Tag Archives: corruption scandal

Peru – Peru Offers Reward for Arrest of Former President Toledo

One of the topics I return to most on this blog is probably corruption and specifically, corruption in the president’s office. The last number of years has witnessed a veritable landslide of corruption cases by those occupying the highest political office across Latin America. Guatemalan ex-President Alfonso Portillo was sentenced to five years in prison in the US for taking bribes from Taiwan. Another former Guatemalan president, Otto Pérez Molina, is currently in Matamoros prison in Guatemala City, serving a sentence for receiving bribes from importers. In El Salvador, evidence emerged linking former president Francisco Flores to illegal and hidden bank accounts. Argentine Vice-President, Amado Boudou, has appeared in court to respond to allegations that he illegally halted bankruptcy proceedings against a company that he supposedly had an interest in. In Mexico, Angélica Rivera, the wife of president Enrqiue Peña Nieto, has become embroiled in a scandal concerning a mansion she purchased in 2012, and Grupo Higa, a government contractor. In Peru, questions have been raised about the manner in which former president, Ollanta Humala, funded his presidential election campaigns in 2006 and 2011. And of course most famously, only last year, Dilma Rousseff, the embattled former President of Brazil was forced out of office partly as a consequence of the huge Lavo Jato corruption scandal which engulfed the Brazilian political establishment, which has also involved allegations of kickbacks from the Brazilian construction giant, Odebrecht, to former president, Luiz Inácio Lula da Silva.

Well now it seems the fallout from that crisis is spreading. Apparently, Odebrecht’s chief executive in Peru, Jorge Barata, told Peruvian investigators that Alejandro Toledo, the former president of Peru between 2001 and 2006, received US$20 million in bribes from Odebrecht in return for granting them the contract to build a large road and infrastructure project. Toledo has been under investigation in Peru since 2013, after his mother-in-law supposedly bought a number of expensive houses via offshore companies that seemed to extend significantly beyond the family’s means.

Somewhat ironically, Toledo came to power in 2001 in the tumultuous aftermath of the resignation of Alberto Fujimori, partly by railing against the corruption scandal engulfing Peru at that time following the discovery of videos of Peru’s head of intelligence, Vladimiro Montesinos, bribing TV network executives. Toledo was in France when this news broke and is now thought to be in California, where he currently holds a visiting professorship at Stanford University. Peru has now offered a 100,000 soles award (approximately US$30,000) for information leading to his arrest and current Peruvian president, Pedro Pablo Kuczynski, has asked Donald Trump to arrest and extradite Toledo back to Peru.

But this scandal looks set to explode to other presidencies. Apparently, Obebrecht had a designated department to bribe governments across the world in return for state building contracts. The presidency of Alan García (2006-2011) is now also falling under suspicion, given that Odebrecht won a record number of contracts in Peru during his tenure and allegations have also surfaced that Colombian president, Juan Manuel Santos, received illegal campaign donations from Obebrecht.

But why such persistent and prevalent cases of corruption in the very highest political offices? Explanations range from the historical development of the state and Guillermo O’Donnell’s infamous ‘brown areas’, to the lack of transparency during the economic reform process of the 1980s and 1990s, to the combination of presidentialism and the PR electoral system, a variant of which most Latin American countries employ.[1] Of course, while this type of graft is a problem in most other regions of the world, what makes the Latin American case particularly interesting is the often very public judicial and legislative battles to bring this wrongdoing to heel. It seems likely that the Obebrecht case is only going to inspire more of these.

[1] See For example, some of the chapters in Walter Little and Eduardo Posada-Carbó (eds.) 1996. Political Corruption in Europe and Latin America. Palgrave Macmillan or Jana Kunicová and Susan Rose-Ackerman. 2005. Electoral Rules and Constitutional Structures as Constraints on Corruption. British Journal of Political Science, 35: 573-606.

Peru – Former President Ollanta Humala to be Included in Campaign Financing Investigation

Once again, I return to the issue of corruption scandals at the level of the executive office. It was announced last week that a public prosecutor would be including Ollanta Humala, the former Peruvian president who finished his five-year term on the 28th of July this year, in a long and ongoing investigation into campaign financing and electoral donations. This investigation had up till now largely centred around Humala’s wife and former first lady, Nadine Heredia.

The investigation of the prosecutor, Germán Juárez, revolves around money raised by Ollanta Humala to fund his presidential election campaigns in 2006 and 2011. There has long been allegations that Heredia, as President of the Partido Nacionalista Peruano, received and hid donations from the former Venezuelan president Hugo Chávez, and a number of Brazilian construction companies, which were then used to finance the campaigns of her left-leaning husband. Only this year, Heredia was prohibited from leaving Peru as investigations continue. For Humala, this latest announcement is significant because as of July this year, he can no longer enjoy presidential immunity, although activities during his presidency are still protected. However, such immunity does not apply to activities during the 2006 election.

This investigation is partly a product of Humala’s own admissions, when he stated that Heredia was only doing what she was ordered to do by Humala, as head of the party, but it also stems from information supposedly contained in a number of notebooks owned by Nadine Heredia, which were given to public prosecutors by former party members. These notebooks are alleged to document millions in campaign donations that remained unreported and which were funneled through personal bank accounts. The prosecutor has asked the judiciary for access to Humala’s domestic and international banking and tax records from his time in office, currently protected by Peruvian law. Ollanta Humala denies all of these allegations and claims that they are the product of political opportunism.

I keep coming back to this topic, but why do we often witness so many corruption scandals related to the highest political office across the region? The allegations against former president Humala, would appear to echo the explanation of Kurt Weyland; he argued that the last two decades have seen the emergence of personalistic leaders who have sought to bypass established political parties in order to reach “the people” through direct and often televised appeals. This can build a new loyal following, but it is also expensive and for these outsiders, the incentive to engage in ‘irregular’ campaign financing to boost coffers which cannot be filled through traditional party and donor networks, is often quite large.[1] Humala is the prototypical outsider. He was a former army officer who rose to prominence during the 2006 elections when he was somewhat scathing of exiting political elites. He only established his political party in 2005, the year before his first electoral bid.

Of course, it is also possible that we are not necessarily witnessing an increase in corruption scandals at the executive level, but rather an increase in the ability of judiciaries across the region to hold current and former presidents to account.

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

Romania – Censure motion fails to remove PM indicted on corruption charges

On 29 September, Romania’s Social-Democratic government survived a no-confidence vote in parliament. This was the fourth censure motion submitted by the National Liberals (PNL), the main opposition party, in the last 18 months. Unlike previous motions, though, the most recent one did not target the government’s collective performance, but was filed in response to the prime minister’s formal indictment on corruption charges on 17 September. The initiators hardly mentioned any government activities and exclusively focused on the need to remove the compromised head of government.

The criminal investigation against the prime minister was launched by the National Anti-corruption Directorate (DNA) on 5 June on grounds of forgery, tax evasion, money-laundering, and conflicts of interest. Perhaps not coincidentally, the National Liberals filed a censure motion against the government on the same day. However, on that occasion the text of the motion criticised the government’s failure to introduce postal voting for Romanians living abroad. The comfortable majority social democrats and their allies enjoy in both parliamentary chambers allowed PM Ponta to survive not only the no-confidence motion, but also a separate parliamentary vote to have his immunity lifted.

Anti-corruption prosecutors formally charged the prime minister and seized his personal assets on 13 July. Shortly thereafter, Victor Ponta stepped down as leader of the ruling Social Democrats but remained in office as head of government. He was temporarily replaced as party leader by Liviu Dragnea, a former deputy prime minister, minister of development, and executive president of the social-democrats, who himself had been forced to leave PM Ponta’s government in May 2015 upon receiving a one-year suspended jail sentence for electoral fraud in the 2012 presidential impeachment referendum.

President Iohannis has repeatedly called on the prime minister to step down since 5 June, when the criminal investigation was launched by anti-corruption prosecutors. He urged the prime minister to resign again after his case was formally brought to the High Court for Cassation and Justice on 17 September and expressed support for the censure motion put forward by his National Liberal Party. However, Romania’s Constitution specifically denies the head of state the power to dismiss the prime minister (article 107). The president does have the power to suspend cabinet members from office when a criminal investigation is launched against them – but only when the accusations concern acts committed while in office (article 109). As the prime minister stands accused of criminal activities dating back to past activities as a lawyer, his continuation in government office can only be decided by the parliamentary majority and/or his party.

Romania’s Constitution features several requirements for a non-confidence vote: a censure motion must be initiated by at least one quarter of all deputies and senators, who are not allowed to endorse another motion of this type during each of the two ordinary parliamentary sessions each year, unless the government invokes a confidence vote (articles 113-114). Under these circumstances, the government is unlikely to face more than one censure motion per legislative session.  As the opposition has just availed of this opportunity at the beginning of the autumn session, the government can rest assured that it will not be confronted with another no-confidence vote until at least February 2016.

Thus, the only threat to PM Ponta’s office can come from his own party. Social Democrats have scheduled elections for the new party leader on 11 October, followed by an extraordinary congress on 18 October. Liviu Dragnea, PSD’s current interim president, has announced his candidacy for the party leadership, while Victor Ponta said he would not run anymore. With both local and general elections scheduled for 2016, it remains to be seen whether or how long the new party leadership will continue to grant unconditional support to a prime minister facing a corruption trial while in office.

South Korea – By-elections 2015: what lessons for the NPAD?

South Korea held by-elections to four seats on April 29, 2015. The lopsided results – the ruling Saenuri party won three of the four seats, while an independent formerly associated with the opposition New Politics Alliance for Democracy (NPAD) won the remaining seat – are resounding defeats for the opposition NPAD for several reasons discussed below. With these by-election wins, the ruling party holds 160 of the 298-seat National Assembly while the NPAD holds 130. Why did the opposition NPAD fare so poorly? Perhaps more importantly, what lessons do the results hold for the NPAD?

 

Hopes dashed?

Notwithstanding the low number of seats, the by-elections appear to favour the NPAD on at least four grounds: first, although this is the first by-election for the newly-elected leader of the opposition, Moon Jae-In, Representative Moon is an old political hand in the opposition, having previously been the 2012 presidential candidate for the then-opposition Democratic United Party. There were hopes that Rep. Moon may be able to draw on or build from his experiences following the presidential election loss to Park in 2012, to unite the party and move it forward. Still, the party leadership-contest divided rather than united the different camps in the NPAD. Although Rep Moon has extended olive branches to the other factions with appointments to high-ranking party positions, the party has so far failed to develop viable policy positions to challenge the ruling party. This failing is not trivial: the NPAD has not been able to achieve public approvals significantly above 20 percent, and this may be the root cause of the NPAD’s poor electoral showing.

Second, the corruption scandal engulfing the country – deceased construction tycoon Sung Wan-jong left a suicide note implicating several prominent politicians as having received bribes, including Prime Minister Lee Wan Koo, President Park’s former chief-of-staffs Kim Ki-choon and Huh Tae-yeol, and current chief-of-staff Lee Byung-kee – ensnared President Park and the ruling Saenuri Party more than the opposition NPAD. Such a scandal should have favoured the NPAD in the election; yet, the results underline that Rep Moon’s message for the election to be a “judgement on a corrupt government” was not sufficient to move voters to the NPAD. Here, again, the outcome directs the NPAD towards the position-strategy of running as a viable governing party, with clear policy-positions, and away from the position-strategy of running only as an opposition.

Third, the one-year anniversary of the Sewol ferry tragedy with more than 300 dead, mostly students, was a painful reminder of the failings of the ruling party that could have diminished support for the ruling Saenuri party. The public’s dissatisfaction and frustration at the lack of progress on investigations or salvage of the ferry has led to demonstrations and fueled criticism even within the ruling party. Under these conditions, the NPAD’s failure to capture the disaffected for the by-election is, again, a clear signal that opposing President Park is not enough to win votes.

Fourth, it is a useful to note that three of the four by-election seats were previously held by leftist party, the Unified Progressive Party, which had been disbanded following the Constitutional Court’s ruling in December that the party was guilty of instigating armed rebellion in the country. That these seats from districts supportive of opposition candidates did not fall to the NPAD is telling: it is a reminder – again – that the public is not just supportive of opposition to the ruling party.

Will the opposition NPAD be viable for the 2016 elections? As discussed previously, it is clear that the headwinds against the opposition must be overcome by clear policies and governance strategies that show that it is more than stonewalling or obstruction.