Countries in Latin America continue to perform poorly when it comes to combating corruption, according to TI’s newly released Corruption Perceptions Index 2018 (CPI), which reveals a link between corruption levels and the health of democracies. With an average score of 44  for three consecutive years (on a scale from 0-100, where 100 is least corrupt), countries in Latin America are failing to make any serious inroads against corruption, compared to full democracies that score an average of around 75, which include countries such as Denmark and New Zealand.  

“We believe that the reason for these results is that there is a crisis of democracy in the hemisphere,” says Luciana Torchiaro, regional coordinator for Latin America and the Caribbean at TI. “There has been a strengthening of authoritarian regimes and a rise of populist leaders which often challenge democratic systems.”

The region, according to TI, is witnessing a rise in leadership styles that favour a number of tactics considered undemocratic, including the undermining of free and independent media, a silencing and control of civil society and international organisations, an increase in voter suppression and disenfranchisement, an increase in anti-immigrant, anti-LGBT, anti-indigenous and racist language; a rise in public promises for simplistic and “strong hand” approaches to solving deep-rooted and complex societal problems, including corruption. “Enforcement of anti-corruption laws is under threat because the system of checks and balances is being challenged,” says Torchiaro.  

While Uruguay continues to be the country with the lowest levels of perceived corruption in Latin America with a score of 70, Venezuela remains stuck at the bottom of the index with a score of 18, reflecting the ongoing weakening of democratic institutions in the country and persistent systemic corruption.

Chile, Mexico and Nicaragua have all declined in their respective scores, failing to make significant progress against corruption. In Nicaragua, which scored 25 in this year’s report, President Daniel Ortega controls most of the country’s democratic institutions, curbing their effectiveness and independence, according to TI. The president has also been clamping down on the political rights of citizens, who despite a violent backlash have taken to the streets in overwhelming numbers to protest against his authoritarian-style of ruling.

With a score of 67 and 28 respectively, Chile and Mexico have both dropped in this year’s rankings. In the past few years, both countries experienced huge corruption scandals involving political leaders. In Mexico, basic political rights, including freedom of expression and press freedom, have sharply declined according to TI, which states that without a free media to provide oversight of the country’s government, the ability to prevent and denounce corruption is limited. “We have had so many presidential scandals in the last few years with zero sanctions or penalties to any company or government officials. In addition to this, we are starting an era of  ’populism’ which, by experience in other countries in Latin America, is not so effective in terms of accomplishing the objectives that they are promising,” says Fernando Cevallos, CEO and founder of forensic investigations and compliance consultancy, F&C Consulting Group. Despite some reservations however, the country has witnessed growing social support for anti-corruption efforts and newly elected President Andrés Manuel López Obrador has vowed to tackle the issue and ensure the country strengthens the position of the National Anti-Corruption System. “Mr Lopez Obrador has started to tackle certain crucial issues, but we are still waiting for the government to effectively implement the National Anticorruption System. Mr Lopez Obrador goals in terms of the CPI is to put Mexico in the Top 10 countries of this ranking, but we must follow it closely,” says Cevallos.

With a score of 35, Brazil, also dropped two points since last year, earning its lowest CPI score in seven years. For many, however, the increase in the perceived levels of corruption is not necessarily a negative sign and instead an indication that people are more aware of the issue as more and more incidents are brought to light, investigated and prosecuted. “Since Brazil has been through so many scandals in recent years, it’s not surprising the perception of corruption has also increased,” says Emir Calluf Filho, legal and compliance director at J&F Investimentos. “In my opinion corruption has not necessarily increased… people in general are becoming more aware of corruption and this ultimately helps on the fight against corruption.” Isabel Franco, partner at KLA - Koury Lopes Advogados, agrees and argues that Brazil has in fact been a trailblazer in applying anti-corruption laws against several entities and leading executives. “It is unquestionable that Brazil has made a remarkable move to combat corruption,” she says. “I can attest to an incredible change of culture in the country. In my opinion, this amazing change in paradigm that resulted from the Car Wash probe, has had an incredible impact on the Transparency International CPI index.”

Despite the many efforts and investigations which have helped bring corrupt individuals from across the political and private sectors to justice in Brazil, there is a growing sense of cynicism and hopelessness among citizens which helped propel President Jair Bolsonaro to power with promises to end corruption once and for all, according to the report. “Many governments have weaponised the issue of anti-corruption as a basis on which to win support, but it remains to be seen if these new governments will truly commit,” says Torchiaro. While some remain sceptical on how far the new government is willing to go to fight corruption, many say they have already seen some positive steps being taken. “The nomination of Minister Sergio Moro as the new Minister of Justice is a strong step towards the effective punishment of corruption,” says Franco. Aline de Almada Messias, legal and compliance director at Hospital Sírio Libanês, also points out that anti-corruption efforts have become a major priority for Brazilian society and therefore more people will be watching the government to ensure real change is enacted. “The good thing is that society is watching both politicians and big companies,” she says. “Society and government must work together…the country has very good laws in place; however, we are still learning how to enforce them.”

Back to Central America and the score for Guatemala remained the same despite some of the turmoil created by President Jimmy Morales’ decision to expel the International Commission Against Impunity in Guatemala (CICIG), the UN-sponsored body charged with assisting national corruption investigations, which sparked outrage both locally and internationally. “This ranking shows the low credibility that citizens have in their institutions and officials in charge,” says independent compliance and corporate affairs advisor and former in-house lawyer for Ingenio Magdalena in Guatemala. “I think that the perception of citizens is that if the entities responsible for ensuring proper compliance with the rules and the fight against corruption are attacked by the government itself and are not supported, then this creates a state of uncertainty and little credibility towards officials and entities.”

The picture is not as gloomy everywhere in the region, however, and some countries have made commendable progress in the fight against corruption. While still low, with scores of 34 and 35 respectively, Ecuador and El Salvador both increased their CPI scores by two points since 2017. In addition, with a score of 40, Argentina increased one point since 2017 and eight points since 2015, showing some significant improvement. According to Torchiaro, countries doing better in the rankings are doing more to advance investigations and prosecutions of cases of corruption against high-profile individuals, including some former presidents. However, “these countries must also continue to strengthen the independence of their judiciary systems to ensure impartial prosecutions, and that those found guilty of corruption receive appropriate punishment,” she says.

In the meantime, compliance counsel and lawyers in companies can do much more to help the private sector play an active role in changing the way business is conducted in the region according to Messias, “The private sector must completely change its selfish behaviour…. There is no corruption if the private sector does not cooperate. When the private sector realises how important its role is, corruption will definitely decrease.”