Corruption in Colombia: Do you feel the bite?

CorruptionThis month, our regular columnist ponders the origins of graft, fraud, corruption, double dealing and misconduct. Find out how this culture goes back to Christopher Columbus and isn’t going away any time soon.


Another day, another sorry saga of corruption in Latin America: the big man using state funds for personal gain. Whether it’s having his brothers, sons and nephews on the payroll, false accounting, skimming workers’ wages or ordering white-elephant projects that are never finished, they are all served up with threats and brutality against detractors or whistle-blowers.

Eventually the big man is investigated, condemned and jailed. But then set free by high-level political contacts. Sound familiar?

Of course it does, though you might be surprised to learn that this story goes back to the discoverer of Spain’s Nuevo Mundo, Christopher Columbus, or Cristóbal Colón. As the colonies’ first governor, El Almirante had his devout followers who would follow him literally to the ends of the known earth. But an equal number despised him as a corrupt despot prepared to torture or kill anyone in his way.

By 1500, the Spanish Crown had heard enough allegations and despatched investigators. The ensuing report – lost then found in a state archive in Valladolid in 2006 – underscores the perils of sending underfunded and unsupervised conquistadors to far-flung places with strict orders to send a tax surplus back to Cadiz’s coffers.

Corruption in ColombiaLife on the frontier “turned noblemen… into rascals and thieves”, to quote James Michener’s Caribbean. Still, the fact that King Ferdinand bothered to send investigators to Hispaniola at all shows that anti-corruption was on his royal ‘To Do’ list. It also explains why Colón was shipped home to Spain in chains, though (mirroring the fate of future transgressors) he was quickly pardoned by the King and sent back to work.

Colón never made it to Colombia but his legacy of mixing personal self-interest with public office certainly did, along with Spain’s decree-based legal system and a centralised bureaucracy that created the need to bend rules just to get things done.

The result is the seemingly never-ending parade of corruption scandals and the ever-increasing incredulity of an exasperated population, so fed up with their ruling class that pollsters no longer talk of popular politicians but rather the ‘least hated’.

The gist of the discourse is, “Now we’ve made peace with the FARC let’s go after corruption.” My friend goes further. In his mind, decades of conflict were cooked up by a pilfering elite to draw attention away from their own crooked ways. As he puts it, “A smoke screen while they picked our pockets.” The guerrillas were the “useful idiots along for the ride,” he concludes.

Such cynicism is natural when even the government-appointed anti-corruption chief – a lawyer called Luis Moreno – is currently in jail for soliciting bribes from the very politicos he was supposed to investigate.

Related: Police targets of Plan Pistola

A more optimistic view is that this avalanche of scandals demonstrates that corruption is actually being uncovered, just as the Santos government promised back when it took power in 2010.

Most people don’t see it that way. Perhaps this is because of the way corruption is measured. Much fraud is hidden, almost by definition. That means a lot is based on the perception of wrong-doing, which in turn depends on media reporting. The more you read about it, the worse it looks. Thus paradoxically, a government taking aim at corruption will actually appear more corrupt.

Corruption in Colombia

Another reality of Colombia is that corruption is everywhere. The bite (la mordida) comes in many small ways, from the crooked cop demanding an ‘instant fine’, to the stonewalling bureaucrats in local offices who need an incentive to get the job done, to the price-fixing business cartels that push up prices in the supermarket.

For years I was stumped as to why school exercise books (cuadernos) were twice as expensive in Bogotá as London until, lo and behold, the cartel de los cuadernos – a price-fixing regime rigidly enforced by the country’s three main suppliers – was unmasked by government investigators. Well, at least it was eventually unmasked (though I didn’t notice any major price drop in cuadernos).

The job market seems equally controlled. When I suggested to an out-of-work teacher friend that he submit his CV to the nearby high school he replied dolefully: “How can I apply when I don’t know anyone there?” His chances of getting a job without some friend on the inside were so astronomically small he wouldn’t even try.

This touches on the perception that without palanca (leverage) nothing gets done, and if you don’t have well-placed friends or family, you might just have to pay a bribe. And if you want to do business you have to bend the rules even when (especially when) dealing with the state. A friend who owns a paint shop told me how the local army unit offered her a large order to repaint the barracks but that “all the receipts had to be 10% over so the officers get their cut.”

Of course Colombians cannot turn to their political leaders for moral guidance since the country’s ruling clans are kings of the kickback. The paint shop scenario plays out at all levels, indeed the very political system in Colombia seems set up for skimming, through public contract systems that allow elected officials to take their slice of the pie.

There are various mechanisms behind this such as, the infamous merry-go-round (carrusel de contratos), whereby construction funds are passed down through a series of bogus consultancies, each taking their 10% cut, to eventually reach a bloke with a shovel and a wheelbarrow who actually does the work. Or not. Usually by this stage there is not enough cash left, creating a half-finished white elephant, unless the state coughs up more money and the carousel starts again.

But even if the work does get finished, there is a high chance it had been over-costed with a big boost to the personal coffers of elected mayors, senators and congressmen factored in. Step forward Odebrecht, the Brazilian conglomerate charged by US courts with the systematic bribing of governments on a global basis and the plat de jour in terms of current Colombian scandals.

And what a juicy feast. By the latest count, USD$27 million has been paid in bribes to politicians and administrators to serve up contracts for Colombia’s prestigious Ruta de Sol road network. The unravelling web has entangled ministers from all political hues and tainted President Santos, who even made a personal presentation at an anti-corruption conference in London last year.

It is worth considering what actually constitutes corruption. Santos has defended the system of political patronage (perfected under his watch) whereby regional chiefs vie among themselves to gain state funds for their locality. “Who better to decide what public work needs to be done in their own backyards than the local elected officials themselves?” he argues, pointing out that countries like the US and UK operate in a similar way.

This means that senators and congressmen are able to use blackmail to get funds, demanding the allocation of projects to their region in return for supporting reforms that the government needs to keep working, a realpolitik which might pass in countries where public works actually get done.

In Colombia, where work frequently doesn’t get done – and there is even now an elefante blanco cell-phone app for citizens to photograph and report unfinished structures – most people see a system that simply allows politicians to buy votes, steal money and stay in power.

So why do people vote for los corruptos? The answer is simply that la mermelada (the jam) is spread thinly, benefiting many families and voters. Mayors, congressmen and senators repay voter loyalty with contracts or jobs which they control by placing ‘their people’ – often relatives or in-laws or clan – in key admin posts, usually including the oversight jobs that should be checking for fraud.

Since most public service staff are on temporary contracts, their employment (and their pension, their health scheme and all the other benefits) depends entirely on the election of ‘their person’ to ensure they keep their jobs. This leads to the remarkable situation after each local election whereby in any given local municipality whole chunks of staff will depart, seemingly overnight (sometimes acrimoniously wiping their computer files), while new faces (with connections to the new mayor) roll in.

Corruption in Colombia

Of course this new bunch are initially inept so any useful work is put on hold for the next six months as they find their feet, including ways to skim as much as they can, knowing in five years the axe will again fall – this time on them.

Will these cycles of nepotism and corruption ever end? Experts say that sufficient laws exist in Colombia to stop corruption but are not implemented. Local government could reduce nepotism on the municipal payroll by moving public workers from temporary to permanent contracts. But no-one does.

Recent laws on transparent bidding should have eliminated bent contracts. Unfortunately, powerful contractors bypass this by dictating the terms of the proposal – often in cahoots with the mayor’s office – to ensure only their bid can win. This could be countered with more technical expertise in the preparation of proposals, since vague and poorly-costed plans foment graft. Others see education as the key, such as including ethics modules in university business courses.

Still others believe that the initiatives to streamline daily bureaucracy – such as anti-tramite laws and putting common processes on-line – are reducing both the need and the opportunities to seek or offer bribes.

Related: Combating the Colombian corruption crisis

A good example I came across recently was the Land Registry office where the front desk workers can no longer calculate tax receipts for property sales. Instead, backroom staff – too far away to be slipped some cash to lower your bill – do the maths and send the result to the front desk.

It’s a small change, but it’s a start.


 Measuring transparency and corruption in Colombia

Transparency International’s Corruption Perception Index (CPI) reflects a sample of experts’ perceptions of corruption across the world. That is not the same as actual corruption, of course, but corruption by its very nature is extremely difficult to measure. According to the 2016 CPI report, Colombia ranked 90th, halfway down the list of 176 countries. Regionally it sits at the halfway mark between cleanest Canada and most corrupt Venezuela.

Transparencia por Colombia is Transparency International’s country specific chapter with links to an interactive map that pin-points specific cases and ITEP, a public services transparency index that uses surveys to rank corruption risks both by territory and by entity.

The ranking reflects the main concern of many Colombians that the very entities tasked with uprooting and punishing corruption – the Fiscalia and the Ministerio de Justicia – are themselves at high risk of corruption. Unsurprisingly, the most at-risk departments – Chocó and La Guajira – are also Colombia’s most impoverished.

According to figures from Colombia’s own Inspector General’s Office, corruption costs the country USD$7.5 billion every year, which adds up to nearly 10% of the government’s 2017 budget. This means corruption costs each taxpayer USD$165 a year – three quarters of a monthly minimum wage.

Some other organisations and government bodies that highlight corruption in Colombia:

La Comisión Nacional Ciudadana para la Lucha Contra la Corrupción (CNCLC), a government-appointed citizens body that oversees implementation of anti-corruption laws, www.ciudadanoscontralacorrupcion.org.

The government’s Secretaria de Transparencia, tasked with implementing anti-corruption laws, www.secretariatransparencia.gov.co, here you can download the Elefantes Blancos app where citizens can report unfinished public works to social media.

Another state department dedicated to ‘measure and analyse’ corruption is El Observatorio de Transparencia y Anticorrupción, www.anticorrupcion.gov.co, where you can find on-line resources to fight corruption.

Online news and analysis sites like www.lasillavacia.com and www.las2orillas.com offer insights sometimes missed by the mainstream media.

The blog of Bogotá economist Alvaro Pachón, www.alvaropachon.blogspot.com.co has analysis of the personal tax returns of senior government ministers made public in 2016 after pressure from transparency groups.

 



Spreading the jam

Some of Colombia’s corruption scandals

Odebrecht – a whiff of corruption turned into a proper stench after the Brazilian giant was caught bribing officials and fixers to the tune of USD$27 million to win road contracts, notably the Ruta de Sol highway from Bogotá to Santa Marta.

Reficar – the modernisation of Cartagena’s oil refinery came in USD$4 billion over budget after using contractors who, strangely, had no experience in oil refineries but plenty in the bedroom: this splurge came with a USD$16 million tab for the services of sex workers.

Roads for prosperity – the presidential plan to improve rural roads did bring prosperity to political caciques on the Caribbean coast with large helpings of la mermelada. La Silla Vacia revealed that all the contracts – no matter where or how long the road – came in at the same cost. Here too we learned how regional senators demanded slush funds from central government in return for support for reforms. Call it traffic jam for votes.

If the price is wrong… then there is a cartel at work, as in the recent price-fixing revelations of nappies / toilet-paper / fruit / onions / potatoes / school books (you can insert just about any commodity into this list). Remember it’s the free market (free to screw us as they please).

The Community of the Ring – a plot as murky as Mordor and as corrupt as Colombian cops created a male prostitution ring, complete with ‘male-order’ catalogue, using young cadets to ensnare and coerce politicians. This led to allegations of murder, kidnapping and the downfall of a police chief.

Judge dismissed – A senior judge and president of Colombia’s constitutional court, Jorge Pretelt, met with an oil company director to demand a fat bribe as pay-off to overturn a USD$9 million dollar fine for flouting environmental laws.

The great Córdoba robbery – Córdoba, Colombia’s cowboy corner, is also its most corrupt with dozens of functionaries, lawyers, judges and senators in jail or being processed for systematic looting of departmental coffers. One example is that of youthful ex-governor Alejandro Lyons, who faced fraud charges but made a dash for the USA to cut a deal and dish the dirt on the dynasty families still reigning here.

Corrupt anti-corruption case – the first person outed by Lyons was the country’s senior corruption investigator, Luis Moreno, now in jail facing corruption charges of his own. The fugitive ex-governor claims that Moreno took bribes not to investigate him for corruption.

Cartel of the haemophiliacs – the stateside Lyons might also shed light on Córdoba’s fraudulent list of falsified haemophiliacs through which various senior officials bled the health system for USD$20 million.


Gerald Barr

2 COMMENTS

  1. All corruption is bad and the Colombia Carbon Tax imposed by Colombia’s government will only hurt its citizens. This is an international scam that needs to be stopped.
    Basic Economics: Companies do not pay taxes. They increase their products price to cover the tax.

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