, Hamid Davoodi and Rosa Alonso-
Terme. “Does Corruption Affect Income Inequality and Poverty?” IFM Working Paper, 1998.

9
 Figure 1: Latin America, Perceptions of Corruption
(CPI) and the Growth Competitiveness Index (GCI)
a Correlation?

8
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GCI CPI
Source: Transparency International 2003 Corruption Perception Index (Scale is 0-10, where 0 is high levels of
corruption and 10 is low); and World Economic Forum, 2003 Global Competitiveness Report (Scale is 0-7, where 0
is low competitiveness and 7 is high).

Global and regional studies that measure the business environment are often used to gain insights
into corruption. One of the more comprehensive reports is the Global Competitiveness Report.
The results of the latest report on competitiveness indicate that Latin America occupies fifth
place among the seven major regions of the world in terms of competitiveness, only slightly
ahead of the poor countries of Asia and the small group of African countries that are included in
the report. Chile and Costa Rica are the countries that offer the best conditions.25 The rest of the
countries of the region are below the world average, many of them in the lowest positions among
nearly 80 countries considered.

A key factor that appears to reinforce the correlation between systemic corruption and
competitiveness is the quality of public institutions. For example, bureaucratic controls and
regulations with regards to starting new business is a key factor for an adequate business
environment. According to a recent competitiveness report of Latin America, business people
perceive this as a major weakness of the region. The average number of procedures to start a
new business is higher in Latin America (14 steps) than in non-Latin American countries (10
steps); the time to complete procedures is longer (nearly 93 days in Latin America compared
with 58 days elsewhere); and the proportion of time senior managers spends with bureaucracy is
also greater (26% in Latin America vs. 21% in the non-Latin American countries).26

25
World Economic Forum and Harvard University. The Global Competitiveness Report. New York: Oxford
University Press, 2003.
26
(Sachs and Vial, 2003).

10
If one adds to the bureaucratic burden the severe deficiencies found in the judiciary system (as
already mentioned above), it is quite clear that some of the major obstacles to competitiveness in
most Latin American countries are directly related to inefficient and ineffective public
institutions that, in many cases, fail to deliver the public goods required from them and tend to
overburden the private sector with controls and regulations. The countries that tend to grow
more rapidly are precisely those that have better conditions of competitiveness, including less
prevalence of corruption. As such, one of the clear consequences of corruption is that it raises
transaction costs and uncertainty in the economy and leads to inefficient economic outcomes.
Corruption also impedes long-term foreign and domestic investment,27 misallocates talent to
rent-seeking activities and pushes firms underground (informal sector). As informal activities
grow, it undercuts the government’s ability to raise revenues, and leads to ever-higher tax rates
being levied on fewer and fewer taxpayers. This, in turn, reduces the government’s ability to
provide essential public goods, including the rule of law. A vicious circle of increasing
corruption and informal economic activity can be the ultimate adverse result.28

In fact, survey data supports the notion that corruption, poor governance and lack of economic
and public sector reform go hand in hand, with causality running in both directions.29 People
think their countries should have made more economic progress and indicated that corruption
and vested financial interests were key reasons for their slow progress.30 In analyzing corruption,
there is a clear link between private and public actors. For example, corruption can influence the
choice of private businesses to supply public goods and services in procurement and contract
processes. It can influence the allocation of monetary benefits (tax evasion, subsidies, pensions,
or unemployment insurance) or in-kind benefits (access to privileged schools, medical care,
housing and real estate, or ownership stakes in enterprises being privatized). Corruption can be
used to reduce the amount of taxes or other fees collected by government from private businesses
and/or to speed up the government's granting of permission to carry out legal activities.
Ultimately, corruption can alter outcomes of the legal and regulatory process, by inducing the
government either to fail to stop illegal activities or to unduly favor one party over another in
court cases or other legal proceedings.

III. Changes in the Fight against Corruption and the Promotion of Transparency in Latin
America

A. What has Changed in the Last Decade?

A decade ago, multilateral and bilateral donor organizations and international financial and
development institutions did not recognize corruption as a major problem of governance and
development that required strategic programmatic interventions. As the Inter American

27
Whether related to corruption or not, the Economic Commission for Latin America and the Caribbean (ECLAC)
reported in a special study that foreign direct investment (FDI) in Latin America and the Caribbean reached almost
US$36.5 billion in 2003, a sharp 19% decline over the previous year, due mainly to drops in Brazil and Mexico. It is
the only region in the world where FDI fell, plunging to well under the US$88 billion in inflows posted in 1999.
See ECLAC. Foreign Investment in Latin America and the Caribbean. Santiago: ECLAC, 2003.
28
(Kaufmann, 2003).
29
(Kaufmann, 2003); and and World Economic Forum, The Latin American Competitiveness Report, 2001-2002.
New York: Oxford University Press, 2003. .
30
(Latinobarometro, 2003).

11
Development Bank acknowledges, “the word corruption was virtually unprintable in official
publications of Latin America.31 Much has changed since 1994, when the OAS began to study
the issue of probity and public ethics. Since then, the Summit of the Americas has become
institutionalized and has opened spaces to tackle corruption and promote accountability and
transparency. In 1996 members of the OAS signed the Inter-American Convention against
Corruption. Many countries in the region have also signed other international conventions
against corruption (Organization for Economic Cooperation and Development32 and United
Nations), as well as other related treaties33 and became formally committed to introducing
reforms to control and fight corruption.

Corruption, today, is broadly recognized as a critical governance and development problem for
developing and transition countries. Today, most international donors are financing a wide
variety of programs to reduce corruption. They have also sponsored an array of studies that have
yielded vital data and information, which has greatly enhanced the understanding of the nature,
causes and consequences of corruption and the formulation of anti-corruption strategies.

In addition to countries’ commitments --even if only formally-- to combating corruption, civil

society organizations like Transparency International and others have also organized in Latin
America at the national and local levels to mobilize key sectors of the society, encourage citizens
to get involved in government oversight and to advocate in favor of reforms to fight corruption.
Today, 14 national chapters of Transparency International in Latin America are part of a formal
network commonly known as TILAC. This has contributed to raise awareness and reduce
tolerance for corruption. Today, corruption in Latin America is increasingly perceived as a
problem that can be discussed, confronted, and reduced, rather than as a cultural trait to be
accepted with resignation.

As Table 1 shows, the international donor community and international NGOs such as
Transparency International have come to share a basic understanding on how to define
corruption. There is wide consensus that corruption is not only a matter of culture, but also of
opportunities and incentives that are directly related to the institutional setting in society. As
such, corruption is now considered a problem of governance, and not necessarily a product of
culture, as it has been suggested.34

The consensus in the main definition of the term has led to a general agreement on how to
combat corruption. Although there are still different approaches and more specialized (i.e.,
legalistic, economic) definitions of corruption, there is a generalized agreement that corruption
needs to be combated through a systematic long-term and multi-pronged approach that while
emphasizing enforcement also focuses on prevention through improving public sector
management and strengthening control institutions. There is also agreement that any strategy to

31
Raphael Di Tella and William D. Savedoff. Diagnosis Corruption. Fraud in Latin America’s Public Hospitals,
Washington, D.C: Inter American Development Bank, 2001.
32
In Latin America only Chile, Mexico, Brazil and Argentina have signed the OECD Convention.
33
United Nations Convention against Organized Crime and Financial Action Task Force 40 Recommendations.
34
For a discussion of the linkage between corruption and culture see, Seymour Martin Lipset and Gabriel Salman
Lenz, “Corruption, Culture, and Markets.” In L. Harrison and S. Huntington, eds. Culture Matters. New York:
Basic Book, 2000 (pp. 112-124); and Daniel Treisman. “The Causes of Corruption: A Cross-National Study.”
Journal of Public Economics, 76, 3 (1998).

12
fight corruption must include citizen participation, and nurturing political will through the
identification of “champions of reform” and the strengthening of broad anti-corruption
coalitions.

Over the past decade, multilateral organizations and the international donor community have
financed a wide variety of programs in Latin America geared at improving public sector
management (integrated financial management systems, civil service reforms, introduction of
information and communication technology in government, modernization of tax administration
and customs agencies) and promoting greater accountability and transparency in government
(access to information legislation, judicial reforms, procurement reforms, training prosecutors,
strengthening civil society organizations, training journalists).

The results of all these efforts appear to be mixed.35 Although more research and empirical
analysis is necessary to evaluate the impact of these projects (see Section V), the record seems to
be filled with examples of programs that succeed at first but that are undermined by subsequent
governments or by economic or political crisis and/or constraints.36 An example of this is the
National Integrity Plan that was launched in Bolivia in 1998 with donor support, which was
designed to tackle state modernization, judicial reform and the fight against corruption. During
its initial phase, the program accomplished the passage of important laws (civil service,
administrative procedures). However, after the change of government in 2002 and the ensuing
economic and political crisis, the program did not gain relevance again.

The results of all these efforts appear to be mixed.37 Although more research and empirical
analysis is necessary to evaluate the impact of these projects (see Section V), the record seems to
be filled with examples of programs that succeed at first but that are undermined by subsequent
governments or by economic or political crisis and/or constraints.38 An example of this is the
National Integrity Plan that was launched in Bolivia in 1998 with donor support, which was
designed to tackle state modernization, judicial reform and the fight against corruption. During
its initial phase, the program accomplished the passage of important laws (civil service,
administrative procedures). However, after the change of government in 2002 and the ensuing
economic and political crisis, the program did not gain relevance again.

Moreover, recent analyses of anti-corruption programs conclude that there are very few success
stories or examples of actually reducing corruption in a “sustained way.”39 In a recent World
Bank document, for example, Daniel Kaufman argues that there has been little progress (in some
cases even deterioration) in key dimensions of governance in Latin America, particularly in the
areas related to controlling corruption and improving the rule of law.40 Kaufman contrasts lack
of progress in these areas with success in other areas not directly related to governance, such as
the quality of infrastructure, the absorption of new technologies, the quality of science and math

35
(Kaufmann, 2003); (DCD/DAC, 2003); (USAID, 2003a); and (UNDP, 2003).
36
United Nations Development Programme (UNDP), Lessons on Anti-Corruption. New York, December, 2003.
37
(Kaufmann, 2003); (DCD/DAC, 2003); (USAID, 2003a); and (UNDP, 2003).
38
United Nations Development Programme (UNDP), Lessons on Anti-Corruption. New York, December, 2003.
39
(DCD/DAC/OECD, 2003); (UNDP, December 2003); Daniel Kaufman, “Rethinking Governance: Empirical
Lessons Challenge Orthodoxy” (mimeo). Washington, D.C: The World Bank, 2003.
40
(Kaufmann, 2003).

13
 education and the management of key macro-economic variables, like inflation and budget
deficits.41

Table 1: Definitions of Corruption

Transparency International:42 Corruption is the misuse of entrusted power for private benefit.
Corruption involves behavior on the part of officials in the public sector in which they
improperly and unlawfully enrich themselves, or those close to them by the misuse of the power
entrusted in them. TI distinguishes between petty corruption and grand corruption. Petty
corruption or survival corruption is practiced by public officials who may be grossly underpaid
and depend on small rents. This small-scale corruption may be simply a downward projection of
much more damaging corruption at higher levels. Grand corruption of high-level public officials
often involves large international bribes and “hidden” overseas bank accounts.

United Nations Development Program (UNDP):43 Corruption is the misuse of public power,
office or authority for private benefit-through bribery, extortion, influence peddling, nepotism,
fraud, speed money or embezzlement. Although corruption is often considered a sin of
government and public servants, it also prevails in the private sector.

Inter American Development Bank (IDB):44 Corruption encompasses acts performed by

officials who use their positions wrongfully, or are requested to do so by others, to obtain some
benefit for themselves or others. Corrupt activities include the solicitation, payment or receipt of
bribes, gratuities or kickbacks, extortion, improper use of information or property, and peddling
of influence.

World Bank:45 Corruption is commonly defined as the abuse of public office for private gain.
The World Bank unbundles the concept of corruption, placing primary emphasis on the
distinction between state capture and administrative corruption. State capture refers to the
actions of individuals, groups, or firms both in the public and private sectors to influence the
formation of laws, regulations, decrees and other governmental policies to their own advantage.
Administrative corruption refers to the intentional imposition of distortions in the prescribed
implementation of existing laws, rules and regulations to provide advantages to either state or
non-state actors.

United States Agency for International Development (USAID):46 Corruption is the abuse of
public office for private gain. It encompasses unilateral abuses by government officials such as
embezzlement and nepotism, as well as abuses linking public and private sectors such as bribery,
extortion, influence peddling, and fraud. Corruption arises both in political and bureaucratic
offices. It can be petty or grand, organized or unorganized.
41
Ibid.
42
Transparency International. Sourcebook 2000.
43
(UNDP, 2003).
44
Inter American Development Bank, “Strengthening a Systemic Framework against Corruption for the Inter
American Development Bank,” February 28, 2001.
45
World Bank. Anti-corruption in Transition: A Contribution to the Policy Debate. Washington, D.C.: The World
Bank, 2000.
46
USAID, A Handbook on Fighting Corruption. Technical Publication Series. Center for Democracy and
Governance. February, 1999.

14
Kaufmann’s broad evaluation seems consistent with some public perceptions about the state of
corruption in Latin America. The majority of Latin Americans still believe that corruption is
widespread in their countries.47 Five of ten Latin Americans have been significantly affected by
corruption.48 And less than 30% of Latin Americans believe that there has been progress in
reducing corruption in the past two years.49

These disappointing findings have to be balanced with a central premise that like most
governance reforms, anti-corruption efforts are long-term projects and that results are not always
evident in the short run. Many donors now recognize, that a well designed anti-corruption
reform strategy requires a long-term vision and a clear understanding that fundamental change
can begin to take place now, but only come to fruition within one or two generations.50 In as
much as it is difficult to ascertain, with current data and instruments, whether corruption has
declined or increased in the region, progress has been documented on a number of fronts.

B. Major Achievements in the Anti-Corruption Front

Countries in the region today have greater access to a wide variety of technological, legal,
institutional and administrative tools to combat corruption. Most countries in the region
have made significant improvements in the modernization of their financial and management
systems,51 their procurement practices,52 and the strengthening of their Supreme Audit
Institutions (SAIs),53 and public prosecutors.54 In various degrees, many countries have also

47
United Nations Development Program (UNDP), Report on Democracy in Latin America. New York: UNDP,
2004; Latinobarómetro. Informe Latinobarómetro 2003. Santiago, Chile: Latinobarómetro, 2003; Transparency
International, Global Corruption Report 2004 Special Focus: Political Corruption. Sterling: Pluto Press, 2004.
48
Transparency International. 2003 Barometer. Berlin: TI, 2003.
49
(Latinobarometro, 2003)
50
(UNDP, 2003); and (DCD/DAC, 2003).
51
Americas’ Accountability Anti-Corruption (AAA) Project. Integrated Financial Management Systems, Best
Practices: Chile and Bolivia. Alexandria, VA: Kwik Copy Printing/AAA Project; Americas’ Accountability Anti-
Corruption (AAA) Project, 2004. Integrated Financial Management Systems in 17 Central American
Municipalities. Alexandria, VA: Kwik Copy Printing/AAA Project, 2004; Juan Carlos Camacho Encinas.
“Viabilidad de los Sistemas Integrados de Administración Financiera en América Latina,” Universidad de Chile
(mimeo, 2002); Marcos, Makón. “Sistemas Integrados de Administración Financiera Pública en América Latina.”
Serie 3 Gestión Pública. Santiago, Chile: Comisión Económica para América Latina (CEPAL), 2000; Lynette
Asselin. “Integrated Financial Management in Latin America, as of 1995” LAPTS Occasional Paper Series, Number
18. Public Sector Modernization Division/LAC Region, World Bank, Washington, D.C., 1995.
52
Simon J. Evenett and Bernard M. Hoekman. Government Procurement: Market Access, Transparency, and
Multilateral Trade Rules. World Bank Policy Research Working Paper 3195, January 2004; SICE.” Information
System for Monitoring Public Procurement - Sistema de información para la vigilancia de la contratación estatal
[online]. Available at (http://www.sice-cgr.gov.co/); Proyecto de Reforma y Modernización del Estado, Chile.
Gobierno Electrónico en Chile: Estado del Arte. Santiago, Chile: Universidad de Chile, 2003; Inter-American
Development Bank. “e-Government Procurement (e-GP): Lessons Learned and New Opportunities for Development
– Conference Proceedings.” Washington, D.C.: IDB, 2002; and Transparency International, Handbook, 2000.
53
Contraloría General de Chile. Contraloría General de la República fija Normas de Procedimiento sobre Rendición
de Cuentas, 2003. Available at (http://www.contraloria.cl/documentos/RENDICION.pdf); Contraloría General de
Colombia. Transparencia contra la corrupción Propuesta de gestión del Contralor General de la República, Antonio
Hernández Gamarra (2002-2006). Available at
http://www.contraloriagen.gov.co/despcontralor/contenido/corrupcion.PDF; and Secretaría de Contraloría y
Desarrollo Administrativo. Programa Nacional de Combate a la Corrupción y Fomento a la Transparencia y el

15
introduced information and communication technology initiatives (e-government) to improve
government efficiency, effectiveness, transparency and accountability.55

Moreover, most countries in the region have made progress in improving their constitutional,
legal, and institutional frameworks. Some have passed constitutional amendments to increase
the independence and professionalization of the judiciary. Others have introduced new
legislation (freedom of information; transparency laws; career civil service laws), and they have
created new institutions such as ombudsmen and anti-corruption agencies.

There are encouraging examples of local and institutional reforms that show promise of
sustainability even if high levels of systemic corruption surround them. For example,
participatory budgeting in Porto Alegre, Brazil;56 the overhauled and strengthening of the
internal revenue service in Ecuador;57 the modernization of the Comptroller General Office in
Bolivia;58 the internal control program in Colombia;59 and social auditing and strategic planning
at the municipality of Santiago de los Caballeros in the Dominican Republic.60

Although the impact of all these efforts in reducing corruption has been modest if not
imperceptible, these institutional innovations can play a fundamental role in multiplying the
control and combat of corruption in the future.

Awareness about the problem of corruption has significantly increased in Latin America.
Even though much remains to be done in raising awareness about the linkage between corruption
and economic development, today, in contrast to the past, corruption is a problem that is widely
and openly discussed as part of the policy agenda. Corruption has become a priority theme in the
regional agenda. Governments are being forced to address corruption by domestic pressures, as
well as by external pressures and potential consequences. There is recognition that if they do not
address corruption effectively, chances are that countries would lose strategic assistance and
investment opportunities. For example, the MCA initiative places enormous importance on
corruption indicators in order to determine country eligibility for USG assistance. The media has
played a significant role in reporting corruption cases and raising awareness about the nature and
the scope of the problem. In virtually all Latin American countries, the media now reports
corruption cases more effectively and on a regular basis. New investigative reporting techniques
have emboldened the media to provide information to the public, which they can use to demand
greater accountability.

Desarrollo Administrativo 2001-2006 (México). Available at

(http://www.ci.inegi.gob.mx/normateca/Programas/PROGRCCFT.htm).
54
UNDP, 2003; and CEJA, 2003.
55
(Berthin, 2003); and Silvana Rubino-Hallman. “E-Government in Latin America and the Caribbean: Reinventing
Governance in the Information Age,” CLAD, 2002.
56
Boaventura De Sousa Santos. “Participatory Budgeting in Porto Allegre: Toward a Redistributive Democracy,”
Politics and Society, Stoneham (December 1998).
57
USAID/Casals and Associates, Corruption Assessment, Ecuador, 2003
58
The World Bank. Bolivia; From Patronage to a Professional State/Bolivia Institutional and Governance Review.
Washington, D.C., World Bank, 2002.
59
Casals and Associates, Inc/USAID, “Presentation at the ICGFM Conference,” Miami, May, 2004.
60
Americas’ Accountability Anti-Corruption (AAA) Project. Citizen Participation to Strengthen Transparency in
Latin America and the Caribbean. Alexandria, VA: Kwik Copy Printing/AAA Project; Americas’ Accountability
Anti-Corruption (AAA) Project, 2004.

16
The analytical tools to understand and measure corruption have substantially improved
and become more sophisticated. In contrast to the past, when corruption was an overarching
concept believed to be “immeasurable,” today new tools have been developed to disaggregate
corruption in its various dimensions, to measure its intensity and estimate its costs. However,
much more needs to continue to be done in this area (see Section V).

New actors have emerged on the anti-corruption front. The different anti-corruption
programs supported by the governments and the international donor community during the past
fifteen years have brought new actors to the fore. The private sector is beginning to emerge as a
critical partner for anti-corruption activities. Once, the private sector was perceived mostly as a
promoter or beneficiary of corruption. But recently it is becoming evident that many
businesspeople not only feel victims of corruption and are ready to fight against it; they have
become important “champions of reform” in their own societies.61

Civil society organizations are increasingly improving their technical skills to effectively oversee
their government’s performance and make it accountable. New groups of social auditors are
emerging in the region with the mandate to keep their governments in check, particularly at the
local level.62

Universities in the region are also playing an increasingly important role in analyzing corruption
and disseminating their results, training public officials, and making technological applications
of information and communication technology designed by the private sector. For example,
worthy of mentioning are Centro de Investigación y Docencia Económicas (CIDE), Facultad
Latinoamericana de Ciencias Sociales (FLACSO), Facultad de Ciencias Económicas de la
Universidad de Buenos Aires and Instituto Centroamericano de Administración de Empresas
(INCAE) in Costa Rica.

At the regional level, organizations such as the Federation of Central American Municipalities
(FEMICA), the Latin American Federation of Cities (FLACMA), the Latin American Journalism
Center (CELAP), the Justice Studies Center of the Americas (CEJA), the Center for Electoral
Technical Assistance (CAPEL), the International City/County Management Association
(ICMA), the Latin American Center for the Management of Development (CLAD) and the
regional offices in Latin America of the Institute for Democracy and Electoral Assistance
(IDEA) are including corruption-related activities in their agendas. At the international level, the
pressure of international organizations to combat corruption is also increasing and expressed in
the ratification and implementation of new anti-corruption conventions.

As a result of an increased understanding of the nature, causes, and effects of corruption,

multilateral organizations and international financial and development agencies have
refined their anti-corruption strategies. After years of implementing programs and activities,
analysts and practitioners acknowledge that anti-corruption efforts require a more systemic,

61
USAID, Anti-corruption Assessment, Panama. 2004; USAID, Governance Assessment. Mexico. 2001.
62
Americas’ Accountability Anti-Corruption (AAA) Project. Citizen Participation to Strengthen Transparency in
Latin America and the Caribbean. Alexandria, VA: Kwik Copy Printing/AAA Project, 2004.

17
holistic, and long-term approach.63 In recent years, international organizations such as the
United Nations Development Program, the U.S. Agency for International Development, the
World Bank, and Transparency International, have outlined their anti-corruption strategies.
Although there are some differences in the breath and scope of their programs, these strategies
share four key elements:

• Prevention: reducing the opportunities for corruption by promoting greater efficiency,

accountability, and transparency in the delivery and administration of public services.
The package of reforms includes civil service reform, freedom of information legislation,
simplification of procedures and regulations through the use of information and
communication technologies; and introduction of sound financial and management
practices with efficient accounting systems.

• Strengthen Oversight and Control Institutions: restraining the power of public

officials by strengthening institutions such as anti-corruption agencies, Office of the
Comptroller General, Office of the Auditor General, Office of the Ombudsperson, and
Legislative Oversight Commissions.

• Public participation and coalition building: ensure broad public support for the anti-
corruption programs and help build the political will to combat corruption by
strengthening anti-corruption coalitions. Support programs geared at improving the
quality of investigative journalists, improving technical capacities of civil society
organizations to conduct social audits and awareness campaigns.

• Enforcement: reducing impunity by promoting greater independence and accountability

of the judicial system; strengthening prosecutors; strengthening capacity and integrity of
the police; protect whistleblowers; and pass anti-corruption legislation that
unambiguously defines corruption and establishes concrete and feasible sanctions.
Today anti-corruption assistance covers a much wider range of program approaches than a
decade ago. This often responds to national demands, to windows of opportunity and/or to the
presence of national champions. In every country in Latin America one would find different
program approaches, with a variety of sectoral and cross-sectoral activities. For example, in
Guatemala much of the anti-corruption activities are focused in the justice sector reform, on
human rights and working with civil society; in the Andean countries anti-corruption efforts are
imbedded in alternative development strategies; in Panama the emphasis is on administration of
justice and on supporting a broad coalition of CSOs and provide them small-grants to develop
and implement initiatives; and in Colombia focus is being placed on the development and
implementation of internal control procedures.64

New Legal instruments and conventions. The OAS Inter-American Convention against
Corruption is another positive change in the fight against corruption (see Section VI for a
detailed analysis). It already offers a number of practical opportunities to intensify the fight

63
(UNDP, 2003); (USAID, 1999); (DCD/DAC, 2003); and The World Bank,
www.worldbank.org/publicsector/anticorruption; (DCD/DAC/OECD, 2003).
64
(USAID, 2003a).

18
against corruption in the future. As the process to verify compliance moved forward, there have
been meetings convened, reports drafted and implementation has been monitored.

Political corruption is beginning to be addressed. A decade ago, it was unthinkable to tackle

corruption and transparency issues related to political parties. Today, political corruption is
emerging as a key issue. Most Latin American countries have introduced legislation on political
parties, in particular to regulate the sources, flow and destination of money in politics. Bans and
limits in the area of political party campaign finance are being addressed divergently in the
region. Public funding is being debated, discussed and in some cases reformed. Control
mechanisms, are being created and strengthened to encourage and enforce disclosure of
information by political parties. Civil society organizations are becoming increasingly involved
in promoting better disclosure and transparency and in lobbying for reform in political party
finance. Poder Ciudadano in Argentina and Participa in Chile are two such examples. In spite
of this progress, much more needs to be done to ensure transparency, integrity and disclosure in
political party finance in Latin America.65

Unlike the past, when high-ranking officials resigned and avoided prosecution, today a
number of corrupt public officials in different Latin American countries have been
effectively prosecuted. Even though it is clear that removing a “few bad apples” will not solve
the problem of systemic corruption, the prosecution of these officials represents a major
achievement on the anti-corruption front. Visible wins may be critical for building credibility
and generating sustained pressure for reform. These officials would not have been prosecuted
without international and national pressures. The investigation against former President Alemán
in Nicaragua, which led to the removal of his legislative immunity and later to his incarceration,
serves as a needed example in the region of the consequences of corruption. Corrupt leaders have
fewer safe heavens today than they had in the past. More importantly, this and other cases, like
the mobilization against the former president of Guatemala and the former Peruvian Head of
Intelligence Vladmiro Montesinos, have empowered civil society organizations in the region.

IV. Lessons in the Fight against Corruption and Challenges for the Future

After nearly a decade of anti-corruption programs and activities, what are the lessons learned?
What areas seem to be promising, what areas seem to be ineffective?

The literature review on what is working and what is not working in anti-corruption in the region
yields four general lessons:

5. There are no quick fixes. Addressing corruption is a complex political endeavor

requiring governance and economic wide reform. Long-term commitment is required to
gain public confidence in efforts to prevent and control corruption;

6. The need to balance between prioritizing short-term, immediate visible targets that create
momentum but merely scratch the surface of the problem with deeper, more difficult, as

65
Americas’ Accountability Anti-Corruption (AAA) Project. Political Party Finance in Argentina, Chile, Costa
Rica and Mexico: Lessons for Latin America. Alexandria, VA: Kwik Copy Printing/AAA Project, 2004.

19
 well as time and resource intensive systemic reform that attack the root causes of
corruption;

7. Anti-corruption activities can be encouraged and fostered by outside partners and

donors, but the drive and the leadership must come from within; and

8. Anti-corruption strategies, whether national or regional, require a long-term vision and

clear understanding that fundamental change can begin to take place now, but only come
to fruition within one or two generations. Nonetheless, visible early victories, such as
successful prosecution of high-level officials, may be critical for building credibility and
generating sustained pressure for reform.

In addition, documentation from experiences in the field and the literature review suggest that
the effectiveness of anti-corruption activities does not depend on one single factor but on a
convergence of factors. For example:

• Political will66 and commitment from national leaders are critical to implement and
sustain anti-corruption efforts.

• Wide popular support and ownership are necessary to advance anti-corruption efforts.
The experiences of Poder Ciudadano in Argentina, Transparencia por Colombia, the
Alianza Pro-Justicia in Panama, are broad coalitions that include government, the
private/business sector, civil society and the media, which have proven to be successful
in identifying problems, agreeing on solutions and implementing reform. In addition,
well-designed awareness campaigns that are accompanied by concrete reform proposals
can help generate ownership by civil society groups and mobilize the public.

• For anti-corruption programs to be effective they must be tailored to each country’s

unique history, economic and institutional conditions. A base line assessment of the
nature, extent and root causes of corruption in a given country is a critical first step to
plan, guide and implement programs. USAID-sponsored assessments in Paraguay,
Honduras, Ecuador and Panama, and the WBI support given to anti-corruption agencies
(Ecuador, Honduras, Nicaragua) have been instrumental in nourishing national anti-
corruption strategies. In addition, the results of the assessments should be widely
disseminated to clarify the nature and extent of the problems, mobilize support and
develop action plans.

• Transparency and access to information are also indispensable tools for enabling the
public to identify and report corruption. Information about government policy and
programs, budgets, fees for services and performance should be available, permitting
citizens to oversee government, hold it accountable, and ensure that their rights are
respected.

66
Political will, refers to the demonstrated credible intent of political actors (elected or appointed leaders, civil
society watchdogs, stakeholder groups) to attack perceived causes or effects of corruption at a systemic level.

20
 • Donor coordination, and information sharing to exchange and learn lessons,
experiences, successes and practices and avoid duplication of efforts.

Even though there has been a lack of any systematic effort by the donor and civil society
communities to synthesize and analyze the impact of anti-corruption experience, there are
nonetheless some emerging lessons that have been articulated in the literature written over the
past five years.

A. Some Emerging Lessons

On Prevention

Reducing incentives and the opportunities for corruption is essential in any effort to combat
systemic corruption. Prevention strategies include a very wide array of policies, reforms,
programs, and activities aimed at increasing the effectiveness, efficiency, transparency and
accountability of governments. Many of these programs were introduced in Latin America
before a coherent anti-corruption strategy was even formulated. The literature of the experience
of reform in these areas is enormous and beyond the scope of this assessment, but evaluations on
the impact of these efforts in reducing corruption is limited. However, there are three main
lessons that can be distilled:

First, improving the performance of governments requires a long-term commitment and the
investment of large amounts of financial, technical, and human resources to change the way in
which governments operate. While the donor community can introduce innovative
organizational models and provide new information systems and technology, governments still
need to appropriate these innovative ideas and technologies and commit sufficient resources to
ensure their sustainability. Many of these reforms entail the support of a large number of people
working in administrative capacities. There are no technical quick fixes. The experience in
Latin America suggests that many technical capacity enhancement projects languish after the
assistance of international donors concludes.67

For example, over the last decade most countries in the region have implemented expensive
Integrated Financial Management Systems (IFMSs), yet little is known about their impact. A
recent effort to document IFMS experiences in Latin America, found that IFMS reform is not
often an integral part of a well-defined, interrelated and interactive state modernization strategy.
Little effort has been made to publicize the benefits of IFMS, to ensure that all stakeholders
understand them and to build support constituencies. Building a cadre of knowledgeable
personnel, with the needed technical skills to implement, manage and operate an IFMS is critical
for obtaining sustainable results. Ultimately, the effectiveness of IFMS as a financial
management and anti-corruption tool is dependent on the ability to finance and the capacity to

67
Manuel E. Contreras, “Capacity Building in the Bolivian Social Policy Analysis Unit. Reflections of a
practitioner.” In Merilee S. Grindle, Getting Good Government. Capacity Building in the Public Sectors of
Developing Countries. Cambridge, Mass: Harvard University Press, 1997.

21
maintain and utilize relevant technology. If either is lacking, the system will not provide useful
and timely information to decision makers.68

Second, there is now a growing recognition that reorganizing bureaucracies and increasing the
salaries of public officials will not reduce corruption in the absence of a broader civil service
reform. The World Bank has documented that raising public sector wages has no impact in
reducing corruption.69 However, setting the pay levels right may be part of the answer. In
several countries, key government agencies, like the tax administration in Ecuador, the Social
Policy Analysis Unit in Bolivia, or the Canal Authority in Panama, improved their performance
by raising wages within a comprehensive package of organizational reforms.70

Third, public awareness campaigns, anti-corruption conferences/seminars and training events can
be useful. For example, in Mexico the Project Atlatl, in collaboration with the Secretaría de
Controlaría y Desarrollo Administrativo (SECODAM), selected the script and funded the
production of a short public awareness anti-corruption awareness film with recognizable themes,
such as “Please do us a Favor/ no sea malito,” and "When I Grow Up/Cuando sea Grande,”
focusing on petty corruption in basic public services i.e., police, permits, health services). This
series was conceived as a non-lucrative project to create pubic awareness on the negative effects
of corruption. The short films were shown in more than 300 theaters throughout the country, and
according to project information, over 5 million people saw the films. In addition, national
long-distance bus companies are showing the films as part of the entertainment showings for
their passengers. The films are being used in seminars and as public service announcements.71
According to the latest Transparencia Mexicana’s report on corruption in Mexico, this type of
public awareness campaigns might have had an impact in reducing petty corruption in Mexico.
According to their report, from 2000 to 2004, petty corruption in Mexico has substantially
declined.72

For prevention to be effective there needs to be continued monitoring (audit, internal controls
and evaluations). Evidence from the literature review and from interviews suggest that it is not
enough to introduce new organizational schemes, new technology (like IFMSs), to train police
forces and prosecutors and to implement public awareness campaigns. Unless these are
continuously monitored and evaluated, anti-corruption efforts could subside and another more
extraordinary effort would be necessary.

68
Americas’ Accountability Anti-Corruption (AAA) Project. Integrated Financial Management Systems, Best
Practices: Chile and Bolivia. Alexandria, VA: Kwik Copy Printing/AAA Project; and Americas’ Accountability
Anti-Corruption (AAA) Project, 2004. Integrated Financial Management Systems in 17 Central American
Municipalities. Alexandria, VA: Kwik Copy Printing/AAA Project, 2004.
69
(Kaufman, 2003).
70
(Contreras, 1997); USAID/Casals and Associates, Inc. Corruption Assessment, Ecuador, 2003; USAID/Casals
And Associates, Inc. Corruption Assessment, Panama, 2004.
71
Casals and Associates, Inc./ Project Atlatl, “Quarterly Report,” 2002.
72
Transparencia Mexicana. Encuesta Nacional de Corrupción y Buen Gobierno. México, DF: Transparencia
Mexicana, 2003.

22
On Strengthening Control and Oversight Institutions

Most Latin American countries have agencies in charge of controlling and curbing corruption.
Many of these agencies have been unable to fulfill their mandates, because they have
encountered legal challenges in the process of moving a prosecution of corrupt officials. In
many cases, their impact in prosecuting and punishing the corrupt has been virtually insignificant
mainly because enforcement approaches have not simultaneously changed.73 Typically, anti-
corruption agencies identify, document, file cases and turn them over to the appropriate
prosecuting agencies. Often, anti-corruption agencies perform these responsibilities without
appropriate capacity and resources. If and when prosecuting agencies receive the cases, they
either refuse to give priority to the cases and/or have little or no capacity to handle corruption
cases. Even when the prosecuting agency handles the case and turns over to the judicial system,
the courts might be weak or too dependent on the executive to effectively pass judgment and
punish responsible individuals and/or groups. Moreover, when courts finally are able to sanction
cases, it is generally against petty offenders sparing the “big fish.”

In addition, some anti-corruption agencies in Latin America have operated under the executive
branch of government, calling into question their political independence and authority. Further,
some of these agencies lack resources and were understaffed and under funded to be effective. In
spite of these shortcomings, these agencies for the most part have played an important role in
providing a central locus for the denunciation of corruption. 74 As was described above, what
happens after the denunciation in many cases is beyond the control of the anti-corruption
agencies, and in itself is a lesson learned for future activities.

In fighting corruption, Supreme Audit Institutions, anti-corruption agencies and entities such as
the fiscalía/procuraduría and the offices of ombudspersons (defensorías) are important.
Experience has demonstrated that to fulfill their functions, these institutions need independence
and functional autonomy from the executive, close relations with enforcement officials, internal
controls, adequate and well-qualified staff, and adherence to international auditing standards.75
In most Latin American countries, these conditions do not exist mostly due to the absence of
political will. Typically, oversight institutions are subordinated to the executive, and lack the
technical capacities and adequate staff to perform their oversight responsibilities.76

Another emerging lesson from Latin America in the area of control and oversight institutions is
that deficient and/overlapping regulation creates confusion, increases arbitrary discretion and
encourages corruption. The cases of Panama, Ecuador and Argentina, exemplify this lesson.
Simplifying administrative procedures and clearly delineating functional responsibilities among
control agencies are important first steps.

73
Patrick Meagher. “Anti-Corruption Agencies: A Review of Experiences.” Maryland: the IRIS Center, 2002.
74
For example during 2002 the Anti-corruption Commission of Ecuador handled more than 600 cases, and the
Bolivian Anti-corruption Office more than 500 cases.
75
DCD/DAC/GOVNET (2003).
76
USAID, Field Perspectives: A report of the Field Mission Anti-Corruption Survey. 2003.

23
On Promoting Public Participation and Coalition Building

Civil society plays an important role in fighting corruption. A watchful public is necessary for
holding government officials accountable, reducing the tolerance for corruption, and creating
public awareness about corruption. However, after years of supporting different groups, there
are some key questions to ask about CSOs working in anti-corruption areas. For example, who
do CSOs really represent? How inclusive are CSOs? And, to whom they are accountable?
Moreover, some civil society groups have questionable motives in seeking international donor
support; therefore, “they need to be held to the same accountability standards as people in public
office and private companies.”77 In addition, CSOs still need much more capacity-building
assistance y key areas, such as project/proposal design, sustainability strategies and coalition
building.
Thus, civil society organizations need to acquire not only greater organizational and advocacy
skills, but also greater technical capabilities to monitor the government and propose alternative
reform strategies.

Furthermore, supporting a stronger and vibrant civil society while important is not an alternative
to promoting cleaner, more accountable and transparent public sectors. They are clearly
complementary.78

Unlike the past, when most efforts of the donor community were geared at strengthening and
enhancing civil society organizations’ capacity to confront their governments and demand
greater accountability and transparency, today many analysts and practitioners agree that a more
collaborative and less confrontational approach is necessary to bring about substantial change.79
Furthermore, civil society organizations need to find “champions of reform,” which are always
present even in the most corrupt public sectors, and build broader coalitions in support for
change. Anti-corruption campaigns cannot succeed unless the public is behind them and are
strongly supported by political leaders.80

Surveys and assessments that involved civil society participation are useful not only in
identifying problems and for monitoring and evaluation programs. As the experience of Poder
Ciudadano in Argentina, Participa in Chile, Corporación Latinoamericana para el Desarrollo
(CLD) in Ecuador, Tranparencia por Colombia and Transparencia Panama suggest, they help
raise awareness and create opportunities for change. If these efforts include the media,
independent consultants and sound methodologies credibility is enhanced even further.
Moreover, it can help raise awareness about the complexities of obtaining and accessibility of
information and encourage more demands for transparent and accountable government.

To date, there is very little evaluative work on the experience of civil society organizations in
Latin America in their fight against corruption. Research in this area can be supported by the
donor community to further improve the role of civil society.

77
World Bank, public sector governance page. http:/www1.worldbank.org/publicsector/anticorruption
78
DCD/DAC/GOVNET, 2003.
79
DCD/DAC/GOVNET, 2003.
80
USAID, 2003a

24
Other key lesson emerging from Latin America in the area of citizen participation and coalition
building are:

• CSO work seems to be evolving from a confrontational to a more collaborative approach,

which includes engaging governmental actors;
• Dependence on donors for financial sustainability is still a key issue for majority of
CSOs in Latin America;
• CSOs are demonstrating that they can play a big role in anti-corruption activities, not
only at the national scene but also at the local scene;
• To help CSOs and citizens organizations, capacity building in key strategic areas is
critical. For example, project/proposal design, survey techniques, use and maintenance of
information and data, monitor and evaluation techniques and cost benefit analysis.

On Enforcement

Efforts to reduce impunity have often translated in the prosecution of a large number of corrupt
officials, or as Klitgaard articulated it, “frying a few big fish.”81 Most analysts and practitioners
agree that systemic corruption requires greater emphasis on prevention than on enforcement.
Experience has proven that too much emphasis on enforcement can become extremely
problematic. First, prosecuting officials takes a long time and the process is usually filled with
“legal technicalities” that are bound to disappoint those who expected quick results. But more
importantly, punishing corrupt officials without introducing substantial reforms to prevent and
detect corruption, does not contribute to reducing corruption in the end. As Rose-Ackerman
rightly argues, the primary goal of reform should be “reducing the underlying incentives to pay
and receive bribes, not to tighten systems of ex-post control….If incentives remain, the
elimination of one set of ‘bad apples’ will soon lead to the creation of a new group of corrupt
officials and private bribe payers.”82 Moreover, the government can use the process of
prosecuting corrupt officials in a discretionary manner to punish political opponents. Needless to
say, the latter can significantly undermine other efforts to strengthen the rule of law.

Even while acknowledging that enforcement cannot become the cornerstone of an anti-
corruption strategy, the effective prosecution of several corrupt officials has demonstrated that
given sufficient public and international pressure, it is in fact possible to build political will to
punish corruption and reduce impunity.

Moreover, enhancing the enforcement capacities of prosecutors and the police, and promoting
the independence and accountability of the judicial systems can also become part of a campaign
of deterring and preventing systemic corruption. The case of Colombia provides some lessons
on enforcement. Not only is there a special unit within the Fiscalia that deals with corruption
cases (Unidad Especializada de Delitos en contra de la Administracion Publica), but the
government has trained citizens to combat corruption using constitutional mechanisms; it has
issued a Decree creating a National System of Internal Control across ministries and other
national bodies; and the General Comptroller’s Office issued a requirement for government

81
(Klitgaard, et.al. 2000).
82
Susan Rose-Ackerman. Corruption and Government: Causes, Consequences and Reform. New York: Cambridge
University Press, 1999.

25
entities to follow the standardized internal control processes. Similarly, under the International
Criminal Investigative Training Assistance Program (ICITAP) in Bolivia, hundreds of members
of the Policía Técnica Judicial (PTJ) have been trained, along with prosecutors from the Instituto
de Investigación Forense (IDIF) and judicial personnel, on investigative techniques and the
Criminal Procedures Code. In addition, progress has recently been made towards improving the
disciplinary regime within the Bolivian National Police (BNP), including the establishment of an
Office of Professional Responsibility (OPR) and the strengthening of the disciplinary court.

Yet, although the majority of Latin American countries have passed important anti-corruption
legislation, most of this legislation remains un-enforced because governments have lacked the
political will to significantly control and combat corruption. Many governments have used these
legal instruments as “window dressing” to comply with international conventions against
corruption without a serious commitment to do much about this problem. The case of Panama
provides a clear example of how, a law on transparency. This law was the collaborative product
of civil society, the business community, the Legislature and elements of the Government. It is
widely understood that the President never favored the law but it came for signature in middle of
a widely publicized corruption scandal involving elements of her government and the
Legislature. However, a few weeks after it was signed, the Government issued implementing
regulations that all but negated most aspects of the law, rendering it practically useless.83 As a
result, critical information, such as the asset declarations of senior officials, continues to be
unavailable to the public. Anti-corruption legislation, can lay the foundation to fights
corruption.84

Effective enforcement activities that have been attempted in Latin America range widely from
supporting legislation, regulatory structures and justice sector institutions to establishing and
supporting institutional procedures and internal control mechanisms. Although no evaluation
exists about the impact of these efforts, progress has been reported in fostering legislative/policy
reform, constitutional reform, criminal laws on anti-corruption, financial crimes, tax,
procurement, and decentralization.85

B. Challenges for the Future

Donor agencies are now realizing that since corruption is a complex and multi-dimensional
phenomenon, and that it is the result of broader structural relationships between and among
political, government, business sector and civil society actors, that there are in fact multiple entry
points for intervention. One of the emerging lessons is that anti-corruption programs need to be
mainstreamed into other areas not previously considered such as poverty strategies, education,
health, and environment. The IDB, for example has supported a study of corruption in the health
sector in Latin America that provides detailed evidence of the effect of corruption in a sector that
many people considered to be “immune from such abuses.”86 New areas that were previously

83
All of the presidential candidates have stated that they will eliminate the problematic implementing regulations
and ensure that the intent of the Transparency Law is fully implemented.
84
Transparency International, Sourcebook 2000, chapter 29.
85
USAID, Field Perspectives: A Report on the Field Mission Anti-corruption Survey, February 2003; and
DCD/DAC, 2003.
86
(Di Tella and Savedoff, 2002).

26
not included in the anti-corruption effort are now emerging as important entry points for the
international community in the future. For example, in a global USAID survey conducted in
2003, USAID missions identified more than 20 types of anti-corruption programs, in areas such
as energy, health, education and environment.87

A decade ago combating corruption focused on measures to address the problem in public
administration and public finance management. Today corruption is a cross-cutting theme.
Because there is an increased recognition that the roots of corruption extend far beyond
weaknesses in the capacity of government, the repertoire has been expanded to target broader
structural relationships, including the internal organization of the political system, relationships
among governmental institutions, the interaction between the public and private sectors and the
relationship between government and civil society.

Designing effective programs to combat corruption in these new areas needs to start with a good
diagnosis, something that is now only beginning to be done. Education, health, and the
environment are critical areas that affect people’s daily lives; anti-corruption efforts in these
areas may have more direct, shorter term impact and gain greater political support than programs
in areas of civil service reform or the modernization of the state which are further removed from
people’s daily affairs and successful results are not easily perceived by the general public.

Another emerging area that has not yet been adequately targeted is political corruption. The
financing of political parties is typically an area where powerful interest groups can “buy”
special favors and “capture” the state once parties are elected into office.88 Many countries in the
region are beginning to perceive the need for regulating the flow of money in politics by
introducing limits to campaign contributions, campaign expenditures and by passing disclosure
provisions. In most countries, this regulation remains largely un-enforced. Illegal contributions,
patronage, and kickbacks are becoming today one of the most important corruption scandals in
these countries. Donors, who have typically worked mostly on areas related to voter registration,
voting and vote counting, can become engaged in providing advice and technical capacity to
administrative agencies responsible for regulating and controlling political party finance.89

Corporate governance is another key anti-corruption area for future programming, particularly
because it emphasizes issues of competitiveness, transparency, internal and external
accountability and disclosure. The private sector is caught in a particular dilemma. On the one
hand, in some cases it benefits and is willing to tolerate and often pay for corrupt practices. Yet,
on the other hand, it suffers from the economic uncertainty and potential expropriation of assets
that are typical of corrupt environments where the public sector and political forces exercise
illegal “demands.” Moreover, privatization of many state-owned enterprises and trade policies
have meant that Latin American countries increasingly depend on private businesses to create
jobs, generate tax revenues, furnish consumers with goods and services, manage pension funds
and financial markets.

87
(USAID, 2003a)
88
AAA Project, TAM on Political Party Finance, 2004.
89
DCD/DAC/GOVNET, 2003; World Bank, Public Sector anti-corruption page,
www.worldbank.org/publicsector/anticorruption

27
Weak institutions for corporate governance not only result in inefficiency, they encourage
corruption. Poorly governed managers often use their positions to extract favors from the
government. Corrupt behavior in the private sector is often difficult to detect, especially in
countries where business transactions are obscured and/or informal. A wide array of corporate
governance reforms has proven effective in curbing both incentives and opportunities for
corruption. For example: public disclosure of share ownership and cross-holdings; strong
penalties for insider trading and pyramid schemes; the appointment of outsiders to boards of
directors; the introduction of regular, published independent audits of financial accounts based
on standardize rules; the establishment of an effective legal framework for the exercise of
creditors’ rights and conflict of interest; strong enforcement of ethical standards; and
improvement in the quality and integrity of financial reporting.90

During the last five years, a number of corporate governance initiatives have been implemented
in the region. For example: in 2001 the Argentine capital markets reform, covering a broad
range of corporate governance issues was decreed into law and became effective; in Chile, in
2002 a new Tender Offers and Corporate Governance Law was enacted; in Colombia, in 2001
the Superintendencia de Valores enacted a resolution, by which all issuers who intend to be
recipients of pension fund investments are obliged to disclose their corporate governance
practices; in 2002, Peru published the “Principles for Good Governance of Peruvian
Corporations,” a key reference endorsed by the private and public sectors; and in 2001, the
Mexican Congress approved key reforms to the Securities Markets Law, such as the power to
regulate tender offers in order to prevent the exclusion of minority shareholders from the
benefits, stricter enforcement and changing the regulatory approach from a merit-based approach
to a disclosure regime.91
As part of their corporate responsibility, many firms in Latin America are recognizing a call to
act in benefit not only of immediate shareholders but also of other less direct interests, including
the immediate community and the public interest. Increasingly, firm are collaborating in the
provision of information technology and training to the government and joining civil society
organizations in their efforts to promote greater transparency and accountability of governments.
However, it is important to recognize that the private sector is not a homogeneous entity. Small
and medium size entrepreneurs (those who have more autonomy from the government and who
therefore depend less on contracts, permits, and other government “favors”) have more to gain
from a system that plays by open and transparent rules and that limits public officials’
discretionary power. These entrepreneurs, more than the larger and most powerful
conglomerates, are the natural allies in any anti-corruption campaign.92

Finally, many countries in the region have introduced decentralization policies in an effort to
increase the government efficacy and efficiency in the provision of public services. More
attention is being paid to the creation of accountability mechanisms to ensure that sub-national
governments have the capacity to respond and account for their actions. The possible impact of
90
For an account on new approaches of the private sector in self-regulating activities, see OECD. “White Paper on
Corporate Governance in Latin America.” Paris: Center for Cooperation with Non-Members/OECD, 2003; and
Virginia Haufler. “A Public Role for the Private Sector: Industry Self-Regulation in a Global Economy,” Carnegie
Endowment for International Peace, 2001.
91
(OECD, 2003).
92
This evident in the cases of Mexico (COPARMEX), Panama (APEDE and Chamber of Commerce), Ecuador
(Chamber of Commerce of Guayaquil) and Brazil (several regional business associations).

28
decentralization on corruption has not been adequately analyzed and addressed. Some emerging
evidence suggests that decentralization may increase the opportunities for corruption.93 For
example, recent studies of Colombia’s experience with decentralization reveal that corruption
significantly increased after a radical decentralization program was undertaken in the early
1990s.94 However, there is also growing evidence that the local/decentralized level presents a
target of opportunity to affectively address corruption, particularly through social audit
mechanisms which seem to be able to gather greater political will from elected municipal
officials because of their closeness to their constituents.95

V. Measuring Corruption and Evaluating Anti-corruption Initiatives

Corruption in Latin America is perceived to be widespread, but measures are imprecise. During
the last decade, there have been efforts to try to measure corruption more systematically and
scientifically, using a wide range of methodologies, ranging from opinion polls to public sector
expenditure tracking and in-depth diagnostic surveys.96 The Corruption Perception Index (CPI),
sponsored by Transparency International each year since 1995, is currently the most popular
such method in the world.

In the international comparison of perceptions Latin America ranks just above Africa (Figure 2).
This provides a useful aggregated measure, which shows that Latin America is lagging behind
the other regions and that it has a huge challenge ahead. Like all averages, however, the CPI
does not reveal the enormous variation in the region with respect to the perceived level of
corruption. For example, the most recent CPI shows that while Chile’s score is high and similar
to the United States and Ireland, Paraguay, Ecuador, Bolivia and Honduras have low scores,
comparable to Uganda, Nigeria and Sierra Leone. Most other Latin American countries have
medium scores. Costa Rica and Uruguay have scores above the global average, while Brazil,
Peru, El Salvador, Colombia and Mexico have scores closer to the regional average. Panama,
Dominican Republic, Nicaragua and Argentina have scores below the Latin American average.

Furthermore, when looking at the Latin American CPI data, and other similar indicators, over
time it is hard to ascertain whether corruption has increased or decline.97 For example, the CPI
from 1999 to 2003 presented in Table 2 shows that Latin America scored almost the same in
terms of perceptions of corruption. The World Economic Forum indicators presented also in
Table 2 show a slight increase in perceptions of corruption. As such, while the CPI and other
similar indicators can be useful as a broad gauge of corruption, they cannot be use to guide
program and or policy decisions.

93
UNDP, December 2003.
94
Fernando Cepeda Ulloa, “Colombia: The Governability Crisis,” in Jorge Dominguez, et.al. Constructing
Democratic Governance in Latin America. Baltimore: John Hopkins University Press, 2003.
95
AAA Project, TAM on Citizen Participation to Strengthen Transparency in Latin America and the Caribbean,
2004
96
(Berthin and Maldonado, 2004).
97
Part of the problem is that corruption is by definition cannot be fully measured.

29
 Figure 2: Transparency International Corruption
Perception Index* (Averages, 2003)

9
8
8.1
7
6
5 5.6
CPI Scale

4 4.2 3.9 3.5

3
2.8
2
1
0
North Europe World Asia LAC Africa
America

*In the CPI Scale, 0 implies high perceptions of corruption while 10 implies low
perceptions of corruption.

Since 1996, the World Bank has also explored the use of surveys as a means to “measure”
corruption. The World Bank has conducted private sector surveys and more recently, perception
surveys directed to households and public officials. Moreover, in recent years an alternative to
the CPI measure has emerged from the World Bank Institute (WBI). This alternative uses a
series of governance indicators, including one for control of corruption, to measure the quality of
governance.98 While WBI data also shows the region of Latin America with a low rating, in
comparison to East Asia (Figure 3), a more in-depth review of country specific data also reveals
regional variation. For example, overall Chile scores high in the WBI governance indicators;
Costa Rica and Uruguay are not ranked as high as Chile, but are above the rest of the countries;
Argentina, Bolivia, Brazil, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua,
Mexico and Peru reflect the average of the region; and Ecuador, Venezuela and Paraguay are
ranked low.

98
Daniel Kaufmann and Aart Kraay. “Governance Matters III: New Indicators for 1996-2002 and Methodological
Challenges,” in Transparency International. Global Corruption Report 2004. London: Pluto Press, 2004; and op.
cit., (Kaufmann 2003).

30
 Table 2: Perception Corruption Indicators in Latin America
Transparency International* World Economic Forum**
Country 1999 2003 2001 2003
Argentina 3.5 2.5 4.28 4.42
Bolivia 2.0 2.3 4.26 3.56
Brazil 4.0 3.9 4.45 4.82
Chile 7.5 7.4 6.35 6.34
Colombia 3.8 3.7 4.73 5.14
Costa Rica 4.5 4.3 4.60 4.41
Ecuador 2.3 2.2 3.91 3.67
El Salvador 3.6 3.7 4.47 5.16
Guatemala 2.9 2.4 4.12 3.81
Honduras 2.7 2.3 3.64 3.84
Mexico 3.7 3.6 4.40 4.82
Nicaragua 2.4 2.6 3.76 4.31
Panama 3.7 3.4 4.26 4.52
Paraguay 1.7 1.6 2.77 3.55
Peru 4.1 3.7 2.31 5.21
D. Republic 3.1 3.3 4.46 4.43
Uruguay 5.1 5.5 4.78 5.88
Venezuela 2.8 2.4 4.05 3.85
Region 3.6 3.5 4.37 4.52
*1-11, low number= high corruption, low number= low corruption; **1-7, low number=high corruption and high
numbers=low corruption. Source: UNDP (2004), Table 19, p. 99.

Figure 3: Quality of Governance

1.5

1 Dev. Countries
E. Asia
0.5
LAC
0 Africa

-0.5
Rule of Law Control of Government Regulatory
Corruption Effectiveness System

Source: D. Kaufmann, 2003.

Another methodology that has been developed to measure corruption is the Victimization
Methodology. Departing from the premise that it overcomes the limitations of the CPI and
World Bank methodologies (based on aggregated national data), and inspired by the crime-

31
victimization surveys (focused on individuals), this methodology measures corruption by
accounting for personal, direct experience with it.

One key finding of this methodology is that perception of corruption has only a weak
relationship to victimization levels.99 In other words, if one uses the perception ratings as a
corruption measure in a Latin American country, one would be inclined to conclude that where
there are low perceptions of corruption victimization levels are also low. In fact, results of the
victimization survey shows that in Latin America the link between perceptions and victimization
is not always consistent.100 Another key finding generated by the victimization survey is that one
very common way in which corruption affects Latin Americans is through the very officials who
should be involved in controlling it, namely the Police.101 While victimization corruption rates
vary substantially from country to country, in all the countries studied it is substantially higher
than in advanced industrial countries. One shortcoming of this methodology is that it is unable
to gauge the extent of grand corruption, in the aggregate more damaging than the petty
corruption victims tend to report.

In addition to the CPI, the WBI indicators and the victimization scale, other organizations like
Transparency International, the International Budget Project and the Center for Public Integrity,
have also introduced innovative methodologies to analyze several aspects of corruption in Latin
America. For example, Transparency International has developed the Global Barometer Survey
and the Bribe Payers Survey, with relevant data for Latin America.102 The International Budget
Project has developed the Latin American Index of Budget Transparency, which is a product that
involved leading civil society organizations in ten countries in the region.103 More recently, the
Center for Public Integrity released the Public Integrity Index, which provides a quantitative
scorecard of governance practices in seven Latin American countries.104 The Public Integrity
Index assesses the institutions and practices that citizens can use to hold their governments
accountable to the public interest.

At the national-level, several organizations have also introduced new methodologies to measure
corruption and integrity in their countries. National-level public perception surveys and
corruption studies play an important role in providing information about the nature, magnitude,
and location of corruption within a country. For example, the Impunity Index in Panama, shows
that of 110 prominent corruption incidents reported in the media, only four ultimately resulted in
legal sanction; the Public Sector Integrity Index in Colombia, measures the effectiveness of more
than 140 public institutions in areas such as transparency, capacity to investigate and sanction
and efficiency; and the Index of Corruption of Good Governance in Mexico, focuses on the 38
most important public services and how corrupt they are based on client responses. These
national-level efforts suggest that corruption is still rooted in those institutions that have the
greatest contact with the public, such as the police, the justice system and health services.

99
Mitchell A. Seligson, the University of Pittsburgh Latin American Public Opinion Project’s Corruption
“Victimization Scale,” in op. cit., (Transparency International, 2004).
100
Ibid.
101
Ibid.
102
www.transparency.org/surveys/index.html.
103
www.internationalbudget.org/themes/BudTrans/LA03.htm.
104
www.publicintegrity.org/ga/ii.aspx

32
Worth mentioning is a collection of country studies recently published by the Inter-American
Development Bank’s (IDB) Latin American Research Network, which provides detailed
evidence of the effects of corruption in the health sector in seven Latin American countries
(Argentina, Bolivia, Colombia, Costa Rica, Nicaragua, Peru and Venezuela).105 Theft of medical
supplies, illegal or excessive fees for goods and services, absenteeism by doctors and nurses and
unauthorized use of public facilities, were some of the problems highlighted in the study.

Information and analysis about corruption has also proliferated and is widely available on the
Internet. Regional web sites such as Respondanet (www.respondanet.com) and Probidad
(www.probidad.org), and non-region specific web sites such as Nobribes (www.nobribes.org)
and the Utstein Anti-corruption Resource Center (www.u4.no) are important virtual fora for the
exchange of information and discussion within the Latin America region and across other
regions of the world. Even though their access is limited to those who have access to computers
and Internet, they have nonetheless contributed significantly to increasing the debate and
information about corruption in the region. In 2002, USAID sponsored several studies to
identify manifestations of corruption in specific sectors.106

Another example is Anti-corruption Without Borders (ACWB), a Respondanet service that

networks 100 CSOs in the region, and allows interaction, interactive online training and
exchange of ideas. Similarly, Periodistas Frente a la Corrupción (PFC) is a regional initiative of
Probidad, which provides a network, resources, assistance, support and defense to journalists and
media outlets involved in investigating corruption. Last but not least, since 1996 the
Transparency International national chapters in Latin America created the TILAC network
(http://www.transparency.org/tilac/english/index.html), which includes 14 countries. It serves as
an important means to share information and experiences.

All of these efforts have yielded an important body of data, which has helped not only to refine
the understanding of the causes and nature of corruption, but also, and more importantly, to
provide civil society organizations with powerful advocacy and monitoring tools for combating
corruption. Nonetheless, in spite of all that progress there is still plenty of room to continue to
understand the nature and dynamics of corruption in Latin America, improve and refine
analytical tools and instruments, further disaggregate data, and most importantly to measure
impact of anti-corruption efforts. In order to know precisely where to invest resources, target
assistance and how to measure the degree of success and/or impact of anti-corruption efforts
assistance, donors like USAID need to be able to rely on more evidence and indicators.

In contrast to a decade ago, today in Latin America it is feasible to measure progress in other
development areas like health, poverty and productivity, with universally accepted objective and
subjective measures. There is as yet any universally accepted standard for measuring
corruption.107 Because current measures are still imprecise, it is difficult to know with certitude
whether corruption is declining or increasing. In the absence of more reliable and hard data on
corruption, donors will find it difficult to target anti-corruption activities and more importantly

105
(di Tella and Savedoff, 2002).
106
MSI/USAID. “Anti-Corruption Sector Papers,” 2002.
107
(Seligson, 2002).

33
without this information donors would not be able to determine what impact, if any, their anti-
corruption efforts are generating.

As the C&A Team researched for literature on corruption trends, best practices and lessons in the
region, it found an enormous amount and variety. Some information, like general assessments
and studies, as well as theoretical and conceptual material was relatively easy to find, although
information on corruption is often woven into the governance, business development and/or
institutional development literature. Impact assessment and other evaluation assessments were
much harder to access; what was found was selective and non-comparative. For example, the
Team was unable to find a recent comprehensive regional or even sub-regional assessment of
corruption in Latin America. Moreover, descriptive and conceptual information about corruption
in Latin America seems to be more easily accessible to practitioners than empirical information
(evaluations and assessments). From the literature review and interviews it is apparent that:

• Donors are just beginning to adapt their information systems to the need to have access
to more hard data and information on corruption in Latin America;
• Few countries in Latin America have any form of evaluation of anti-corruption policies
and programs, from which positive and negative lessons about implementation can be
learned. Some countries have had corruption and/or democracy governance
assessments, which are not easily accessible or have not been made public;
• In general, there is little document sharing among donors, in key anti-corruption areas
such as expenditures tracking, procurement, civil service reform and public sector
financial management;
• Information and documents, if they exist, on the effects of the anti-corruption efforts in
Latin America have not been made public;
• There are few comparative evaluations that examine experiences of similar types of anti-
corruption programs and/or activities in Latin America; and
• With very few exceptions, such as Respondanet (www.respondanet.com), the TILAC
Network (http://www.transparency.org/tilac/english/index.html), the Probidad
(www.probidad.org), and the Utstein Anti-corruption Resource Center (www.u4.no),
there are very few efforts to create and maintain a common updated data base of
indicators and information to assist analysis, research and evaluation of corruption and
anti-corruption efforts in Latin America.

Few anti-corruption programs in Latin America have been evaluated systematically. Such
analysis could be used in developing future program and strategic plans. These evaluations
could also help donors, governments and civil society organizations to refine anti-corruption
objectives and performance measures.

While much progress has been made in estimating the global economic costs of corruption, much
remains to be done in terms of measuring the impact of corruption on economic development,
particularly in the Latin American region. Estimating the financial costs of corruption is
necessary to dimension its impact on the quality of public services, on the investment climate,
and on the opportunity cost for the private sector in general.

34
Several studies have attempted to show that corruption has a negative impact on public
investment, foreign direct investment, as well as on the size and quality of these investments.
These studies, however, have been mainly conducted at a global scale. At the regional level
there has not been a systematic and comparative effort. The results of these studies could
become a critical tool in raising awareness about the problem of corruption in the region and how
it is linked to those economic problems that people in Latin America recognize as the most
critical ones.

For example, in his study of several developing countries, Paulo Mauro, from the International
Monetary Fund (IMF) concluded that a reduction of corruption could significantly contribute to
increase the ratio of total investment to Gross Domestic Product (GDP).108 Furthermore, a drop
in the investment/GDP ratio as a result of corruption was shown to have an important negative
effect on economic growth. According to Mauro’s estimates, a reduction of corruption by an
equivalent of two points on the corruption index would contribute to increase the annual grow
rate by 0.5 percent through its positive effect on the investment/GDP ratio. Considering the
severity of economic problems in Latin America, particularly the inability to attract investment
and the sustaining economic growth, this type of findings could be relevant for the region.
In another study focusing on foreign direct investment, Shang Jin Wei of the National Bureau of
Economic Research shows that an increase in the marginal tax rate has a lower impact on foreign
direct investment than an increase of corruption.109 According to this study, an increment of 1
percent of the tax rate affects foreign direct investment by 3.3 percent, while an increment of 1
percent in the corruption index reduces foreign direct investment by 11 percent. The uncertainty
and unpredictability of corruption has a negative impact on foreign direct investment. If studies
like this could be conducted in the region and widely disseminated. Their findings could be used
to convince investors that paying taxes is more profitable than paying bribes.

In terms of the impact of corruption in the operation and maintenance of public services, a study
by Tanzi and Davoodi from the IMF concludes that high levels of corruption have a negative
impact on the size and quality of infrastructure investment.110 According to this study, the
impact of corruption is strongest in the quality of roads and in power outages. It would be
interesting to find out how this manifests in Latin America.

Lastly, several studies conducted mostly by the World Bank and Transparency International have
estimated the costs of corruption on income distribution. Even though it is shown that the rich
generally “spend” more on corruption related activities, the poor are strongly affected because
these expenditures represent a larger share of their total income.

VI. Legal Mechanisms

A. No Safe Haven

108
Paulo Mauro. Why Worry about Corruption. Washington, D.C.: IMF, 1997.
109
Shang-Jen Wei. Why is Corruption so Much more Taxing than Tax? Arbitrariness Kills. Cambridge, Mass:
National Bureau of Economic Research 1987.
110
Vito Tanzi and Hamid Davoodi. “Corruption, Growth and Public Finances.” Washington, D.C.: an IFM
Working Paper, 1998.

35
At the May 2003 Third Global Forum on Combating Corruption and Safeguarding Integrity in
Seoul, Korea, the USG committed to deny safe haven to corrupt officials, those who corrupt
them, and their assets. The US has been successful in getting countries of the Region to
undertake similar commitments, culminating in the inclusion of the no Safe Haven commitment
in both the G-8 Evian Declaration and the Special Summit of the Americas' Declaration of
Nuevo Leon last year. The “no safe haven” commitment was also reiterated in the most recent
OAS General Assembly meeting held in Ecuador in June 2004. These mechanisms have
contributed to reduce the tolerance for accepting corrupt official and their assets in the United
States and throughout the hemisphere.

B. Conventions

The United Nations (UN) Convention against Corruption, The Organization for Economic
Cooperation (OECD)'s Convention on Combating Bribery of Foreign Officials in International
Business Transactions and the Organization of American States (OAS)'s Inter-American
Convention against Corruption: These three conventions have varying provisions that will
impact on corruption in Latin America. Below (see Annex IV) is a discussion of the three treaties
and a series of charts that describe the differences and similarities of the UN and OAS
conventions.111

The recently adopted UN Convention against Corruption is the most complex and
comprehensive international legal instrument dealing with transparency and corruption. The
Organization for Economic Co-operation (OECD) and Development Convention on Combating
Bribery of Foreign Public Officials in International Business Transactions and the Organization
of American States (OAS) Inter-American Convention against Corruption have a more limited
scope.

Logically, many of the issues contained in the UN Convention are also found in the other
instruments, particularly in the Inter-American Convention against Corruption (See Annex IV).
However, there are at least two significant differences among the three treaties.

First, in terms of the requirements of USAID to identify areas to develop assistance, the OAS
Inter-American Convention against Corruption should be considered as the main source. In Latin
America, only Argentina, Brazil, Chile and Mexico have ratified the OECD Convention.112 The
UN Convention is in the process of ratification, with an uncertain time frame to cover every
country in the region. In contrast, the OAS Inter-American Convention against Corruption has
been signed and ratified by every country in the Americas, except for Barbados, Cuba and Haiti.
Therefore, the mandate of the Convention is a common field for almost every Latin American
government. This has a practical effect. Since the massive ratification of the Inter-American
Convention against Corruption, governments are now legally committed to implement a
significant number of policies aimed at reducing corruption and enhancing transparency.

111
This analysis was conducted by Casals consultant, Roberto de Michele, expert in the Inter American Convention
against Corruption.
112
Access of new Latin American countries to the OECD framework is not automatic and probably there will be no
additional admissions in the near future.

36
Second, both the OECD Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions and the Inter-American Convention against Corruption have
an operating follow-up Mechanism, based on a peer-review process.

The UN Convention in Chapter VII, Article 63, paragraph 4 (e) reflects the necessity of a
Conference of State Parties to develop a follow-up procedure, once the conditions for entry into
force are met.113 In other words, the possibility of monitoring the compliance of the UN
Convention is a pending issue.

Therefore, even if the UN Convention is a more comprehensive instrument, it has not achieved
so far two important requirements in order to be considered the central element of an anti-
corruption strategy. The first requirement is that the ratification process is at its very early stage.
Only a small number of countries have ratified this instrument. Only when thirty countries ratify
and deposit the Convention, it will enter into force. Once that happens, the process to convene a
committee to address the issue of monitoring the applications of the treaty will begin. In other
words, the application of the UN Convention is currently limited by its particular process of
ratification and adoption.
The second requirement is the lack – at this time – of a process to monitor compliance.
It should not be concluded that no effort should be bestowed in promoting the UN Convention.
The ratification of the UN Convention should be considered as a positive outcome. This is
basically a political process aimed at creating the conditions for the ratification of the
Convention. Only then, the mandate of the UN Convention would have a practical effect at the
national level.

As mentioned before, the UN Convention is more comprehensive than both the OECD and the
OAS treaties. However, the Inter-American Convention against Corruption is reasonably broad
in terms of its contents. It includes several criminal provisions that help leveling the field of
penal legislation for many Latin American countries. It also contains a number of articles
designed to facilitate legal and technical mutual assistance. Such provisions are essential to
promote transnational cooperation in the fight against corruption. Last, but not least, Article III
of the Convention is an inventory of measures, actions and policies to prevent corruption.

Article III includes paragraphs related to public sector accountability, public ethics, conflicts of
interest regulations, financial disclosure forms, public procurement, revenues systems,
accounting systems, civil society participation and others.

In other words, the Inter-American Convention against Corruption provides a solid starting point
for a preventive and prosecutorial strategy against corruption.
The current situation should serve to indicate where to invest the existing energies. That is, in
promoting the ratification of the UN Convention, but mostly in complying with the existing
commitments under the Inter-American Convention against Corruption.114
Perhaps one way of demonstrating that while complying with the Inter-American Convention
against Corruption, countries are also in the process of complying with the general mandate of

113
See Article 68 of the UN Convention
114
There could be a legitimate concern that the UN Convention could be use as an excuse to divert the required
commitments to sustain the existing efforts to comply with the Inter-American Convention against Corruption.

37
the UN Convention is to identify the provisions in both treaties dealing with similar topics. In
Annex 4 there is a comprehensive comparative analysis of both instruments.115

C. Compliance with the Requirements of the OAS Convention

Compliance with the requirements of the Convention is verified mainly by the Follow-up
Mechanism. However, before this exercise began, the OAS conducted a study to determine the
level of compliance of the criminal law provisions of the Convention. This study is reflected in a
collection of reports. These reports describe the existence of criminal law provisions at the
national level and their consistency with the requirements of the Convention.

The main difference is found in the area of illicit enrichment. These reports should be reviewed
in light of the new legislation, and an updated account provided. In general, these reports find
that most of the countries in Latin America have the basic criminal law provisions required to
deal with corruption. There are some exceptions, such as illicit enrichment and bribery of foreign
officials, where either a review of existing legislation or the passing of new statutes is required.
In any case, given the fact that legislatures regularly produce reforms to criminal law, the
information on those reports could be updated and revised.

Regarding the follow-up mechanism, every country has submitted a reply to the questionnaire.
The quality of the responses to the questionnaires is uneven. The reply to the questionnaire
requires certain analytical capacity. In the case of some countries it is evident that such capacity
is limited. For example, the Methodology - which defines how to analyze and respond the
questionnaire -requires providing objective indicators of the level of implementation. Several
countries failed to identify indicators or provided information that cannot be considered as an
indicator. So far no country has been asked to redo a submission. Results from recent research
on the performance of the Follow-Up Mechanism suggest that some experts expressed the
opinion that redoing a submission could be an alternative, though an extreme one.116

The Committee of Experts convenes at least three times a year to review the responses to the
questionnaire. In each session, four countries are analyzed. To date, eight countries (Argentina,
Chile, Colombia, Ecuador Nicaragua, Panama, and Paraguay) have been reviewed. In July 2004
the Committee of Experts will convene to analyze four additional countries (Bolivia, Costa Rica,
Peru, and Venezuela). The result of this analysis is a Country Report, containing the finding of
the Committee of Experts and specially the recommendations for improving the application of
the Inter American Convention against Corruption.

On the other hand, there has not been time, energy or resources to focus on reviewing the
practical effects of the Country Reports produced by the Committee of Experts. That is, to help
the reviewed country to implement the recommendations suggested by the Experts. In this way,
however, the Follow-Up Mechanism could have a practical impact. The Country Reports are an

115
Some of the most salient provisions are compared. The criterion used for selection and comparison should be of
functional equivalence. See the OECD Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions and the Methodology on the Follow-Up of the Inter-American Convention
against Corruption for alternative definitions of this concept.
116
(de Michele, 2004a).

38
excellent starting point to suggest assistance to particular countries. For example, in the case of
Argentina, the Committee of Experts recommended expanding the application of preventive
measures, such as conflicts of interest regulations, to the provincial level. In the case of Panama,
the Committee of Experts recommended to revise the access to information regulations, to make
them operative and less restrictive.

D. Is the Mechanism Working to Reduce Corruption?

It allows for examining, from a technical point of view, the consistency of the efforts
implemented by countries to implement the Convention. This activity, paired with the publicity
of the reports, creates the opportunity to sustain political debate based on a policy-oriented
strategy to attack corruption. The inclusion of civil society reports is extremely important to
balance the process.

Will this reduce corruption? It will promote the identification and implementation of public
policies to prevent it and will increase transparency. The Mechanism should not be tested as an
instrument of reducing cases of corruption, but as a process to promote the implementation of the
proper structural policies. Actually, the Mechanism shifts the debate away from cases and
scandals into considerations connected with governance issues. The way in which corruption is
framed by the Convention and analyzed by the Mechanism requires an approach that takes into
account not only formal legislation, but also compliance, not only the public sector, but also civil
society and to a lesser degree the private sector, not only investigation but also prevention.

In other words, the Convention and the Mechanism provide a systemic approach to confronting
corruption. Given its emphasis on public sector, civil society, criminal provisions, and
preventive measures, the Convention is a suitable platform for developing a comprehensive
strategy.

This has implications not only for government and civil society, but also for multilateral and
bilateral agencies that should benefit by coordinating their efforts more effectively.

A less recognized contribution of the Convention and the Mechanism is that it has changed the
tenor of the debate. Compliance with the Convention, in its various forms, is now required given
the commitment of the government at the time of signing the treaty. This removes from the
discussion unnecessary explanations on why certain policies or measures or legislation need to
be implemented.

Evidently, there are some gaps in the Convention. For example, there is no reference to political
campaign financing, a determinant factor of corruption. Corporate governance is another topic
not addressed by the Convention, though there is a reference to revenues systems and accounting
systems.

39
VII. Donors: Summary of their Anti-Corruption Efforts and their Role

The USG including all its agencies (State, USAID, Treasury, Justice, and Commerce) jointly had
put together a holistic approach to USG foreign anti-corruption assistance in a wide range of
areas including policy, diplomacy, and programs to advance four main goals:

1. Uniting governments under common anti-corruption commitments;

2. Helping governments meet or exceed those commitments;
3. Mobilizing popular will and private sector action; and
4. Leading by example.

USAID, one of the major donors in the region, is developing a new anti-corruption assistance
strategy to identify programmatic entry points that can make a greater contribution to USG
efforts. An inter-agency experiment is being carried out in Nicaragua on a pilot basis that will,
inter alia, be cross-sectoral in its approach and involve raising citizen awareness of the costs of
corruption and strengthening civil society's capacity to oversee government activities.

The OAS is also sponsoring interesting activities in the area of transparency. For example, a
project helps to identify best practices in the use of information and communication technology
in the private sector, and works with high-tech firms in the region. The OAS is persuading firms
to donate funding and technical training to use applications of this technology in the public
sector (e-government, e-procurement) as part of their corporate responsibility. The OAS is also
working with clusters of municipalities to train them in the use of information and
communication technology. The Unit for the Promotion of Democracy (UPD), one of the
principal bodies within the General Secretariat of the OAS has also been directly and indirectly
involved in the anti-corruption area.117 In particular, the UPD is working in the area of political
party finance. Advocating for more transparent mechanisms and the modernization of political
parties throughout the hemisphere have been two key areas.

The Inter-American Development Bank (IDB) has no particular central place to address
transparency and accountability issues. It works across sectors and in an array of areas. For
example:

• Integrated financial management systems, more recently at the municipal level;

• Provides technical assistance to countries working to comply with the requirements of the
Inter-American Convention Against Corruption;
• Technical cooperation for the follow-up by civil society organizations to the implementation
of the Quebec Summit of the Americas Action Plan;
• Regional policy dialogue that focuses on transparency and public sector management with a
network of senior public authorities;
• A host of bilateral lending activities to the countries of the region in the areas of income and
asset disclosure, national procurement systems, modernization of the public sector (especially
civil service reform) and support to national legislatures to oversee public spending;

117
In the OAS, the Inter-American Drug Abuse Control Commission (CICAD) deal with some issues related to
corruption in Latin America and the Caribbean.

40
• Programs to improve the administration of justice;
• Documenting and analyzing best practices in the area of citizen participation in municipal
budgetary decision-making;
• Drafted a strategy for promoting citizen participation in Bank programs;
• Money laundering prevention training activities and the creation of financial intelligence
units in South America; and
• Drafted a set of recommendations to adopt in assisting countries to implement transparency
and accountability policies.118

The World Bank has long been working in this area, especially through the research conducted
by the World Bank Institute. The Bank has had programs in administration of justice, ethics
training, procurement systems, and civil service reform. Moreover, the World Bank has
supported many public sector modernization programs, including IFMS. Their programmatic
goals are to:

• Increase political accountability.

• Strengthening civil society participation.
• Create a competitive private sector.
• Create institutional restraints on power.
• Improve public sector management.

In some countries, such as Argentina and the Dominican Republic, the International Monetary
Fund (IMF) has included as part of Stand-By Agreements recommendations on institutional
reform and public sector management that are consistent with increasing transparency and
accountability. Such interventions could be beneficial if coordinated with a more comprehensive
strategy carried-out by USAID and other donors.

Other bilateral donors are working in a piecemeal fashion on transparency and accountability
issues. An inventory of bilateral and multilateral donor assistance is desperately needed to
understand the programs in this sector and to coordinate them. Donor coordination mechanisms
are extremely weak in this area as well (as reported by USAID field mission), as one important
constraint on program effectiveness.119

VIII. Strategic and Policy Options for Programming, 2004-2009

One of the major roles of any anti-corruption strategy is to serve as a catalyst for change in
government, civil society and businesses. In prioritizing strategic and policy options, the LAC
Bureau should make controlling and reducing corruption in the region the first Intermediate
Result under the Strengthening Democracy Strategic Objective. Clearly reducing corruption will
promote the consolidation of democratic governments in Latin America. Strategic and policy
options cannot be a blueprint, but rather a set of rolling recommendations which recognize that
corruption is very complex and multidimensional, manifests itself in a variety of ways in

118
Roberto de Michele. “Iniciativas para Incrementar la Transparencia y Prevenir la Corrupción Fichas de Trabajo,”
Washington, D.C.: Departamento Legal/ IDB, 2003.
119
(USAID, 2003a).

41
different settings, and changes in intensity and scope over time. As such, any strategy must be
responsive to ever changing conditions in the field and to targets of opportunity.

Since corruption is the result of high opportunities for engaging in corrupt behavior combined
with a low level of risk, an effective regional anti-corruption approach must affect both
prevention (the reduction of opportunities) and enforcement (the increase of risk and reduction of
impunity).

The menu of strategic and policy options presented in this section should help the LAC Bureau
to establish programmatic and funding priorities; identify coordination mechanisms; and find
appropriate entry points for anti-corruption activities. One of the most important activities or
options is the need to identify appropriate methodologies to assess and measure quantitatively
the nature and extent of corruption in the region, as well as the impact of anti-corruption
programs and activities.

Based on the regional trends identified in this desk assessment, the following strategic options
are recommended for consideration by the LAC Bureau. In Part A, the Assessment Team
proposes a set of Non-Project Activities at the regional level, or sub regional level that would
help to further progress in reducing corruption in Latin America. These interventions are meant
to compliment bilateral or mission funded initiatives. In addition, the Assessment Team
proposes seven strategic options in Part B, along with illustrative activities, for consideration
by the LAC Bureau. Each strategic option suggests possible partners for implementation of the
illustrative activities. They are listed in order of priority. They are meant to be a menu of strictly
regional activities, with the understanding that the Bureau will not be able to fund all the options
presented. Some new activities are recommended, such as the LAC Bureau managed regional
technical assistance fund, new, critical research in establishing linkages between poverty and
corruption, and cost effectiveness analysis on the best combination of interventions to have the
greatest impact.

A. Non-Project Activities

1. Regional policy dialogue on anti-corruption and its impact on poverty reduction, trade-led
economic growth, and good governance in the Hemisphere: The USG has substantial influence
in Latin America. From the Assistant Secretary of State for Western Hemisphere Affairs
through all the US Ambassadors to USAID Mission Directors, the ability to discuss, convene,
and demarche this topic is unquestioned. Indeed, many ambassadors (e.g. Ambassador Linda
Watts in Panama, Larry Palmer in Honduras) and Assistant Secretary Roger Noriega have
already increased the level of public discourse on the problems of corruption. Continuing
negotiations on bilateral free trade agreements (Panama, the Dominican Republic, Ecuador,
Peru) and sub regional agreements (CAFTA, CAF, MERCOSUR) and, of course, the Free Trade
Agreement for the Americas in 2005 are all excellent platforms to introduce the importance of
reducing corrupt practices and strengthening democratic institutions.

Country Teams in the region are continually expanding the dialogue on a bilateral basis. The
recommendation is to develop a policy agenda that can be conducted on a regional level in
regional forums, meetings of regional associations etc. that USG senior level personnel attend. It

42
is the Team's belief that a regional dialogue would help reinforce and sustain bilateral dialogues.
Policy institutions in the United States and in Latin America could be natural partners.

One of the most important elements in this policy dialogue agenda should be the elimination of
immunity for high-level public sector employees, including national legislatures, and regional
bodies such as PARLACEN. Other agenda topics could be a discussion of libel laws and media
ownership.

2. Strengthening coordinating mechanisms for USG programs in corruption at the

Washington level. Although the Team was told that the inter-agency coordinating groups were
working together, there was still a lot of bureaucratic jousting that was time and energy
consuming. Perhaps professional facilitation of these meetings, a high level senior official as
chair, or a renewed commitment to jointly addressing the problem without introducing agency
affiliations and bureaucratic turf would improve the process. It is imperative that this
coordination process succeed to avoid duplication of programs, provide synergies across
programs, and to reduce costs. Fighting corruption is an important shared objective among the
USG agencies working in law enforcement and development in Latin America.120

3. Improved Donor Coordination of Anti-Corruption programs. For the same reasons the
USG agencies must coordinate their programs, donors need to sit together and share the donor
burden of assisting countries to address their accountability and transparency problems. In as
much as the problem in Latin America is systemic, donors working in the region do not often
respond to the problem systemically. Donors’ engagement is on a piecemeal basis, such as
working on political party finance issues or e-procurement or strengthening civil society groups
in monitoring and social auditing activities. Governance programs of donors, however, generally
impact on corruption problems, as well as their development programs in other sectors like
environment or health. Regular, periodic donor meetings to focus on corruption (or transparency
and accountability) issues and programs would benefit the host countries and the donors alike.
Too few of these meetings are actually held on the bilateral level and virtually none at the
regional level for Latin America. At the regional level, coordination could be promoted and
enhanced by sub-regional groupings of countries (Central America, CARICOM, Andean, and
Southern Cone countries) where borders are shared and problems may be similar.

4. Improved Coordination among USAID Mission Anti-Corruption Programs. Regional,

sub regional, and cross border meetings with neighboring missions should be held periodically to
promote internal coordination among USAID anti-corruption programs and exchanges of
experiences. These meetings could be facilitated by a partner or contractor working in the anti-
corruption area. Currently, missions are reinventing the programs in each country and there are
too few exchanges to promote lessons learned. It is clear from the desk assessment that
missions, and indeed all donors, are clamoring for this type of information. A set of regional
workshops would be extremely valuable for those charged with carrying out the anti-corruption
mandate for their missions.

120
Foreign Aid in the National Interest, USAID's White Paper on U.S. Foreign Aid, and the joint State-USAID
Strategic Plan, 2002.

43
B. Strategic Activities

Strategic Option 1: Increase awareness of the problem and mainstream anti-corruption

programs within development strategies and programs

Although there is citizen concern about rampant corruption, the issues of poverty and
employment are still of more immediate concern than controlling corruption. Much work
remains to be done to move the issue higher up on the development agenda. Information on
costs and impact of corruption on the economy and on society would help to truly understand the
dynamics of the problem and help make the case for mainstreaming corruption within
development programs, across all sectors. It would be very useful to know the cost of corruption
in health and education and in the environment. Also it would be useful to know if corruption
was occurring at the local level below that of municipalities, in the local neighborhood
associations, such as Mothers Committees and similar. One nagging question is why some anti-
corruption efforts have more impact in some countries and not in others. Is it political, cultural,
ethical, legal, institutional, or financial? Clearly corruption manifests itself differently across
and within countries in the region, and we do not yet fully understand the reasons.

Our desk audit revealed that more research is clearly needed on such topics as: confirming the
linkages between uncontrolled corruption and poverty, on foreign investment, on trade-led
economic growth, and on quantifying the corruption problem and measuring results with
experience- based data. Some even recommend that the Transparency Perception Index should
include broader measures such as political party financing issues. There is limited information
on the level of enforcement of criminal laws. There are some studies that identify the
shortcomings of criminal justice systems, but they are not necessarily linked to reducing
corruption. New tools are required to reduce corruption. More "lessons learned" and best
practices" literature is being demanded by donors, Latin American governments, and civil
society. International financial institutions and other bilateral donors are now trying to take
political corruption into account when deciding to support government programs. The criteria
for the Millennium Challenge Account (MCA) of the United States is a good example of these
attempts.

Illustrative Activities:

a. A series of regional white papers or abstracts on the linkages issues and the quantitative
measurement/indicator issues should be drafted at the earliest and given the widest distribution
possible. Despite years of program funding we still do not know enough about these issues to say
with any degree of assurances what are the most cost effective interventions to reduce corruption
in a given country situation. Nor how do we define success. In this sense the area/sector is
lagging behind the more traditional development programs. Fortunately, this type of research
lends itself well to a regional approach. The research could be conducted by a prestigious
network of social science research institutions such as FLACSO or if the research dealt with
enforcement and justice sector issue, CEJA could be a mechanism.

b. A study of best practices and lessons learned in implementing anti-corruption programs in

Latin America is urgently needed for future programming requirements. There should be

44
empirical and comparative studies on what is happening at the country level in terms of impact
and results. The desk assessment revealed that impact assessments of this type have either
not been carried out, or if carried out, they have not become public. This stock-taking
exercise is timely as the LAC Bureau moves into possible second generation projects in the anti-
corruption area. At the moment it is really not known what the best combination of
interventions make for the greatest impact, since there has not been a comprehensive and
systematic effort to learn what is working and not working. The Global Report on the Field
Mission Anti-Corruption Survey conducted by USAID in February of 2003 is a good starting
point and should be complemented with regional and sub-regional impact assessments. Impact
evaluations should be based on field visits and interviews with donors and host countries and
include cost effectiveness data. Once again the research would be specific to Latin America and
should be given broad distribution.

c. Create a database of quantifiable indicators to measure the impact of anti-corruption projects.

This needs to be done in conjunction with the impact evaluations as described above.

d. Utilize Respondanet.com and Probidad.org as a distribution vehicle. Maintain USAID support

for these important web sites.

e. Develop an inventory of existing regional institutions and examine their activities with a view
toward adding complementarity to other transparency and accountability projects and creating
synergies.

d. Convene Lessons Learned Workshops for countries and missions in the region and the sub
regions. Especially look at activities in the area of corporate responsibility, governance reform,
political party finance and internal controls. Concrete experiences should be highlighted, such as
the experiences of Mexico with corporate responsibility, Chile with governance reforms and
Colombia with internal controls.

f. Examine the OAS's approach of working with clusters of municipalities to install

accountability and transparency measures.

g. Increase attention to the issue of political corruption, including political party finance and
political party modernization. Donors, who have typically worked mostly on areas related to
voter registration, voting and vote counting, can become engaged in providing advice and
technical capacity to administrative agencies responsible for regulating and controlling political
party finance.

Strategic Option 2: Reduce the tolerance for corruption and help to strengthen the political
will to undertake reforms to fight corruption.

This strategy could operate throughout the life of any new regional project. The assumption is
that political will in the hemisphere is spotty; strong in some countries and non-existent in others.
Activities that would shore up political will and hold executive branch officials accountable to
their commitments made during political campaigns and international conventions (OAS
Convention on Anti-Corruption, UN Convention against Corruption) would be supported. One

45
way to do this is to place emphasis on external, as opposed to internal or governmental,
accountability mechanisms. Our desk audit revealed that these external accountability
mechanisms have proven to be strongly effective in maintaining political will for carrying out
anti-corruption reforms across various sectors of government.

Illustrative Activities:

External Accountability Training

a. Hold regional level training courses in for civil society organizations and business groups
that are engaged in, or planning to be engaged in, social auditing/monitoring activities, as
well as advocacy strategies and participatory budgeting. Training courses should be linked to
other substantive activities, such as project design, public awareness, organizational capacity
and monitor and evaluation.

b. Regional training of legislative commissions in how to hold/convene oversight hearings of

executive branch programs.

c. Regional training of civil society organizations in how to perform oversight functions in

general, and, particularly, of the judiciary, especially how to participate in merit selection and
promotion of judges.

d. Regional training at CELAP of journalists in conducting and reporting investigations of

corruption scandals.

e. Support national and regional level efforts to adopt and/or expand social oversight and
auditing. At the national-level, in some setting, the variety of experiences is significant, but
this divergence is multiplied many-fold regionally. Systematization of these experiences is
warranted, as is the need to disseminate/provide technical assistance and highlight best
practices.

Other Training

f. Regional training for technology managers and data entry personnel for e-procurement and e-
government systems in Latin America.

g. Support schools of public administration to promote civil service reform and training in
technology applications for the public sector. Use established schools such as INCAE in
Costa Rica and ESAN in Peru as regional training centers.

h. Support internal controls training, using the Colombian model.

i. Continue to support capacity-building initiatives for Supreme Audit Institutions.

Strategic Option 3: Assist Countries in the implementation of the Inter-American

Convention against Corruption

46
The Inter-American Convention against Corruption (IACC) provides a comprehensive
framework of preventive and traditional enforcement policies and strategies. Governments are
responsible for responding to the questionnaire, participating in the Committee of Experts,
reviewing other countries and for implementing the Convention at the national level, taking into
account the Country Reports and other inputs.

The IACC envisions a prominent role for civil society participation, as providers of alternative
sources of information to facilitate an independent assessment by the experts of the replies to the
questionnaire. This process is carried out by producing independent reports and sending them to
the Committee of Experts for their analysis. Along with the country reports, civil society reports
play a critical role in promoting public debate at the national level and are a tool for advocacy
and monitoring strategies.

This strategy should include government entities and civil society as critical actors.

Illustrative Activities:

a. Regional training courses for government and civil society to increase knowledge of the
IACC.

b. Under a regional fund managed by LAC and to supplement mission financing, provide
technical assistance to pertinent government officials in order to create the required expertise to
reply to the questionnaire, to participate effectively in the Committee of Experts of the Follow
Up Mechanism, and to review other country cases; and provide technical assistance to civil
society groups to enhance their capacity to present independent reports as part of their
participation in the Follow Up Mechanisms, as well as to increase their advocacy and monitoring
capacity of the commitment of government to implement the provisions of the IACC.121

c. Design a methodology to conduct a regional inventory of the Countries’ legislation and

institutions and the extent of consistency with the requirements of the IACC.

d. Organize regional meetings/conferences to develop assessment mechanisms in order to

measure the extent to which countries followed the recommendations from the Committee of
Experts.

e. Organize regional meetings/conferences to discuss obstacles to the implementation of the

IACC and to determine specific technical assistance that may be relevant. Article XIV of the
IACC indicates the need of “State Parties to provide legal technical assistance.” Such activities
could be included under the policy dialogue agendas or as part of other activities to enhance the
networking capacity of prosecutors and judges across the region.

121
This is analyzed in greater length in Roberto de Michele. Citizen Participation in the Follow-up of the Inter-
American Convention Against Corruption. Alexandria, VA: Project AAA, 2004.

47
j. Devise a regional mechanism to ensure that relevant government officials in each country are
informed about the Committee of Experts’ recommendations.

k. Identify and develop best practices in terms of institutional design, public policies, and
legislation consistent with the mandate of the IACC, such as conflicts of interest regulations
procurement laws, financial disclosure system and codes of conduct for public employees.

Strategic Option 4: Promote private sector engagement and Corporate Governance

The private sector has an important mandate to carry out in facilitating a more transparent and
accountable relationship within the market and in connection with the public sector.

Whether under the corporate governance approach, or under the more comprehensive idea of
corporate social responsibility, there are areas where the private sector can engage constructively
in promoting a more transparent environment for business.

The principle objectives of this option are to promote the engagement of the private sector in
transparency activities, create better conditions for fair economic practices and to improve the
quality of the relationship and interaction between the public and the private sectors.

Illustrative activities:

a. Development/adoption of best practices in the framework of the corporate governance

approach: transparency in investment, creditors’ rights.

b. Analysis of the situation of corporate governance practices in the sub regions.

Inventory of efforts in corporate social responsibility in the sub regions.

c. Development of best practices for the region, such as ethical frameworks for corporations
(codes of conduct, ethics officials, and training courses).

d. Development of a regional strategy to reduce the incentives for non-transparent relations with
the public sector: procurement regulations and conflicts of interest regulations.

Strategic Option 5: Establish a fund to support innovative pilot activities in Missions

Provide additional financing to mission bilateral funds to test innovative pilot projects for
reducing corruption by establishing a technical assistance fund managed at the regional level by
USAID/LAC/RSD. Innovative activities could be in the area of, for example, community social
auditing, implementation of internal control systems, or technical assistance centers to protect
whistle blowers.

Illustrative Activities:

a. Create a small grants program involving civil society for innovative activities, both practical
and analytical.

48
b. Have an annual regional award event to recognize innovation and impact of anti-corruption
activities in Latin America.

c. Provide technical assistance to strengthen national mechanisms used to measure corruption

(impunity index, public integrity index), and explore the possibility to replicate these experiences
in another country, using south-south cooperation.

d. Promote “communities of practice,” as a forum to discuss lessons learned and best practices
and to encourage greater cooperation among practitioners from different countries in the region.

Strategic Option 6: Support regional institutions in their fight against corruption

There is no single institution in Latin America devoted to fighting corruption as there is in rule of
law (Justice Studies Center of the Americas), human rights (Inter-American Institute for Human
Rights) decentralization and municipal development (FEMICA) etc. There are professional
associations of ombudsmen, attorneys general (fiscales), public defenders, chambers of
commerce, financial managers (ICGFM - International Consortium on Government Financial
Management), and journalists. In addition, there are networks of non-governmental organizations
engaged in advocacy and oversight activities in numerous sectors including transparency and
anti-corruption, e.g. The Democracy Network and Anti-Corrupción Sin Fronteras.

The LAC Bureau could devote grant resources to convening partners and other civil society and
business organizations to review the feasibility and demand for establishing a Hemisphere-wide
Transparency and Accountability regional organization that would act as a clearinghouse for the
region. One way to do this is to build on the experience of TILAC.
The principle objectives of this strategic option would be to:

• Provide moral and financial support to national anti-corruption efforts;

• Bolster commitment and political will to maintain reform momentum; and
• Act as a technology transfer and dissemination of lessons learned mechanism for the region.

Illustrative Activities:

a. Inventory all ongoing USG programs to determine if there is duplication of activities and
identify gaps. This could also be expanded to cover the anti-corruption programs of other
major donors.

b. Inventory all bilateral and multi-lateral donor activity in the transparency/anti-corruption area
for the same purpose and to aid in creating a donor coordination mechanism for the Region
as a whole.

c. Continue support to the Democracy Network and the Anti-Corrupción Sin Fronteras.

Strategic Option 7: Strengthening Investigative Capacity of Agencies in dealing with

complex crimes, such as corrupt activities (money laundering and illicit enrichment)

49
Some countries have appointed special anti-corruption prosecutors for high profile cases. The
special prosecutor for the Montesinos scandal in Peru is a good example. Generally, however,
these cases languish because of poor investigative capacity of the judicial police and the
prosecutors, or languish in the courts due to crowded dockets and lack of judges trained in
understanding the sometimes complicated evidence used in such cases. Cases also are subject to
intervention on the part of the Executive Branch (Panama/CEMIS for example), and the cases
are dismissed. Lack of political will to pursue "big fish" is clearly a problem. Most countries in
the LAC region are beginning to modernize their justice systems and introduce new criminal
procedure codes. At the regional level organizations such as CEJA are training justice sector
operators in the implementation of the new codes. At the regional level it may be possible to
spark the momentum for reforms by convening regional conferences, workshops to discuss how
countries in the region have addressed these problems. Strengthening investigative agencies is
key to success in this area. One aspect of the problem is the immunity afforded to executive
branch and legislature branch officials.

Governments in the region also need to support aggressive accountability, integrity, and
professional responsibility practices and techniques that are found in modern police
organizations, including the development of specialized units: Internal Affairs, Inspections, and
Background Investigation units. Internal Affairs Offices need to be developed in close
coordination with the prosecutor's office responsible for prosecuting government employees in
order to enhance public acceptance. Internal Affairs should also coordinate with other
government anti-corruption offices and programs. In countries that believe the police are
incapable of monitoring themselves the government should be encouraged to form a well-trained
Civilian Oversight Board, either temporary or permanent, as a means to build community trust.
Police reform should be part of any broad civil service reform in a country. ICITAP has a long
record in providing assistance in these areas.

Illustrative Activities:

a. Regional training and workshops to discuss and inform countries on setting up investigations
of anti-corruption cases.

b. Regional conference to discuss the elimination of widespread immunity from prosecution.

c. Regional money laundering courses and conferences to promote the coordination of activities
of financial investigation units across countries, especially cross borders, such as
Paraguay/Bolivia and Peru/Chile.

d. Regional training courses for Fiscales in new investigative techniques and regional
approaches for improving forensic and anti-corruption activities with judicial police and
Fiscales.

e. Sharing databases on information dealing with illicit activities such as secret bank accounts,
money laundering/assets to prevent corrupt officials finding safe heavens in other countries
in the region.

50
f. Continued assistance to ICITAP/INL in police reform areas discussed above.

g. Regional workshops to develop strategies and techniques to enhance effective cooperation in

the judicial investigation and prosecution of transnational corruption, according to the Inter-
American Convention against Corruption and the UN Convention against Corruption.122

122
Both conventions stress the importance of mutual legal assistance in investigations of corruption. The lack of
dialogue and coordination among countries to have a common framework to cooperate in investigating cases
seriously limits the possibility of effective prosecution. For example, the investigation of Montesinos and Fujimori
required the legal assistance of several Latin American countries. The recent scandal involving former President
Portillo of Guatemala is another example. Generally speaking, most countries try to have good bilateral relations
with the United States and/or even Switzerland. However, new realities are forcing countries to put priority on
cooperation with neighboring countries. Probably because the United States and Switzerland have increased their
vigilance and monitoring of funds coming from illegal practices in Latin America, corrupt officials from the region
are again using countries such as Argentina, Panama, Uruguay and others to hide the profits from corruption.

51
 Annex 1: Statement of Work Desk Assessment
of Corruption in Latin America

Background

One of the most serious problems facing Latin America and the Caribbean today is the growing
incidence of corruption. In the 2002 survey carried out annually by Latinobarómetro in 17 Latin
American countries, corruption was regarded as the most important problem facing the region,
second only to unemployment. However, in the 2003 Latinobarómetro survey the perception
that there had been progress made in reducing corruption was documented with nearly one-third
of the sample interviewed believing progress had been achieved. Responses ranged from 57% in
Colombia to 10% in Guatemala. In 10 of the 17 countries surveyed, the averaged response was
between 21 - 29%. In spite of these perceptions, corruption is still a major development
challenge for the Latin American and Caribbean (LAC) region.

During the past decade, in a majority of LAC countries national and international-funded efforts
to combat corruption have been implemented by governments and non-governmental
organizations. Similarly, most Latin American countries have established some form of
centralized Anti-Corruption Agency. However, the evidence seems to point out that: the lack of
political will; a weak institutional capacity; and, a consistent lack of resources has slowed
implementation and precluded sustainable impact. Most candidates running for national and
local offices provide lip service to addressing corruption, but more often than not do not have a
true commitment to do so and thus do not offer specific programs once in office or simply they
do not operationalize their campaign promises. Similarly, civil society, including the media and
the business sector, has been addressing the issue more and more through advocacy programs
and monitoring activities. However, civil society groups need more technical capacity to follow
up with in-depth investigations and analyses. Furthermore, whistle-blowers have begun to play
an increasingly important role in the fight against corruption. Nonetheless, very little exists in
the way of legal instruments to protect whistle-blowers against retaliation and intimidation.

Most countries, with the help of donors (including USAID) are working to reform and modernize
their justice systems with few exceptions, and most countries are working to strengthen their
control and auditing institutions. Indeed, many countries have raised financial management
standards by promoting rigorous accounting and establishing integrated financial management
systems that have increased transparency in bookkeeping and reduced opportunities for fraud.

In part because of the growing information about the costs and effects of corruption in the LAC
region, and with corruption still a prominent issue in the agendas of international organizations
and national groups, many governments in the region have been pressured to launch or
reinvigorate anticorruption policies.

The First Summit of the Americas held in Miami in 1994, acknowledged corruption as an
acceptable development issue for international concern. The First Forum on Fighting Corruption
in 1999 ratified this effort. Supported by the Summit process, 28 countries in the Hemisphere
now ratify the 1998 Inter-American Convention Against Corruption and there is a process in

52
place to monitor anti-corruption laws and corrupt practices on a periodic basis. It offers
numerous opportunities to reduce the crippling effects of corruption on fragile democratic
institutions and market-led economies in the region. The OECD Convention on Combating
Bribery of Foreign Public Officials in International Business Transactions was signed in 1997 by
34 countries (including Mexico in the LAC region) and is helping to fight corruption in
international business. More recently, in December 2003 seventeen Latin American countries
signed the United Nations Convention against Corruption.

Corruption is also specifically mentioned as a U.S. foreign policy concern in the September 2002
National Security Strategy. The joint State-USAID Strategy for FY 2004-2009 seeks to
implement many of its recommendations, especially the section calling for the U.S. to develop,
"…transparent and accountable governing institutions." The Millennium Challenge Account, the
most important foreign assistance policy initiative in over forty years, places enormous
importance on corruption indicators in order to determine country eligibility. There are
numerous other policies and programming documents to consult while examining regional
approaches to reducing corruption. The World Bank and the Inter-American Bank have also
begun new programs in this area.

LAC programs funded with regional monies must be regional in approach and focus, tied to the
Summit objectives, the Inter-American Convention against Corruption, the Central America-
Mexico Strategy (CAM) and/or reflect other cross border issues best addressed through a
regional approach.

Purpose of the Assessment

To conduct a desk study on the most recent corruption trends in the LAC region, including
strategic recommendations for USAID’s LAC Bureau on options for addressing corruption from
a regional perspective. This assessment will provide the basis for an effective, realistic, and
comprehensive regional approach over the five- year strategy period, 2004-2009. The
assessment will highlight areas of opportunities and recommend feasible approaches.

The contractor will perform a desk study designed to answer or address a series of questions and
issues that are relevant to a regional approach to reducing corruption in the LAC region. Anti-
corruption program components and alternatives for analysis will be explored including:

• Procurement and budget oversight in the social sectors;

• Political and parliamentary immunities;
• Civil society needs (partnerships, fundraising and capacity); and
• Anti-corruption law enforcement mechanism

Specific questions, concerns and issues to be answered by the desk assessment include, but are
not limited to the following:

1. How effective has the Inter-American Convention against Corruption been? What are its
successes, failures, and challenges?

53
2. What can be done on a regional basis to make the Convention more effective in reducing
corruption? What is USAID's role in making it more effective at the regional level?
3. What are the biggest problem areas in corruption? (The strengths, weaknesses, opportunities,
and threats (SWOT) of corruption on a region-wide - basis, i.e. LAC as a whole).
4. What has been working well in corruption programs that USAID on a regional level can
build on? (Best practices).
5. What are the new opportunities in anti-corruption programming?
6. Who are the key actors and implementing partners at the regional, sub-regional, and country
levels (NGOs, universities, governments,)?
7. What are some new, creative approaches to reducing corruption?
8. Are there any recommended changes in legislative frameworks related to corruption or to the
Convention that would impact the reduction of corruption?

Other Considerations

The Assessment Team will take into full account the evolving U.S. government policy in
corruption as described in such documents as:

• The National Security Strategy

• The Joint USAID - State Strategy
• Summit of the Americas documents
• OAS Inter-American Convention Against Corruption
• Inter-American Democratic Charter
• Inter-American Convention on International Traffic in Minors
• International Anticorruption and Good Governance Act
• Global Forum on Fighting Corruption
• UN Convention Against Transnational Organized Crime and Supplemental Protocols
• Senior Experts on Transnational Crime of the G-8
• OECD DAC paper on Security and Development Nexus: Questions and Challenges
for Aid
• White Paper on US Foreign Aid
• Foreign Aid in the National Interest
• OECD Convention on Combating Bribery of Foreign Public Officials in International
Business Transactions
• State Department International Strategy Against Corruption
• Millennium Challenge Account

Deliverables

1. The Assessment (including table of contents and executive summary) in 5 hard copies and
electronic format. The document will not exceed 50 pages (although additional text can be
placed as an annex).
2. Oral Presentation in English of the Assessment Findings
3. Power Point Overview of the Assessment on disc.

54
Technical Approach

The contractor shall form a team with experience in:

• Anti-corruption assessments and analysis including financial management, decentralization,
private sector ethics, and media,
• Justice system operations, especially prosecution in Latin America,
• Civil society organizations and networks,
• Various conventions on anticorruption and other relevant international and US strategy
documents and U.S. foreign policy objectives, and
• USAID programming, indicators and measurements.

One of the professionals will serve as Team Leader. The team will review the relevant policy
documents cited above and interview appropriate officials in the LAC, DCHA, and WHA
bureaus. On April 27, 2004 a meeting, chaired by USAID, will be held in USAID with the
partners holding IQCs in the anticorruption area in order to discuss their experiences with
anticorruption programs, indicators and other relevant findings. These discussions will serve as
inputs into the regional assessment.

Period of Performance

All work shall be completed by May 10, 2004. Draft report (in hard copy and electronic format)
will be submitted on May 15, 2004. Final Assessment Report and other deliverables will be
submitted on June 14, 2004.

55
 Annex 2: List of Interviews
USAID/Washington IFIs

ƒ Steve Hendrix, ROL adviser, LAC ƒ Janine Perfit Senior Civil Society
ƒ Maria Barron, Civil Society Specialist, State, Governance and
adviser, LAC Civil Society Division, IDB
ƒ Madelene O'Donnell, Governance ƒ Mark Payne Social Development
adviser, DCHA Specialist, State, Governance and
ƒ Jerry O'Brien, Anti-Corruption Civil Society Division, IDB
specialist, DCHA ƒ Linn Hammergren, ROL and
ƒ Gene Ward, Sr Advisor, Political governance adviser, PREM, World
Finance, DCHA Bank (phone)
ƒ Eric Kite, Democracy Officer, ƒ Ronald Scheman, Director General,
DCHA CIDI/OAS
State Department Other US organizations

ƒ Alain Norman, Policy Planning ƒ Bradley Smith, Chairman, Federal

Officer, WHA/PPC Elections Commission (conference)
ƒ John Brandolino, Director Anti- ƒ Charles Kolb, President, Committee
corruption and Governance for Economic Development
Initiatives, INL (conference)
ƒ Richard Werksman, Adviser on the ƒ Charles Lewis, Executive Director,
Inter-American Convention Against Center for Public Integrity
Corruption (conference)
ƒ Jim Parrot, INL/Peru, Financial ƒ Larry Noble, Executive Director,
Crimes and Money Laundering Center for Responsive Politics
Unit (phone) (conference)
ƒ Vonda Brown, Transparency
Specialist/Civil Society Programs,
Partners of the Americas
Department of Justice Regional Organizations

ƒ Ray Rivera, ICITAP ƒ Juan Enrique Vargas, Executive

ƒ Tim Delaney, ICITAP (email) Director, Justice Studies Center of
the Americas
ƒ Luciana Sánchez, Director of
Programs, Justice Studies Center of
the Americas
Transparency International Others

ƒ Peter Eigen, chairman, TI ƒ Mitch Seligson, Professor of

ƒ Nancy Zucker Boswell, Managing Political Science, University of
Director, TI-USA Pittsburgh (phone)

56
 Casals & Associates, Inc.

ƒ Sergio Diaz-Briquets, Vice President

ƒ Olga Nazario, Field staff in Guatemala (email)
ƒ Frank Miller, COP, Colombia (email)
ƒ Sally Taylor, COP, Honduras (email)
ƒ Margaret O'Donnell, Bolivia (email)

57
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 Annex 4: Analysis of the OAS and UN Conventions

The first set of articles compared is related to general principles and scope. Along these charts it
will be noticed that there is significant variation in the wording of the provisions. A more in-
depth analysis should identify if such differences are substantial or formal, and therefore have
the same practical effect.

UN Convention against Corruption Inter-American Convention against

Corruption
Article 3 Article II
Scope of application Purposes
The purposes of this Convention are:
1. This Convention shall apply, in accordance with
its terms, to the revention, investigation and 1. To promote and strengthen the development by each
prosecution of corruption and to the freezing, of the States Parties of the mechanisms needed to
seizure, onfiscation and return of the proceeds of prevent, detect, punish and eradicate corruption; and
offences established in accordance with this
Convention. 2. To promote, facilitate and regulate cooperation among
the States Parties to ensure the effectiveness of measures
2. For the purposes of implementing this and actions to prevent, detect, punish and eradicate
Convention, it shall not be necessary, except as corruption in the performance of public functions and
otherwise stated herein, for the offences set forth in acts of corruption specifically related to such
it to result in damage or harm to state property. performance.

Article IV
Scope
This Convention is applicable provided that the alleged
act of corruption has been committed or has effects in a
State Party.

Article XII

Effect on State Property

For application of this Convention, it shall not be
necessary that the acts of corruption harm State property.

Both treaties contain a significant amount of provisions regulating Preventive Measures.

UN Convention against Corruption Inter-American Convention against

Corruption
Preventive measures Article III
Preventive Measures
Article 5
Preventive anti-corruption policies and For the purposes set forth in Article II of this
Convention, the States Parties agree to consider the
practices applicability of measures within their own institutional
systems to create, maintain and strengthen:
1. Each State Party shall, in accordance with the 11. Mechanisms to encourage participation by civil

69
fundamental principles of its legal system, develop society and nongovernmental organizations in efforts to
and implement or maintain effective, coordinated prevent corruption.
anticorruption policies that promote the
participation of society and reflect the principles of
the rule of law, proper management of public affairs
and public property, integrity, transparency and
accountability.
Preventive measures Article XIV
Article 5 Assistance and Cooperation
4. States Parties shall, as appropriate and in 2. The States Parties shall also provide each other with
accordance with the fundamental principles of their the widest measure of mutual technical cooperation on
legal system, collaborate with each other and with the most effective ways and means of preventing,
relevant international and regional organizations in detecting, investigating and punishing acts of corruption.
promoting and developing the measures referred to To that end, they shall foster exchanges of experiences
in this article. That collaboration may include by way of agreements and meetings between competent
participation in international programs and projects bodies and institutions, and shall pay special attention to
aimed at the prevention of corruption. methods and procedures of citizen participation in the
fight against corruption.

The Inter-American Convention against Corruption

concentrates in a single provision – Article XIV – the
regulation of assistance and cooperation. The wording of
this Convention is sufficient.

UN Convention against Corruption Inter-American Convention against

Corruption
Article 6 Article III
Preventive anti-corruption body or bodies Preventive Measures
1. Each State Party shall, in accordance with the For the purposes set forth in Article II of this
fundamental principles of its legal system, ensure Convention, the States Parties agree to consider the
the existence of a body or bodies, as appropriate, applicability of measures within their own institutional
that prevent corruption by such means as: systems to create, maintain and strengthen:
(a) Implementing the policies referred to in article 5
of this Convention and, where appropriate, 9. Oversight bodies with a view to implementing modern
overseeing and coordinating the implementation of mechanisms for preventing, detecting, punishing and
those policies. eradicating corrupt acts.

Article 7 There are no similar provisions in the Inter-American

Public sector Convention against Corruption. Except for Article III,
paragraph 5:
1. Each State Party shall, where appropriate and in
accordance with the fundamental principles of its For the purposes set forth in Article II of this
legal system, endeavor to adopt, maintain and Convention, the States Parties agree to consider the
strengthen systems for the recruitment, hiring, applicability of measures within their own institutional
retention, promotion and retirement of civil servants systems to create, maintain and strengthen:
and, where appropriate, other non-elected public
officials: 5. Systems of government hiring and procurement of
goods and services that assure the openness, equity and
(a) That are based on principles of efficiency, efficiency of such systems.
transparency and objective criteria such as merit,
equity and aptitude; Evidently the UN Convention is more specific on this
subject.

70
(b) That include adequate procedures for the Still, paragraphs 1,2 and 4 of Article III are clear on the
selection and training of individuals for public need to establish public ethics regulations and policies to
positions considered especially vulnerable to monitor public employees.
corruption and the rotation, where appropriate, of
such individuals to other positions;

(c) That promote adequate remuneration and

equitable pay scales, taking into account the level of
economic development of the State Party;

(d) That promote education and training programs

to enable them to meet the requirements for the
correct, honorable and proper performance of public
functions and that provide them with specialized
and appropriate training to enhance their awareness
of the risks of corruption inherent in the
performance of their functions. Such programs may
make reference to codes or standards of conduct in
applicable areas.

UN Convention against Corruption Inter-American Convention against

Corruption
Article 7 There are no similar provisions in the Inter-American
Public sector Convention against Corruption.

Note that this is a critical issue and probably could be

3. Each State Party shall also consider taking considered as an subject to be included in the strategy,
appropriate legislative and administrative measures, even though it is not covered by the Inter-American
consistent with the objectives of this Convention Convention against Corruption.
and in accordance with the fundamental principles
of its domestic law, to enhance transparency in the
funding of candidatures for elected public office
and, where applicable, the funding of political
parties.

UN Convention against Corruption Inter-American Convention against

Corruption
Article 7 Article III
Public Sector Preventive Measures

4. Each State Party shall, in accordance with the For the purposes set forth in Article II of this
fundamental principles of its domestic law, Convention, the States Parties agree to consider the
endeavor to adopt, maintain and strengthen systems applicability of measures within their own institutional
that promote transparency and prevent conflicts of systems to create, maintain and strengthen:
interest.
1. Standards of conduct for the correct, honorable, and
Article 8 proper fulfillment of public functions. These standards
Codes of conduct for public officials shall be intended to prevent conflicts of interest and
mandate the proper conservation and use of resources
entrusted to government officials in the performance of
1. In order to fight corruption, each State Party shall their functions. These standards shall also establish
promote, inter alia, integrity, honesty and measures and systems requiring government officials to
responsibility among its public officials, in report to appropriate authorities, acts of corruption in the

71
accordance with the fundamental principles of its performance of public functions. Such measures should
legal system. help preserve the public's confidence in the integrity of
public servants and government processes.
2. In particular, each State Party shall endeavor to
apply, within its own institutional and legal 2. Mechanisms to enforce these standards of conduct.
systems, codes or standards of conduct for the
correct, honorable and proper performance of public 3. Instruction to government personnel to ensure proper
functions. understanding of their responsibilities and the ethical
rules governing their activities.
3. For the purposes of implementing the provisions
of this article, each State Party shall, where 4. Systems for registering the income, assets and
appropriate and in accordance with the fundamental liabilities of persons who perform public functions in
Principles of its legal system, take note of the certain posts as specified by law and, where appropriate,
relevant initiatives of regional, Interregional and for making such registrations public.
multilateral organizations, such as the International
Code of Conduct for Public Officials contained in The rules of the Inter-American Convention against
the annex to General Assembly Resolution 51/59 of Corruption on conflicts of interests are vague. The
12 December 1996. OECD has done a very good job at suggesting standards
for such regulations. The UN code of ethics is very good.
4. Each State Party shall also consider, in In practice, these provisions are generating some
accordance with the fundamental uncertainty at the Committee of Experts of the Follow-
principles of its domestic law, establishing Up Mechanism, given the lack of specific criteria to
measures and systems to facilitate the reporting by evaluate CI regulations.
public officials of acts of corruption to appropriate
authorities, when such acts come to their notice in The same is the case with financial disclosure forms.
the performance of their functions.

5. Each State Party shall endeavor, where

appropriate and in accordance with the fundamental
principles of its domestic law, to establish measures
and systems requiring public officials to make
declarations to appropriate authorities regarding,
inter ail, their outside activities, employment,
investments, assets and substantial gifts or benefits
from which a conflict of interest may result with
respect to their functions as public officials.

6. Each State Party shall consider taking, in

accordance with the fundamental principles of its
domestic law, disciplinary or other measures against
public officials who violate the codes or standards
established in accordance with this article.

UN Convention against Corruption Inter-American Convention against

Corruption
Article 9 Article III
Public procurement and management of Preventive Measures
public finances
For the purposes set forth in Article II of this
1. Each State Party shall, in accordance with the Convention, the States Parties agree to consider the
fundamental principles of its legal system, take the applicability of measures within their own institutional
necessary steps to establish appropriate systems of systems to create, maintain and strengthen:
procurement, based on transparency, competition
and objective criteria in decision-making, that are 5. Systems of government hiring and procurement of

72
effective, inter alia, in preventing corruption. Such goods and services that assure the openness, equity and
systems, which may take into account appropriate efficiency of such systems.
threshold values in their application, shall address,
inter alia: Note the significant difference in scope between both
Conventions.
(a) The public distribution of information relating to
procurement procedures and contracts, including
information on invitations to tender and relevant or
pertinent information on the award of contracts,
allowing potential tenderers sufficient time to
prepare and submit their tenders;

(b) The establishment, in advance, of conditions for

participation, including selection and award criteria
and tendering rules, and their publication;

(c) The use of objective and predetermined criteria

for public procurement decisions, in order to
facilitate the subsequent verification of the correct
application of the rules or procedures;
(d) An effective system of domestic review,
including an effective system of appeal, to ensure
legal recourse and remedies in the event that the
rules or procedures established pursuant to this
paragraph are not followed;

(e) Where appropriate, measures to regulate matters

regarding personnel responsible for procurement,
such as declaration of interest in particular public
procurements, screening procedures and training
requirements.

UN Convention against Corruption Inter-American Convention against

Corruption
Article 9 Article III
Public procurement and management of Preventive Measures
public finances
For the purposes set forth in Article II of this
2. Each State Party shall, in accordance with the Convention, the States Parties agree to consider the
fundamental principles of its legal system, take applicability of measures within their own institutional
appropriate measures to promote transparency and systems to create, maintain and strengthen:
accountability in the management of public
finances. Such measures shall encompass, inter alia: 9. Oversight bodies with a view to implementing modern
mechanisms for preventing, detecting, punishing and
(a) Procedures for the adoption of the national eradicating corrupt acts.
budget;
This is another area where the Inter-American
(b) Timely reporting on revenue and expenditure; Convention against Corruption falls behind the UN
Convention on a critical subject.
(c) A system of accounting and auditing standards
and related oversight; C&A and others have contributed significantly in
promoting public finance systems.
(d) Effective and efficient systems of risk
management and internal control; and Recent studies show that in some cases the results

73
(e) Where appropriate, corrective action in the case achieved are not up to expectations or reforms are not
of failure to comply with the requirements fully implemented.
established in this paragraph.
This is an area where coordination and cooperation with
3. Each State Party shall take such civil and other agencies – basically the World Bank and the Inter-
administrative measures as may be necessary, in American Development Bank – should help the reform
accordance with the fundamental principles of its process in the right direction.
domestic law, to preserve the integrity of
accounting books, records, financial statements or
other documents related to public expenditure and
revenue and to prevent the falsification of such
documents.

UN Convention against Corruption Inter-American Convention against

Corruption
Article 10 There are no similar provisions in the Inter-American
Public reporting Convention against Corruption.

Note that this is a critical issue and probably could be

Taking into account the need to combat corruption, considered as a subject to be included in the strategy,
each State Party shall, in accordance with the even though it is not covered by the Inter-American
fundamental principles of its domestic law, take Convention against Corruption.
such measures as may be necessary to enhance
transparency in its public administration, including
with regard to its organization, functioning and
decision-making processes, where appropriate.
Such measures may include, inter alia:

(a) Adopting procedures or regulations allowing

members of the general public to obtain, where
appropriate, information on the organization,
functioning and decision-making processes of its
public administration and, with due regard for
the protection of privacy and personal data, on
decisions and legal acts that concern members of
the public;

(b) Simplifying administrative procedures, where

appropriate, in order to facilitate public access to
the competent decision-making authorities; and

(c) Publishing information, which may include

periodic reports on the risks of corruption in its
public administration.

UN Convention against Corruption Inter-American Convention against

Corruption
Article 11 There are no similar provisions in the Inter-American
Measures relating to the judiciary and Convention against Corruption. However, given the
definition of public official adopted in the treaty, effects
prosecution services of rules on public ethics include members of the different
branches of government.
1. Bearing in mind the independence of the
judiciary and its crucial role in combating
corruption, each State Party shall, in accordance

74
with the fundamental principles of its legal system
and without prejudice to judicial independence, take
measures to strengthen integrity and to prevent
opportunities for corruption among members of the
judiciary. Such measures may include rules with
respect to the conduct of members of the judiciary.

2. Measures to the same effect as those taken

pursuant to paragraph 1 of this article may be
introduced and applied within the prosecution
service in those States Parties where it does not
form part of the judiciary but enjoys independence
similar to that of the judicial service.

UN Convention against Corruption Inter-American Convention against

Corruption
Article 12 Article III
Private sector Preventive Measures

1. Each State Party shall take measures, in For the purposes set forth in Article II of this
accordance with the fundamental principles of its Convention, the States Parties agree to consider the
domestic law, to prevent corruption involving the applicability of measures within their own institutional
private sector, enhance accounting and auditing systems to create, maintain and strengthen:
standards in the private sector and, where
appropriate, provide effective, proportionate and 6. Government revenue collection and control systems
dissuasive civil, administrative or criminal penalties that deter corruption.
for failure to comply with such measures.
7. Laws that deny favorable tax treatment for any
2. Measures to achieve these ends may include, individual or corporation for expenditures made in
inter alia: violation of the anticorruption laws of the States Parties.
10. Deterrents to the bribery of domestic and foreign
(a) Promoting cooperation between law government officials, such as mechanisms to ensure that
enforcement agencies and relevant publicly held companies and other types of associations
private entities; maintain books and records which, in reasonable detail,
accurately reflect the acquisition and disposition of
(b) Promoting the development of standards and assets, and have sufficient internal accounting controls to
procedures designed to safeguard the integrity of enable their officers to detect corrupt acts.
relevant private entities, including codes of conduct
for the correct, honorable and proper performance Note the difference in scope between both Conventions.
of the activities of business and all relevant The UN Convention is more precise in defining the
professions and the prevention of conflicts of obligations of the private sector. This is an area that is
interest, and for the promotion of the use of good seldom explored in terms of anti corruption and
commercial practices among businesses and in the transparency strategies and there is plenty to be done.
contractual relations of businesses with the State;
The increasing levels of debate on CSR and corporate
(c) Promoting transparency among private entities, governance are indicators of a positive trend.
including, where appropriate, measures regarding
the identity of legal and natural persons involved in See Transparencia por Colombia (TI-Colombia) and
the establishment and management of corporate their joint efforts with the Ethics Resource Center.
entities;

(d) Preventing the misuse of procedures regulating

private entities, including procedures regarding
subsidies and licenses granted by public authorities

75
for commercial activities;

(e) Preventing conflicts of interest by imposing

restrictions, as appropriate and for a reasonable
period of time, on the professional activities of
former public officials or on the employment of
public officials by the private sector after their
resignation or retirement, where such activities or
employment relate directly to the functions held or
supervised by those public officials during their
tenure;
(f) Ensuring that private enterprises, taking into
account their structure and size, have sufficient
internal auditing controls to assist in preventing and
detecting acts of corruption and that the accounts
and required financial statements of such private
enterprises are subject to appropriate auditing and
certification procedures.

3. In order to prevent corruption, each State Party

shall take such measures as may be necessary, in
accordance with its domestic laws and regulations
regarding the maintenance of books and records,
financial statement disclosures and accounting and
auditing standards, to prohibit the following acts
carried out for the purpose of committing any of the
offences established in accordance with this
Convention:

(a) The establishment of off-the-books accounts;

(b) The making of off-the-books or inadequately

identified transactions;

(c) The recording of non-existent expenditure;

(d) The entry of liabilities with incorrect
identification of their objects;

(e) The use of false documents; and

(f) The intentional destruction of bookkeeping

documents earlier than foreseen by the law.

4. Each State Party shall disallow the tax

deductibility of expenses that constitute bribes, the
latter being one of the constituent elements of the
offences established in accordance with articles 15
and 16 of this Convention and, where appropriate,
other expenses incurred in furtherance of corrupt
conduct.

76
UN Convention against Corruption Inter-American Convention against
Corruption
Article 13 Article III
Participation of society Preventive Measures

1. Each State Party shall take appropriate measures, For the purposes set forth in Article II of this
within its means and in accordance with Convention, the States Parties agree to consider the
fundamental principles of its domestic law, to applicability of measures within their own institutional
promote the active participation of individuals and systems to create, maintain and strengthen:
groups outside the public sector, such as civil
society, non-governmental organizations and 11. Mechanisms to encourage participation by civil
community-based organizations, in the prevention society and nongovernmental organizations in efforts to
of and the fight against corruption and to raise prevent corruption.
public awareness regarding the existence, causes
and gravity of and the threat posed by corruption. Additionally, the Methodology for analyzing the
This participation should be strengthened by such implementation of the Inter-American Convention
measures as: against Corruption states:
(a) Enhancing the transparency of and promoting
the contribution of the For the purposes of the review of the
public to decision-making processes; implementation of this provision, in addition to its
consideration in general, the following mechanisms
(b) Ensuring that the public has effective access to may be taken into account:
information;
a. Mechanisms to ensure access to information.- In
(c) Undertaking public information activities that this regard, mechanisms that regulate and facilitate
contribute to non-tolerance of corruption, as well as the access of civil society and non-governmental
public education programs, including school and organizations to information under the control of
university curricula; public institutions shall be reviewed, taking into
account that the possibility of obtaining this
(d) Respecting, promoting and protecting the information is a prerequisite for these organizations
freedom to seek, receive, publish and disseminate to participate in efforts to prevent corruption.
information concerning corruption. That freedom
may be subject to certain restrictions, but these b. Consultative mechanisms- In this regard,
shall only be such as are provided for by law mechanisms that enable those who perform public
and are necessary: functions to request and receive feedback from civil
society and non-governmental organizations shall be
(i) For respect of the rights or reputations of others; reviewed, taking into account the valuable
contribution made by these consultative mechanisms
(ii) For the protection of national security or ordure in efforts to prevent corruption.
public or of public health or morals.
c. Mechanisms to encourage active participation in
2. Each State Party shall take appropriate measures public administration.- In this regard, mechanisms
to ensure that the relevant anti-corruption bodies that permit the active participation of civil society
referred to in this Convention are known to the and non-governmental organizations in public policy
public and shall provide access to such bodies, and decision-making processes shall be reviewed, as
where appropriate, for the reporting, including part of the efforts to prevent corruption.
anonymously, of any incidents that may be
considered to constitute an offence established in d. Participation mechanisms in the follow-up of public
accordance with this Convention. administration.- In this regard, mechanisms that permit
the participation of civil society and non-governmental
organizations in the follow-up of public administration
shall be reviewed, in order to meet the purposes of
preventing, detecting, punishing, and eradicating acts of
public corruption.

77
UN Convention against Corruption Inter-American Convention against
Corruption
Article 14 There are no similar provisions in the Inter-American
Measures to prevent money-laundering Convention against Corruption.

1. Each State Party shall: Note that this is a critical issue and probably could be
considered as an issue to be included in the strategy,
(a) Institute a comprehensive domestic regulatory even though it is not covered by the Inter-American
and supervisory regime for banks and non-bank Convention against Corruption.
financial institutions, including natural or legal
persons that provide formal or informal services for This should not only include regulations but also training
the transmission of money or value and, where to appropriate enforcement agencies.
appropriate, other bodies particularly susceptible to
money-laundering, within its competence, in order
to deter and detect all forms of money-laundering,
which regime shall emphasize requirements for
customer and, where appropriate, beneficial owner
identification, record-keeping and the reporting of
suspicious transactions; etc.

UN Convention against Corruption Inter-American Convention against

Corruption
Chapter III Article VIII
Criminalization and law enforcement Transnational Bribery

Article 15 Subject to its Constitution and the fundamental principles

Bribery of national public officials of its legal system, each State Party shall prohibit and
punish the offering or granting, directly or indirectly, by
its nationals, persons having their habitual residence in
Each State Party shall adopt such legislative and its territory, and businesses domiciled there, to a
other measures as may be necessary to establish as government official of another State, of any article of
criminal offences, when committed intentionally: monetary value, or other benefit, such as a gift, favor,
promise or advantage, in connection with any economic
(a) The promise, offering or giving, to a public or commercial transaction in exchange for any act or
official, directly or indirectly, omission in the performance of that official's public
of an undue advantage, for the official himself or functions.
herself or another person or entity, in order that the
official act or refrain from acting in the exercise of Among those States Parties that have established
his or her official duties; transnational bribery as an offense, such offense shall be
considered an act of corruption for the purposes of this
(b) The solicitation or acceptance by a public Convention.
official, directly or indirectly, of an undue
advantage, for the official himself or herself or Any State Party that has not established transnational
another person or entity, in order that the official act bribery as an offense shall, insofar as its laws permit,
or refrain from acting in the exercise of his or her provide assistance and cooperation with respect to this
official duties. offense as provided in this Convention.

78
Article 16 There are no similar provisions in the Inter-American
Bribery of foreign public officials and Convention against Corruption.
officials of Public international
organizations
1. Each State Party shall adopt such legislative and
other measures as may be necessary to establish as a
criminal offence, when committed intentionally, the
promise, offering or giving to a foreign public
official or an official of a public international
organization, directly or indirectly, of an undue
advantage, for the official himself or herself or
another person or entity, in order that the official act
or refrain from acting in the exercise of his or her
official duties, in order to obtain or retain business
or other undue advantage in relation to the conduct
of international business.

2. Each State Party shall consider adopting such

legislative and other measures as may be necessary
to establish as a criminal offence, when committed
intentionally, the solicitation or acceptance by a
foreign public official or an official of a public
international organization, directly or indirectly, of
an undue advantage, for the official himself or
herself or another person or entity, in order that the
official act or refrain from acting in the exercise of
his or her official duties.

Criminal law provisions have been a central subject for anti-corruption strategies. There is a
growing tendency to harmonize this type of legislation. Even though these Conventions appear to
march on parallel roads, they aim at a similar destiny. Still, the critical issue in Latin America is
impunity, which is not related with the lack of an adequate legal framework, but with the lack of
will or capacity to implement the existing laws.

UN Convention against Corruption Inter-American Convention against

Corruption
Criminal Law Provisions Article VI
Acts of Corruption
Most of the Criminal Law Provisions of
the UN Convention are under the Defines, as an act of corruption:
following articles.
a. Active and passive bribery;
Article 17 b. Breach of public duties;
Embezzlement, misappropriation or other diversion
of property by a public official c. The fraudulent use or concealment of property;
Article 18 d. Participation as a principal, coprincipal, instigator,
Trading in influence accomplice or accessory after the fact, or in any other
manner, in the commission or attempted commission of,
Article 19

79
Abuse of functions or in any collaboration or conspiracy to commit, any of
the acts referred to in this article
Article 20
Illicit enrichment Article IX defines Illicit Enrichment
Article 21
Bribery in the private sector
Article XI recommends criminalizing:

Article 22 a. The improper use of any kind of classified or

Embezzlement of property in the private sector confidential information which that official or person
who performs public functions has obtained because of,
Article 23 or in the performance of, his functions;
Laundering of proceeds of crime
b. The improper use by a government official or a person
Article 24 who performs public functions, for his own benefit or
Concealment that of a third party, of any kind of property belonging to
the State or to any firm or institution in which the State
Article 25 has a proprietary interest, to which that official or person
Obstruction of justice who performs public functions has access because of, or
in the performance of, his functions;
Article 26
Liability of legal persons c. Any act or omission by any person who, personally or
through a third party, or acting as an intermediary, seeks
to obtain a decision from a public authority whereby he
illicitly obtains for himself or for another person any
benefit or gain, whether or not such act or omission
harms State property; and

d. The diversion by a government official, for purposes

unrelated to those for which they were intended, for his
own benefit or that of a third party, of any movable or
immovable property, monies or securities belonging to
the State, to an independent agency, or to an individual,
that such official has received by virtue of his position
for purposes of administration, custody or for other
reasons.

Therefore, Articles 21,22,23, 25 and 26 of the UN

Convention do not have a comparable provision under
the Inter-American Convention against Corruption

Each Convention has a set of provisions generally defined as procedural rules. These rules are
meant to help apply the Convention to the investigation and prosecution of cases.

80
UN Convention against Corruption Inter-American Convention against
Corruption
Article 29 Article XIX
Statute of limitations Temporal Application / Statute of limitations
There are no provisions comparable to article 30 of the
Article 30 UN Convention;
Prosecution, adjudication and sanctions

Article 31 Article XV
Freezing, seizure and confiscation Measures Regarding Property includes measures in
seizure and confiscation;
Article 32
Protection of witnesses, experts and victims Article III includes protection of witnesses
There are no provisions comparable to article 3e of the
Article 33 UN Convention;
Protection of reporting persons
Article XII is similar to Article 34 of the UN
Article 34 Convention;
Consequences of acts of corruption
There are no provisions in the Inter-American
Article 37 Convention against Corruption to define cooperation
Cooperation with law enforcement authorities with law enforcement agencies.

Chapter IV Article XIV, paragraphs 1 and 2 is equivalent to Article

International cooperation 43 and 46 of the UN Convention;

Article 43 Article XIII in the Inter-American Convention against

International cooperation and Article 46 Corruption regulates extradition;
Mutual legal assistance
Although the Inter-American Convention against
Article 44 Corruption mentions in Article XV the recovery of
Extradition assets, the level of detail and the extent of this provision
in the UN Convention is much greater. Actually, this is
Chapter V another area in which there is room to suggest activities
Asset recovery to enhance the capacity of judges, prosecutors and
enforcement agencies to implement strategies to recover
assets.

81
 Annex 5:
Corruption in Latin America:
A Desk Assessment
Norma Parker, Team Leader
Gerardo Berthin, Roberto de Michele and Yemile Mizrahi

Americas’ Accountability Anti-Corruption Project

Casals and Associates, Inc.
U.S. Agency for International Development (USAID)

June 14, 2004

Washington, D.C.

Funded under ContractAEP-1-00-00-00010-00. Task Order No. 1 Transparency and Accountability.

 Purpose of Desk Assessment
• Baseline overview of corruption in Latin
America.
• It provides USAID/LAC Bureau inputs for a
regional programming approach over the five-
year strategy period, 2004-2009.
• Not exhaustive, serves as a starting point to
document recent trends, programming
approaches and potential entry points for anti-
corruption activities in Latin America.
• Given time and resources limitations, assessment
is limited in its scope. It is not intended to be an
impact or capacity assessment; much less an
evaluation of specific programs and/or projects.
 Methodology of the Assessment
• It draws on the literature reviewed, Casals and
Associates (C&A) experiences and on a series
of interviews in Washington D.C. with key
informants and experts.
• Consultative process: Team reviewed more
than 100 policy and strategy documents, email
interviews with missions where C&A has in-
country staff and with those partners that
responded to emails sent by USAID/LAC
Bureau.
 Findings in Brief
• Corruption in Latin America is widespread, but
measuring its extent is inherently challenging.
• The incidence varies from country to country,
ranging from “normal” to “widespread” to
“systemic.”
• Where there is systemic corruption, the institutions,
rules, and norms of behavior have already been
adapted to a corrupt modus operandi, with other
actors following the examples.
• When systemic, corruption can be highly damaging
to the stability of democratic institutions, erosive to
the rule of law and corrosive to economic growth
and competitiveness.
 Findings in Brief [2]
• Several factors in Latin America give rise to
corruption.
ØCivil service that is still in transition;
ØCumbersome legislation, overlapping
responsibilities of different government agencies,
legal confusion (complex and excessive
bureaucratic procedures and regulations)
ØOversight and control institutions remain weak,
ØMost of the countries lack an effective judicial
system to prosecute and sanction corrupt officials.
ØAbsence of political will, weak social controls, and
mixed attitudes about corruption.
 Findings in Brief [3]
• International donors, including USAID, and
international non-governmental organizations
(like Transparency International) are
addressing corruption directly or indirectly by
working to create an environment that is not
conducive to corruption.
• Over the past decade, the donor community
has financed a wide variety of programs in
Latin America:
Ø improving public sector management (IFMS, civil service
reforms, ICT, public sector modernization); and
Ø promoting greater accountability and transparency in
government (access to information, judicial reforms,
procurement, training prosecutors, strengthening civil
society organizations, training journalists).
 Findings in Brief [4]
• The results of all these efforts appear to be mixed.
Although more research and empirical analysis is
necessary to evaluate the real impact of these
projects, the record seems to be filled with examples
of programs that succeed at first but that are
undermined by subsequent governments or by
economic or political crisis and/or constraints.
• Many donors now recognize, that a well designed
anti-corruption reform strategy requires a long-term
vision and a clear understanding that fundamental
change can begin to take place now, but only come to
fruition within one or two generations.
 Accomplishments
• In as much as it is difficult to ascertain, with current
data and instruments, whether corruption has declined
or increased in Latin America, progress has been
documented on a number of fronts.
Ø Greater access to a wide variety of technological, legal,
institutional and administrative tools to combat corruption;
Ø Awareness about the problem of corruption has
significantly increased, both among policymakers and
society;
Ø The analytical tools to understand and measure corruption
have substantially improved and become more
sophisticated;
Ø New actors have emerged on the anti-corruption front, both
at the national and regional levels;
 Accomplishments [2]
ØMultilateral organizations and international financial and
development agencies have refined their anti-corruption
strategies and made them more systemic, holistic, and
long-term;
ØToday anti-corruption assistance covers a much wider
range of program approaches than a decade ago;
ØNew legal instruments and conventions, such as the OAS
Inter-American Convention against Corruption and the UN
convention against corruption;
ØPolitical corruption is beginning to be addressed; and
ØA number of corrupt public officials in different Latin
American countries have been effectively prosecuted.
 General Lessons
• There are no quick fixes.
• The need to balance between prioritizing short-term,
immediate visible targets and systemic reform.
• Anti-corruption activities can be encouraged and
fostered by outside partners and donors, but the drive
and the leadership must come from within; and
• Anti-corruption strategies, whether national or
regional, require a long-term vision and clear
understanding that fundamental change can begin to
take place now, but only come to fruition within one
or two generations. Nonetheless, visible early
victories, such as successful prosecution of high-level
officials, may be critical for building credibility and
generating sustained pressure for reform.
 Factors of Success
• Not one single factor but on a convergence of factors:
Ø Political will.
Ø Wide popular support and ownership (Civil Society
actively engaged in fighting corruption through oversight).
Ø Tailored to each country’s unique history, economic and
institutional conditions.
Ø Transparency and access to information are also
indispensable tools for enabling the public to identify and
report corruption.
Ø Donor coordination and information sharing, to exchange
and learn lessons, experiences, successes and practices and
avoid duplication of efforts.
 Measuring Progress
• Progress with perception indicators, WBI governance
indicators and victimization indices.
• But current measures are still imprecise, it is difficult
to know with certitude whether corruption is
declining or increasing.
• Absence of more reliable and hard data on corruption,
can result in difficulties for targeting anti-corruption
activities and inability to determine what impact, if
any, anti-corruption efforts are generating.
 Measuring Progress [2]
• Assessment Team was unable to find a recent comprehensive
regional or even sub-regional assessment of corruption in
Latin America.
• Enormous amount and variety of basic information about
corruption in Latin America.
• Impact assessment and other evaluation assessments were
much harder to access; what was found was selective and non-
comparative (Costs of corruption).
• Few anti-corruption programs in Latin America have been
evaluated systematically. Such analysis could be used in
developing future program and strategic plans.
• These evaluations could also help donors, governments and
civil society organizations to refine anti-corruption objectives
and performance measures.
 More Information, Research &
Evaluations are Needed
• Donors are just beginning to adapt their information systems
to the need to have access to more hard data and information
on corruption in Latin America;
• Few countries in Latin America have any form of evaluation
of anti-corruption policies and programs, from which positive
and negative lessons about implementation can be learned.
• Information and documents, if they exist, on the effects of the
anti-corruption efforts in Latin America have not been made
public;
• There are few comparative evaluations that examine
experiences of similar types of anti-corruption programs
and/or activities in Latin America; and
• There are few efforts, nationally and regionally, to create and
maintain a common updated data base of indicators and
information to assist analysis, research and evaluation of
corruption and anti-corruption programs.
 Strategic and Policy Options for
Programming [1]
• The Assessment Team proposes a set of Non-Project
Activities at the regional level, or sub regional level
that would help to further progress in reducing
corruption in Latin America. These interventions are
meant to compliment bilateral or mission funded
initiatives.
Ø Regional Policy Dialogue
Ø Strengthening coordination mechanisms for USG programs
at the Washington D.C. level;
Ø Improve donor coordination of anti-corruption programs
(both in D.>C and in the field);
Ø Improve coordination among USAID mission anti-
corruption programs.
 Strategic and Policy Options for
Programming [2]
• In addition, the Assessment Team proposes seven strategic
options, with illustrative activities.
Ø 1. Increase awareness of the problem and mainstream anti-
corruption programs within development strategies.
Ø 2. Reduce the tolerance for corruption and help to
strengthen the political will.
Ø 3. Assist countries in the implementation of the Inter-
American Convention against Corruption.
Ø 4. Promote private sector engagement
Ø 5. Establish a fund to support innovative pilot activities.
Ø 6. Support regional institutions in their fight against
corruption.
Ø 7. Strengthening investigative capacity of agencies in
dealing with corrupt activities.