A Tsunami Called Odebrecht

The recent resignation of Pedro Pablo Kuczynski of the presidency of Peru, after only 19 months in office, has returned the Odebrecht scandal in Latin America to the front pages, although the widespread corruption has long been a focal point for the media. With his resignation, Kuczynski became the highest-level Latin American politician to fall in the scandal while still in office, although it has affected many more.

Let us remember briefly what the Odebrecht case is about: the shocking scandal was carried out by the Brazilian construction giant, the largest in Latin America. It began in December 2016, when under the Lava Jato Operation, Brazilian, Swiss and American prosecutors revealed, thanks to rewards given to almost 80 former employees of the construction company, an extensive network of bribes in 11 Latin American countries. In total, USD $788 million in illicit payments were disbursed to dozens of politicians and officials, in order to win contracts for more than 100 lucrative projects in the region.

In the case of Peru, the accusations have involved politicians across the entire political spectrum, giving the impression that no Peruvian politician can resist easy money: there are accusations of handing over USD $1.2 million to the opposition leader Keiko Fujimori; USD $700,000 to former President Alejandro Toledo; USD $300,000 to the recently resigned President Kuczynski, and USD $3 million to former President Ollanta Humala and his wife, Nadine Heredia. All for the electoral campaign of 2011. Additionally, 200 thousand dollars for the campaign of former President Alan García in 2006, as well as payments in 2014 to the then mayor of Lima, Susana Villarán.

But the situation in Peru is not unique. The investigations have reached an unusual extent and depth in Brazil, although undoubtedly the standout case involves former president Luis Inácio Lula da Silva, who is on the verge of imprisonment.

In other countries there have been some appreciable results: in Ecuador, the case already forced the resignation of vice president Jorge Glas, and led to his subsequent imprisonment, along with some collaborators and a relative. In Guatemala, former government officials of former president Otto Pérez have been arrested, as well as the leader of the left, Manuel Baldizón. In Colombia, a minister of former President Uribe is accused and there is talk that Odebrecht financed, among other things, the 2014 presidential campaigns of the current president, Juan Manuel Santos, and his main competitor, Uribista Óscar Iván Zuluaga, although the investigation appears to have stalled.

In Panama, a minister of former President Martinelli has been imprisoned, and his sons and several former collaborators have been charged, and while there are still not formal charges against the current president Juan Carlos Varela and former president Martin Torrijos, they have been implicated. In the Dominican Republic, meanwhile, several officials have been imprisoned. And in Argentina, the case is progressing with difficulty due to legal differences and political problems. Chile is just commencing legal proceedings in the matter, and no one has been charged yet.

In Mexico, prosecutions are not moving forward: investigations against a very close former associate of President Peña Nieto have stalled, while the prosecutors investigating the case were forced to resign (prosecutors looking into the presidential campaign of Peña Nieto in 2012). For its part, in Congress, the PRI (Peña Nieto’s party) has hampered the investigations. For now, all sanctions have fallen on the construction company itself, which has been banned from bidding on government contracts, while secondary officials have received minor penalties.

The impunity advocated by the Mexican government is only surpassed by the inaction of the Venezuelan government, where the accusations against Nicolás Maduro, Diosdado Cabellos, and other politicians, both Chavistas and opposition, have not been investigated and are rather used as weapons of political blackmail by the forces of Chavismo.

The business of bribing everyone

The obvious should be noted with respect to all these cases: the payment of bribes did not know ideological boundaries, nor did it confine itself to specific parties or personalities. The business of Odebrecht was to bribe everyone. As one former employee noted: “When I say ‘all’ I mean everyone,” referring not only to “supporting” candidates who could win, but also those who were expected to lose, thereby creating a support network for the construction company and avoiding future problems.

These payments also extended to the media, journalists, and NGOs. As the owner of the construction company, Marcelo Odebrecht, recognized: “Odebrecht did not invent the concept of bribes,” so the scandal simply exposes a systemic practice throughout Latin America. In this regard, will Latin American citizens be willing to condemn the way that politicians and companies operate in their countries and change public policy, for example, by ending public financing of parties and making private funding transparent? Or will they prefer, as always, to look the other way?

It is a positive and healthy development that this network of public-private illicit activities has been uncovered, but we must be careful with our reactions. It is becoming increasingly clear that attacks on the political class open up opportunities for political adventurism and strongman personalities, for the emergence of renewed populist sentiments, as a result of societies that have lost faith in their institutions. This is the case, for example, in Mexico and Colombia, where the uninspiring efforts of governments in the fight against corruption, has led to the unpopularity of the presidential candidates linked to Peña Nieto and Juan Manuel Santos, and the emergence, in contrast, of López Obrador and Gustavo Petro, respectively.

The cases of Jimmy Morales in Guatemala and the close result of the second electoral round in Costa Rica also involve the emergence of new and destructive populisms.

In this regard, it is worth remembering that companies that bet everything on an honest and “moral” leader almost always lose out, because they cheat themselves and let themselves be deceived…until it is too late. The example of Venezuela, where Hugo Chávez came to power promising to end corruption and shake institutions to their foundations, is the most illustrative case that “honest politicians” (sorry for the oxymoron) are not enough; independent judicial institutions are essential, and, above all, a limitation on the functions of the state and measures to prevent the concentration of resources and power in the hands of politicians and bureaucrats.

If this does not happen, the Odebrecht case will only be the beginning of new and bigger scandals, and of a greater degradation of Latin American public life at the hands of its supposed saviors.


Publicado en inglés en: https://panampost.com/editor/2018/03/28/the-tsunami-called-odebrecht/ 



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