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Print articleGuatemala's Anti-Corruption Shock Therapy
June, 2016 -
Guatemala is experiencing an unprecedented and well-deserved offensive against corruption. An Ex-President and Vice-President along with many ex-Cabinet members are currently being prosecuted for a growing array of crimes including passive graft, money laundering and tax fraud, among others. The indictments are being brought through the efforts of a UN-sponsored commission which, until recently, had limited success in dismantling “organized crime”, its principal mandate. The revelations have exposed different corruption networks, involving accusations against attorneys, judges, and Court of Appeals and Supreme Court magistrates. They have generated a climate of wariness leading judges to deny, at times, sensible requests for bail due to the fear of being prosecuted themselves. Some companies' legal representatives are being prosecuted for active graft, accused of illegally financing the electoral campaigns of the prior government in exchange for financial benefits through government contracts and purchases. The initial amazement is beginning to fade, although some still express skepticism toward the ability to prosecute a practice that has for so long been considered “the norm”.
On the surface, there is a certainly popular sentiment that justice will be applied to the criminal behavior that had always been treated with impunity. For example, just recently an Ex-President was prosecuted through the US Court System for conspiracy to launder money after local courts determined that there was not sufficient evidence to convict him on a host of stronger corruption charges. After serving a reduced jail term in the United States, he returned and attempted to run for a Congressional seat. These types of occurrences have fueled popular frustration.
Perhaps most notable, a shaken business community is now showing concerns over the effects of the anti-corruption offensive, resulting in a short and midterm shock to the Guatemalan economy. Holding corrupt businesses accountable has resulted in a vacuum of qualified companies to fill public contracting needs. This used to be a non-transparent space where winning bidders were hand-picked. The clean businesses that once shied away from public contracting, because of its red tape and complexity, are not prepared to quickly take over this “specialty” market. Transforming an engrained system now subject to deep stress, will require thorough and thoughtful analysis as well as academic rigor, which has yet to emerge. At the same time, weak institutions at the root of the shock are ill prepared to propose and implement successful long-term remedies. In fact, they have at times misunderstood the popular sentiment by attempting to promote improvised judicial, electoral and other reforms. A meaningful reform would be better achieved by a more comprehensive approach from the academic and professional communities.
The long-term effects of this anti-corruption offensive are still uncertain. Some are concerned that the enhanced powers of some government entities and leaders, as well as popular support behind them, might lead to vindictive actions inconsistent with the Rule of Law, or that certain players might take advantage of the opportunity to seek personal publicity to enhance their public or international standing. On the other hand, the real change probably could not have resulted from any “smooth” type of transition.
One thing is certain: there is a widespread feeling that Guatemala now has an exceptional opportunity to strengthen the Rule of Law and emerge as a stronger nation. Ideally, efforts will eventually transition from prosecuting government officials and businesses to encouraging a stronger anti-corruption culture more generally. The Chair of the OECD Working Group on Bribery, Drago Kos, recently acknowledged that enhanced enforcement has been transitioning to the encouragement of higher integrity in business transactions. Additionally, international efforts to standardize and enforce anti-corruption methodologies and implement international anti-bribery system standards, such as the much expected ISO 37001, bring renewed hope. Many argue that change will come less from legal reform, which is frequently promised or enacted but rarely enforced, and more from an intrinsically motivated appetite to strengthen the system by implementing sound business and political reforms consistent with shared personal and community values. This approach might be more in line with the business community's long-term strategies than its short-term profit reaping. Perhaps current circumstances will incite businesses to play their part in raising the bar on what is considered to be acceptable business ethics. They might do this, not necessarily for moral purposes, but in the interest of mere business sustainability.
On the surface, there is a certainly popular sentiment that justice will be applied to the criminal behavior that had always been treated with impunity. For example, just recently an Ex-President was prosecuted through the US Court System for conspiracy to launder money after local courts determined that there was not sufficient evidence to convict him on a host of stronger corruption charges. After serving a reduced jail term in the United States, he returned and attempted to run for a Congressional seat. These types of occurrences have fueled popular frustration.
Perhaps most notable, a shaken business community is now showing concerns over the effects of the anti-corruption offensive, resulting in a short and midterm shock to the Guatemalan economy. Holding corrupt businesses accountable has resulted in a vacuum of qualified companies to fill public contracting needs. This used to be a non-transparent space where winning bidders were hand-picked. The clean businesses that once shied away from public contracting, because of its red tape and complexity, are not prepared to quickly take over this “specialty” market. Transforming an engrained system now subject to deep stress, will require thorough and thoughtful analysis as well as academic rigor, which has yet to emerge. At the same time, weak institutions at the root of the shock are ill prepared to propose and implement successful long-term remedies. In fact, they have at times misunderstood the popular sentiment by attempting to promote improvised judicial, electoral and other reforms. A meaningful reform would be better achieved by a more comprehensive approach from the academic and professional communities.
The long-term effects of this anti-corruption offensive are still uncertain. Some are concerned that the enhanced powers of some government entities and leaders, as well as popular support behind them, might lead to vindictive actions inconsistent with the Rule of Law, or that certain players might take advantage of the opportunity to seek personal publicity to enhance their public or international standing. On the other hand, the real change probably could not have resulted from any “smooth” type of transition.
One thing is certain: there is a widespread feeling that Guatemala now has an exceptional opportunity to strengthen the Rule of Law and emerge as a stronger nation. Ideally, efforts will eventually transition from prosecuting government officials and businesses to encouraging a stronger anti-corruption culture more generally. The Chair of the OECD Working Group on Bribery, Drago Kos, recently acknowledged that enhanced enforcement has been transitioning to the encouragement of higher integrity in business transactions. Additionally, international efforts to standardize and enforce anti-corruption methodologies and implement international anti-bribery system standards, such as the much expected ISO 37001, bring renewed hope. Many argue that change will come less from legal reform, which is frequently promised or enacted but rarely enforced, and more from an intrinsically motivated appetite to strengthen the system by implementing sound business and political reforms consistent with shared personal and community values. This approach might be more in line with the business community's long-term strategies than its short-term profit reaping. Perhaps current circumstances will incite businesses to play their part in raising the bar on what is considered to be acceptable business ethics. They might do this, not necessarily for moral purposes, but in the interest of mere business sustainability.
