Tag Archives: Corruption

Ukraine – Ex-Presidents and their Legal Troubles

A few weeks ago, on the pages of this blog, we posted an article about Peru’s ex-presidents and their legal troubles. Today, we continue the series with a follow up on Ukraine and ex-presidents’ troubles there.

In March 2018, EU prolonged sanctions against the former Ukrainian President Viktor Yanukovych and his associates, including President’s son, two former Prime Ministers, and Yanukovych’s chief of staff. EU accused the former President and his inner circle of misappropriation of state funds and froze their assets shortly after the president fled the country in February 2014. Estimated to be tens of billions of dollars, access to funds was blocked on the territories of 8 EU countries.

Yanukovych successfully challenged the sanctions during their first year, from March 2014 to March 2015, as EU did not have enough evidence of embezzlement at the time. However, the sanctions were re-instated starting from March 2015, followed by a recent extension for another year, until March 2019. Yanukovych and his son filed appeals in 2016 and 2017 to be taken off the EU sanctions listing. Both appeals have been dismissed and sanctions were upheld. Nonetheless, the President and his son continue to maintain their innocence and deny any involvement in corruption or other wrongdoings.

In the meantime, the court hearing for Yanukovych’s treason case in Ukraine also continues. The trial started a year ago, in May 2017. The ex-president is charged with state treason. The punishment ranges from 10 years in prison to life imprisonment. The current President of Ukraine, Petro Poroshenko, was called to testify in February 2018. However, his testimony  ended prematurely as the judge accused the lawyers of the defense of intentionally asking questions unrelated to the criminal investigation. And in the latest development, the former Prime Minister of Ukraine, Mykola Azarov, requested to testify in the case. However, due to fear of persecution, he agreed to appear in court only via a video conference. It is estimated that the investigation and trial will go on for several years.

Despite all the corruption problems in Ukraine, Yanukovych is the only president currently either on trial or on the run. That said, another ex-President, Leonid Kuchma, has experienced his fair share of legal troubles. In addition to being accused of corruption and vote-rigging, in 2011 he was indicted by court for his alleged involvement in the 2000 murder of a Ukrainian journalist. However, Kuchma managed to rehabilitate his image and turned into a respected diplomat in 2015, helping Ukraine negotiate during the crisis with Russia.

Zbigniew Brzezinski has been quoted saying that every Ukrainian president is worse than his predecessor. This may explain the low trust Ukrainians have in the executive office and their readiness to go to the streets to demand responsible politics. With the upcoming election next year, the Ukrainians surely hope that the current president will prove Zbigniew Brzezinski wrong.

Peru – President Pedro Pablo Kuczynski Resigns

The President of Peru, Pedro Pablo Kuczynski, resigned on Wednesday in the wake of allegations of vote buying and a larger existential threat to his leadership from the Odebrecht scandal.  He was facing an impeachment vote on Firday of this week in Congress, but party leaders have agreed to accept his resignation, which will prevent this vote from going ahead.

President Kuczynski had become entangled in the wider Odebrecht scandal that has engulfed Latin American politicians across the region. The tentacles of the Odebrecht scandal had already reached Peru, where former president, Alejandro Toledo (2001-2006), has been accused of receiving US$20 million in bribes from Odebrecht in return for granting them the contract to build a large road and infrastructure project. The presidency of Alan García (2006-2011) also fell under suspicion, given that Obebrecht won a record number of contracts in Peru during his tenure. Last year, President Kuczynski had been accused of receiving US$782,000 from Odebrecht through a company that he owned. He has admitted he received the money, but insists it was above board.

As a consequence, he was accused of being “morally unfit” to be president and he faced an impeachment vote in Congress in December of last year. Over 87 votes were needed to impeach him, but the motion, although supported by 78 against 19, did not pass. But a cloud hung over this vote. One of President Kuczynski’s main opponents in Congress has been the right-leaning Keiko Fujimori, the daughter of the former President, Alberto Fujimori, who is currently serving a 25-year sentence for corruption and human rights abuses. Keiko’s increasing power in Congress has placed significant pressure on Kuczynski and her party, Fuerza Popular, has been the main activist behind each impeachment vote. In the December vote however, her brother, Kenji Fujimori, defied his sister by leading a small group of rebellious Fuerza Popular legislators to block the impeachment vote against Kuczynski. A few days later, President Kuczynski pardoned Alberto Fujimori.

On Tuesday night, the fate of President Kuczynski was sealed. Videos emerged, released by Fuerza Popular, which purportedly show the President’s allies offering legislators a share of key public work programs, in addition to access to various government prerogatives, in return for their support in the impeachment vote scheduled for this Friday. Although Kuczynski has alleged that the tapes were heavily edited, already daunted by the prospect of a hostile Congress this Friday, this appeared to the final nail in the coffin of his political career and after just 19 months in office, he resigned on Wednesday.

And so Kuczynski becomes another victim of the Odebrecht scandal. Centered on the Lavo Jato corruption scandal, it has its roots in bribes given to Brazilian politicians (and elsewhere) by the Brazilian construction giant, Odebrecht, in addition to other construction companies, in return for a whole gamut of favors. In fact, Odebrecht has admitted to paying over US$1 billion in bribes and apparently, they even had a designated department whose sole function was to bribe governments across the region in return for state building contracts.

The scandal has also dragged other Latin American executives into its orbit. It was partly responsible for forcing Dilma Rousseff, the former president of Brazil, out of office. In Panama, prosecutors are now seeking to detain the sons of former president, Ricardo Martinelli (2009-2014). Ricardo Alberto and Luis Enrique Martinelli are accused of depositing part of a US$22 million bribe that Odebrecht paid in return for lucrative state contracts in Panama. And current Panamanian president, Juan Carlos Varela, has been accused by a former advisor of receiving political donations from Odebrecht. In Colombia, a former senator who admitted receiving bribes from Odebrecht has accused current Colombian president, Juan Manuel Santos, of receiving illegal campaign donations from the Brazilian firm and in Argentina, members of Mauricio Macri’s centre-right organization have been accused of ties with Odebrecht, and in the case of Gustavo Arribas, of accepting a direct bribe from the firm. In the Dominican Republic, the Brazilian firm admitted that it payed US$92 million in bribes to Dominican government officials to secure large and lucrative infrastructure projects.

In Peru, the former President, Alejandro Toledo, who is also facing prosecution for his dealings with Odebrecht, is currently on the run. This led to the Peruvian government offering a 100,000 soles award (approximately US$30,000) for information leading to Toledo’s arrest.

Undoubtedly, the Odebrecht scandal will rumble on and drag many more politicians into its wake.

Given the line of succession outlined in the Constitution of Peru, the Vice-President, Martin Vizcarra, will now become acting president.

Ukraine – President Poroshenko and the Anti-Corruption High Court

On 31 December 2017, President Poroshenko used his Twitter account to post a video on the last day of the year. The 1 minute 41 seconds video was a collection of clips with a short text underneath each providing a summary of the greatest achievements of the year. Among the biggest successes, the President named the establishment of the visa-free regime and the association agreement with Europe, the release of 73 hostages held in captivity by Russian-led militants in Donbas, large scale highway works as well as pension, education and medical reforms.

One reform area, however, was absent from the video – a demonstration of achievements in the fight against corruption. Given that corruption is one of the chronic, endemic problems that plagues Ukraine and was the reason for ousting its previous President, it is the reforms in this sphere that Ukrainian civil society is most adamant about.

As we mentioned previously on the pages of the blog, to address the demands for corruption reform the President promised to sign a law launching an anti-corruption court by the end of 2017. On December 22, President’s draft law “On the High Anti-Corruption Court” was registered in Ukraine’s parliament. However, the civil society groups and opposition legislators criticized the President’s draft arguing that it did not guarantee the selection of independent judges.

Civil society groups were not the only ones to disapprove the draft law. Transparency International urged the President to withdraw his draft, rework it and submit a new one, listing several areas where the draft did not adhere to the recommendations of the Venice Commission of October 2017.

Both the World Bank and the International Monetary Fund (IMF) also wrote to the President’s office this month expressing concern that the draft law fails to meet the recommendations of the European rights and legal watchdog. Establishing an independent and effective Anti-Corruption Court is one of the reforms required for Ukraine to qualify for the further funding from the IMF, which amounts to $800 million.

Political scientists Robertson and Pop-Eleches call this joint effort between the Ukrainian civil society and the international community to force the country down the road of anti-corruption reforms a “sandwich” model. The model worked effectively in the case of defending the director of the National Anti-Corruption Bureau and other anti-corruption reformers. Whether it will be effective in the case of the Anti-Corruption Court remains to be seen. Recently, the President confirmed that he will amend his legislation to make it more effective.

However, Anders Aslund, a leading specialist on economic policy in Russia, Ukraine and Eastern Europe, is pessimistic about the prospect of the effective reforms in Ukraine. In a recent article, Aslund wrote that the ruling coalition did not seem to be interested in a real independent anti-corruption court or electoral reform even if legislation was under way. Instead, Ukraine’s politicians seemed to be deeply absorbed by the upcoming election scheduled to be held in May 2019.

Ukraine – EuroMaidan: 4 years on

On the night of November 21st, 2013, the citizens of Ukraine came to the streets to protest the policies of then government of Viktor Yanukovych. The wave of demonstrations and civil unrest now commonly referred to as EuroMaidan ultimately forced the president and many high political officials to flee the country. Although the demonstrations were sparked by the decision to suspend the signing of the association agreement with the European Union, the protests were also against corruption at the highest levels of the Ukrainian society. Yesterday marked 4 years since the beginning of EuroMaidan, what progress has been made since then?

Last week, the President of the World Bank, Jim Young Kim, visited Ukraine to discuss the reforms in the country. The President of the World Bank affirmed “we applaud the remarkable reforms Ukraine has implemented, which have helped the economy return to growth.” However, Jim Young Kim called for establishment of an independent corruption court as “a critical step to tackle corruption.”

Chatham House also issued a report on the state of the Ukrainian reforms in October 2017, praising “the remarkable progress in laying the foundations for reducing corruption in public life.” Nonetheless, the report also noted that, despite numerous achievements, from the standpoint of the Ukrainian population there has been little to show for the reforms [1]. Thus, it is not surprising that last month Ukraine was engulfed in yet another wave of anti-graft protests. Over 4,000 people gathered outside of the parliament demanding to lift parliamentary immunity, change electoral system to an open-party list, and create a National Anticorruption Court.

President Petro Poroshenko took immediate steps to speed up the legislative process to address the three demands raised by the protestors. As a result, the legislators agreed to fast-rack a bill stripping members of parliament of immunity from persecution possibly as early as next year. Parliament also started discussing the possibility of changing the electoral system. Finally, President Poroshenko promised to sign a law launching the anti-corruption court by the end of the year.

However, it is important to note that scholars still know very little about corruption, why some countries succumb to it, and most importantly how to eradicate it. Certainly, more research is needed on the topic, especially since Ukraine is definitely not the only country struggling with corruption. This year alone, on these pages we have reported on the corruption scandals at the highest levels of government in Brazil, Romania, South Korea and Guatemala, among others.

Although protestors in many countries in the world, including Ukraine, rightly demand the enactment of anti-corruption reforms and the elimination of corruption, these do take time. Unfortunately, Ukraine does not have that much time. In their 2015 article, Rosas and Manzatti found that victims of corruption are more likely to punish presidents and governments that condone or engage in corruption. Furthermore, “those that suffer corruption and find themselves in a situation of poor economic performance are even more likely to offer pessimistic assessments of the siting president” [2]. Only 18 months are left before the next presidential elections in Ukraine. Given the levels of inflation and struggling unemployment figures, Ukrainian citizens are likely to hold the president accountable for failing to curb corruption in the next elections. Therefore, to improve his chances of winning the re-election, President Poroshenko will need to show progress in reducing corruption in the country or at least to take significant steps toward it.

Notes

[1] Lough, John. 2017. “Anti-corruption Reforms” in Ash, Timothy et al. Chatham House Report: The Struggle for Ukraine.

[2] Rosas, Guillermo and Luigi Manzatti. 2015. “Reassessing the trade-off hypothesis: How misery drives the corruption effect on presidential approval,” Electoral Studies 39: 26-38.

Brazil – President Temer Continues to Battle Corruption Charges

Michel Temer continues to fight the corruption allegations that have dominated his short presidency. On Tuesday, a report presented to the Constitution and Justice Committee (CCJ) by Bonifacio de Andrada (PSDB-MG), a Temer ally, urged the Brazilian Chamber of Deputies to reject the latest criminal charges against President Temer, and two members of his cabinet, Eliseu Padilha, the Chief of Staff, and Moreira Franco, the General Secretary.

Temer is accused of obstruction of justice an racketeering by the federal prosecutor as part of the Lavo Jato scandal that has engulfed the Brazilian political class. This latest charge has emerged as a result of a set of tapes that was given to prosecutors by two brothers, Joesley and Wesley Batista, who are in control of the gigantic Brazilian meat packing firm, JBS. As part of a larger plea deal involving allegations of bribery and corruption, the Batista brothers released these tapes to the federal prosecutor, on which we can allegedly hear President Temer approving continued cash payments by the Batista brothers to the former Speaker of the House, Eduardo Cunha, in return for his silence. As part of their testimony, the Batistas also allege that President Temer received millions of dollars over the last seven years in order to fund his electoral campaigns. Temer and his party are accused of receiving nearly US$190 million in return for political favors.

The Brazilian lower house now have to vote on these accusations. They will do this towards the end of October. For the investigation to continue, 342 out of 513 members of congress must vote in support of the allegations. If the Chamber reject the charges, then the investigation is frozen until Temer leaves office. If the charges are accepted, then Temer will be suspended and his case will be heard in the Senate, under the direction of the Supreme Court. In fact, this is the second time that the Chamber will have voted on charges levelled against Temer. In August, by 263 votes versus 227, they rejected a different allegation of corruption presented by federal prosecutors.

The wider Lavo Jato corruption scandal centers upon bribes given to Brazilian politicians (and elsewhere) by the Brazilian construction giant, Odebrecht, in addition to other construction companies, in return for a whole gamut of favors. In fact, Odebrecht has admitted to paying over US$1 billion in bribes and apparently, they even had a designated department whose sole function was to bribe governments across the region in return for state building contracts.

The scandal has also dragged other Latin American executives into its orbit and has included allegations of corruption involving the former president of Peru, Alejandro Toledo (2001-2006), the sons of former Panamanian president, Ricardo Martinelli (2009-2014), current Panamanian president, Juan Carlos Varela, current Colombian president, Juan Manuel Santos, and in Argentina, members of Mauricio Macri’s centre-right organization have been accused of ties with Odebrecht, and in the case of Gustavo Arribas, of accepting a direct bribe from the firm. In the Dominican Republic, the Brazilian firm admitted that it payed US$92 million in bribes to Dominican government officials to secure large and lucrative infrastructure projects.

Michel Temer has a lot on his plate. He has been trying to push through crucial legislation relating to pensions and the retirement age in Brazil, but this scandal has dominated the political scene. Temer is now the most unpopular president ever in Brazil. According to a recent Ibope poll, only 3 per cent of the population consider his government good, or very good. Indeed, 77 per cent consider his government bad or terrible. One thing is for sure – the Lavo Jato will continue to dominate Brazilian politics for the foreseeable future.

 

Brazil – Former President Lula Sentenced to Nine and a Half Years in Prison

In a decision, where the true political ramifications are, as of yet, unknown, last week, the former two-term president of Brazil, Luiz Inácio Lula da Silva, was sentenced to nine years and six months in prison by judge Sergio Moro. Lula, of the Partido dos Trabalhadores (PT) or Worker’s Party, served as Brazil’s president between 2003 and 2011. Probably Brazil’s most popular politician in recent decades, Lula was sentenced for his part in the ever-widening Lavo Jato corruption scandal. The sentence is connected to some UK£590,000 in bribes that Lula allegedly received from the Brazilian engineering firm OAS. Apparently, Lula bought a seaside apartment in a complex built and operated by OAS for UK53,000, but OAS then ‘upgraded’ Lula to a lavishly refurbished duplex apartment worth nearly UK£600,000 in the same complex.

The Lavo Jato corruption scandal, which has engulfed the Brazilian, and increasingly the regional, political establishment centres upon bribes given to Brazilian politicians (and elsewhere) by the Brazilian construction giant, Odebrecht, in addition to a host of other companies, in return for a whole gamut of favours. In fact, Odebrecht alone has admitted to paying over US$1 billion in bribes and apparently, they even had a designated department whose sole function was to bribe governments across the region in return for state building contracts.

The scandal has rocked Brazil. The current president, Michel Temer is facing corruption charges, and a much discussed list, known as Fachin’s list, when released, contained details of prominent politicians that are under investigated for allegedly receiving payments from Odebrecht. This list is based on information provided to federal investigators in Brazil by 77 former Odebrecht executives as part of a larger plea bargain and includes at least eight government ministers, nearly a third of the whole cabinet.

The scandal has also dragged other Latin American executives into its orbit and has included allegations of corruption involving the former president of Peru, Alejandro Toledo (2001-2006), the sons of former Panamanian president, Ricardo Martinelli (2009-2014), current Panamanian president, Juan Carlos Varela, current Colombian president, Juan Manuel Santos, and in Argentina, members of Mauricio Macri’s centre-right organization have been accused of ties with Odebrecht, and in the case of Gustavo Arribas, of accepting a direct bribe from the firm. In the Dominican Republic, the Brazilian firm admitted that it payed US$92 million in bribes to Dominican government officials to secure large and lucrative infrastructure projects.

Although this sentence hangs above Lula like the sword of Damocles, Judge Moro has allowed Lula to remain free until he appeals, a process that could take up to eighteen months. The decision will also have significant implications for the next presidential election in 2018. Lula has long been touted as a possible candidate for the beleaguered PT, and opinion polls suggest that he would be one of the hypothetical front runners in any election contest. Currently, as long as the legal action is ongoing, Lula is free to run. However, if he appeals and his appeal is successful, the verdict must completely quash Moro’s ruling. Any slight alteration or amendment to the sentence would still result in a conviction and would present Lula from running in the next election, as his case would have been heard in two different courts. If he accepts his sentence and does not appeal, he is also free to run, but he most likely will end up in prison. Not an easy choice for either Lula or the PT.

Ukraine – Ex-president Viktor Yanukovych on Trial

On May 4, Ukraine began a high treason trial of its former president Viktor Yanukovych. According to the Ukrainian state prosecutor’s website, Yanukovych is accused of committing “treason by helping the Russian Federation and its representatives to violate the sovereignty and territorial integrity of Ukraine.”

The so-called “trial of the century” has already held two sessions. The prosecution’s main evidence are copies of letters written by Yanukovych asking Russian President Vladimir Putin to send troops to Ukraine. In addition, the prosecutor says that it has witness testimonies, documents, and photo materials to support the case. The punishment for treason in Ukraine carries a sentence of 10 to 15 years.

However, in addition to the treason trial, Yanukovuch is also under criminal investigation in three other cases. First, the former president is accused of ordering the use of disproportionate force against the demonstrators during the so-called Europmaidan protests between November 2013 and February 2014. Second, Yunukovych is accused of having formed criminal groups. And finally, the Mezhyhirya case of illegal acquisition of property. The Mezhyhirya residence of the former president became famous when it was confiscated in 2014 after he fled the country. Later authorities discovered fleet of luxury cars and other luxury items that have stored in the the now infamous estate.

Currently leaving in exile in Russia, the president is being tried in absentia. To enable this, Ukrainian legislature had to pass a number of amendments to the Criminal Procedure Code. This, however, generated a number of controversies. Some argued that the bill is a case of selective justice and is politically motivated, drafted with a sole purpose of putting the former president on trial. Furthermore, the defence has argued that there is no legal basis for the treason trial as Yanukovych has not been presented with an official notification of the charges against him. Most importantly, however, the bill has been criticised for the potential impact it may have on regular citizens. Many argue that the amendment can lead to the dangerous abuse of power allowing the possibility of convicting a person in absentia, without them even knowing about being on trial.

In the last year alone, a number of other countries put their presidents on trail. The most high profile recent case is the impeachment and the corruption trial of the president of South Korea Park Geun-hye. Burkina Faso has also recently started a trial of its former president Blaise Compaore. He is also tried in absentia and is accused of using force against unarmed protesters in 2014, during the uprising that took him out of power. The presidents of Brazil and Argentina are also currently on trial for corruption. Thus, a quick look around the world shows that Ukraine is not the only country to have one of its former presidents on trial. However, it is one of the few countries to have a president tried for treason, in addition to corruption and excessive use of force.

The trial is an important test for the Ukrainian judiciary. There are serious grounds for bringing charges against the former president. However, it is crucial for the trial to be conducted in a fair and independent manner in order not to only avoid the verdict being challenged in an international court but also continue to further build and strengthen the judicial system in Ukraine.

Brazil – One Third of the Cabinet to be Investigated for Corruption

Everybody was waiting for this. I have written before on this blog about the long tentacles of the huge Lavo Jato corruption scandal, which has engulfed the Brazilian, and increasingly the regional, political establishment. The whole scandal centres upon bribes given to Brazilian politicians (and elsewhere) by the Brazilian construction giant, Odebrecht, in return for a whole gamut of favours. Odebrecht has admitted to paying over US$1 billion in bribes and apparently, they even had a designated department whose sole function was to bribe governments across the region in return for state building contracts.

Well, now in Brazil, a federal judge, Edson Fachin, has released a list of prominent politicians that are to be investigated for allegedly receiving payments from Odebrecht. This list is based on information provided to federal investigators in Brazil by 77 former Odebrecht executives as part of a larger plea bargain. It was due to be released earlier, but the former federal judge responsible for the investigation, Teori Zavascki, was killed in a plane crash in January.

The list was part of a ruling that allows federal prosecutors to begin investigating politicians named by the Odebrecht executives and for the somewhat beleaguered government of Michel Temer, it is particularly damaging. It may also have consequences for the 2018 presidential elections. At least eight government ministers, nearly a third of the cabinet, will now be under investigation for allegations of bribery and corruption. It includes Michel Temer’s chief of staff, Eliseu Padilha, and his foreign minister, Aloysio Nunes Ferreira. It also includes the Speaker of the lower house and the head of the Senate, not to mention a large chunk of sitting senators (24), 40 federal deputies and 3 governors.

This comes at a moment when Temer is trying to push an important pension bill through Congress, which would introduce a mandatory retirement age and reduce death benefits. This legislation is deemed crucial in order to deal with Brazil’s very large primary budget deficit. The deputy responsible for its introduction to the Chamber of Deputies has also been named on this list.

Potential candidates for the 2018 election have also been implicated, including Aécio Neves and José Serra (both from the PSDB). It is difficult to see how Temer’s party, the PMDB, could realistically contest the election given the incumbency curse they will face, and it remains to be seen whether the PT can shrug off its own involvement in the corruption scandal. Given that nearly the entire upper echelons of Brazilian politics have been caught up in this scandal, a cynical and downtrodden electorate might end up turning to an outsider like Marina Silva, or a populist, like the right-leaning Jair Bolsonaro.

One thing is for sure. There is more to come with this scandal. It has already spread across Latin America and its tentacles have thus far enveloped the sons of former Panamanian president, Ricardo Martinelli (2009-2014), the current president of Panama, Juan Carlos Varela, and in Colombia, a former senator who admitted receiving bribes from Odebrecht has accused current Colombian president, Juan Manuel Santos, of receiving illegal campaign donations from the Brazilian firm. In Peru, Odebrecht’s chief executive there has supposedly told Peruvian investigators that Alejandro Toledo, the former president of Peru between 2001 and 2006, has also received US$20 million in bribes from Odebrecht, in return for a lucrative infrastructure project.

We have not seen the end of Lavo Jato by a long shot.

Latin America – Odebrecht Scandal Expands across the Region

In my last post, I discussed the fallout from the Lavo Jato corruption scandal, which was partly responsible for forcing Dilma Rousseff, the former president of Brazil, out of office last year. Parts of this scandal involved allegations of kickbacks from the Brazilian construction giant, Odebrecht, to former worker party president, Luiz Inácio Lula da Silva (2003-2011). The scandal spread to Peru, where former president, Alejandro Toledo (2001-2006), has been accused of receiving US$20 million in bribes from Odebrecht in return for granting them the contract to build a large road and infrastructure project. This led to the Peruvian government offering a 100,000 soles award (approximately US$30,000) for information leading to Toledo’s arrest.

Well, the scandal rumbles on. And rumbles across the region, dragging into its orbit current and former presidents across Latin America.

In Panama, prosecutors are now seeking to detain the sons of former president, Ricardo Martinelli (2009-2014). Ricardo Alberto and Luis Enrique Martinelli are accused of depositing part of a US$22 million bribe that Odebrecht paid in return for lucrative state contracts in Panama. And current Panamanian president, Juan Carlos Varela, has been accused by a former advisor of receiving political donations from Odebrecht. In Colombia, a former senator who admitted receiving bribes from Odebrecht has accused current Colombian president, Juan Manuel Santos, of receiving illegal campaign donations from the Brazilian firm.

In Argentina, members of Mauricio Macri’s centre-right organization have been accused of ties with Odebrecht, and in the case of Gustavo Arribas, of accepting a direct bribe from the firm. All of this comes amid a controversy over a government plan to settle a fifteen year debt incurred by Macri’s father when he owned the Argentine postal service. In the Dominican Republic, the Brazilian firm admitted that it payed US$92 million in bribes to Dominican government officials to secure large and lucrative infrastructure projects. And on Wednesday, prosecutors in Chile raided the Santiago offices of Odebrecht as part of a larger 10 country investigation into the political links and acitivies of the construction company.

So is there an explanation for such an encompassing and massive scandal? Part of the problem clearly lies with norms and regulations governing campaign financing across Latin America. There are few public subsidies to political parties and most campaigns are paid for by corporate donors, while repeated attempts to regulate donations have fallen short, given the lack of an incentive structure for doing so among the political classes.[1] The lack of strict regulations governing campaign financing is surely compounded by the rise of populist outsiders who appeal to “the masses” via television. Kurt Weyland has argued that “over the past 15 years, such personalistic leaders have sought to bypass established political parties and interest groups in order to reach “the people” through direct, most often televised, appeals aimed at building up a loyal following from scratch. Because its methods are costly, the new media-based politics has given ambitious politicians much higher incentives to resort to corruption.”[2]

Political donation kick-back schemes therefore like the one operated by Odebrecht are simply too difficult for many Latin American politicians to turn down, given the spiraling cost of electoral campaigns across the region. Expect more revelations to emerge.

Notes

[1] See the recent Economist article on campaign financing across the region: http://www.economist.com/news/americas/21717985-unavoidable-trade-offs-paying-democracy-how-latin-america-deals-campaign-finance.

[2] Kurt Weyland. 1998. The Politics of Corruption in Latin America. Journal of Democracy 9 (2): 108-121.

Ukraine – New Political Party, Corruption, and Calls for Parliamentary Election

On 28 November 2016, Mikheil Saakashvili, a former President of Georgia and a former Governor of Odessa region in Ukraine, held a rally in support of his new political party – Movement of New Forces. During the rally, Saakashvili told around 1,000 people who turned up to support him in the centre of Kyiv that he knew “how to make Ukraine great…and we will do it together.”

Educated in Ukraine and later in the U.S., Saakashvili first came to power after the 2003 Rose Revolution. He served two terms as President of Georgia. Barred from running for a third term, Saakashvili left Georgia shortly after the expiration of his term in 2013. Today, he is wanted in Georgia on the charges of abuse of power and use of excessive force against the demonstrators in 2007.

Saakashvili renounced his Georgian citizenship in 2015 and accepted Ukrainian citizenship to become a Governor of Odessa region in Ukraine. On 7 November 2016, however, he resigned his governorship and accused President Poroshenko and his allies of supporting corrupt officials and undermining his reform efforts in the region. His resignation came just a week after the online declarations detailing the assets of around 50,000 top Ukrainian public official have been released. To the surprise of both Ukrainians and the West, the declaration revealed that Ukraine’s top officials owned millions in cash, luxury items, and properties raising questions about country’s commitment to curtail corruption.

In a recent interview with Kyiv Post, a famous Ukrainian newspaper, Saakashvili insisted that Ukraine needed to hold an early parliamentary election to get rid of its entire ruling political class. Next parliamentary election in Ukraine is scheduled for 2019. If Ukraine holds another election now, it will be its third election in the past two years. Nonetheless, Saakashvili insisted on “a real, clear threat of violence” if elections were not held, warning of a possibility of a military coup.

Some argue that Saakashvili came to Ukraine to start his second political career and was deeply dissatisfied to be only a Governor after holding a presidential post in his native Georgia. Although his motivations for coming to Ukraine remain unclear, his career offers an interesting perspective on term limits, presidents, and their future careers. In his recent book, Alexander Baturo examines why some executives willingly step down from power whereas others attempt to circumvent term limits. [1] Baturo argues that this variation can be explained by the cost and benefits of leaving office. Simply put, the executives will try to extend their tenure if the stakes of losing office are too high. These high stakes could include lucrative opportunities while in office as well probabaility of persecution once out of office. This theory would suggest that Saakashvili should have stayed in power in Georgia in 2013 given that he faced persecution after leaving office and little possibility of continuing his political career or extending his wealth once out of office. However, Saakashvili’s example shows that another possiblity for a former president who faces few benefits and relatively high costs of leaving office is to leave office and start over in another country.

[1]. Baturo, Alexander. 2014. Democracy, Dictatorship, and Term Limits. Ann Arbor: University of Michigan Press.