Latin America – Corruption and the Executive Office II

I have written before about the relationship between corruption and the executive office in Latin America. Across the region, presidents have often been accused and impeached for corruption while occupying the executive office. For example, this year alone, Guatemalan ex-President Alfonso Portillo was sentenced to five years in prison in the US for taking bribes from Taiwan. In April in El Salvador, it was announced that evidence had emerging linking former president Francisco Flores to illegal and hidden bank accounts. Argentine Vice-President, Amado Boudou, appeared in court in June to respond to allegations that he illegally halted bankruptcy proceedings against a company that he supposedly had an interest in.

Explanations for the persistence of corruption in the presidential office in Latin America range from history and the evolution of a permissive political culture across the region to the combination of PR electoral systems and presidentialism.[1] Latin American executives often need to deal with uncooperative legislatures and so at times, corruption can appeal as the easiest way for the executive to pursue their agenda. The prototypical example of this dynamic can be found in the Mensalão scandal in Brazil.

Given this level of corruption in the highest political office, it is no surprise that many Latin American countries languish in the bottom half of Transparency International’s annual Corruption Perception Index.

Now, two new cases of alleged corruption, which are related to the executive office in Latin America, have come to light. The first of these involves the embattled president of Mexico, Enrqiue Peña Nieto. Peña Nieto was already facing huge political pressure over the disappearance of 43 students in Iguala. Now, his wife and former soap star, Angélica Rivera, has become embroiled in a scandal concerning a mansion she purchased in 2012, and Grupo Higa, a government contractor. In November, Higa, as part of a larger consortium, was awarded a US$4 billion contract to construct a high-speed rail project. It has now emerged that Rivera purchased her house form a unit of Higa, and she has yet to hand over a sizable portion of the asking price. Higa still hold the deeds to the house. As a recent news story succinctly put it: “So the first lady’s mansion is owned by a construction company that has bid successfully for government contracts.” The government has strenuously denied any wrongdoing. The story is not going away however. On Friday, the Mexican Finance Minister, Luis Videgaray, was implicated in a similar house buying scandal.

The other scandal is even larger. Petrobras, the Brazilian state energy behemoth, was allegedly used in an elaborate kick-back scheme, where money from inflated contracts was channeled back to the governing Partido dos Trabalhadores (PT). Thirty-five people, including top executives from Petrobras, have already been charged, and this schandal could have long-lasting and wide-ranging implications for the PT and president Dilma Rousseff. Currently, despite the efforts of the opposition, Dilma has remained above the scandal. She denies any knowledge of the kickback scheme, just as Lula did during the Mensalão scandal. It is expected that this story  will only get bigger.

One thing is for sure however. Corruption in the presidential office in Latin America remains a serious problem.

[1] For example, 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.

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