By: Staff Writer
August 6, 2021
The US laments the amount of corruption in Central America in this year’s US Investment Climate Statement.
Corruption, while not uncommon in developing nations, plagues all countries to varying degrees but in countries in parts of the Caribbean and Latin America the problem is pervasively troubling.
For example, the US claims that in Colombia the perception of corruption “is a serious obstacle for companies operating or planning to invest in Colombia.
“Analyses of the business environment, such as the WEF (World Economic Forum) Global Competitiveness Index, consistently cite corruption as a problematic factor, along with high tax rates, inadequate infrastructure, and inefficient government bureaucracy.
“Transparency International’s latest ‘Corruption Perceptions Index’ ranked Colombia 92nd out of 180 countries assessed and assigned it a score of 39/100, a slight improvement from the year prior. Customs, taxation, and public works contracts are commonly-cited areas where corruption exists.”
The report also noted however that security in Colombia has improved significantly over the past several years, particularly in its urban centres. Colombia has been plagued with a reputation as a major drug and narcotic manufacturing centre, going back to the days of Pablo Escobar; and with narcotics, comes guns and violence.
In addition, as the country continues to modernize and put behind it its socialist guerrilla factions, things are becoming more politically predictable. In 2016 it signed a peace agreement with the FARC Revolutionary Armed Forces of Colombia—People’s Army, to end half a century of confrontation.
The US notes, “Congressional approval of that peace accord put in motion a disarmament, demobilization, and reintegration process, which granted the FARC status as a legal political organization and took over 13,000 combatants off the battlefield.
“Currently the peace negotiations with the National Liberation Army (ELN), which began in 2017, are suspended. This terrorist group continues a low-cost, high-impact asymmetric insurgency, including an attack on the Colombian police academy in 2019 that killed 22 cadets. The ELN often focuses attacks on oil pipelines, mines, roads, and electricity towers to disrupt economic activity and pressure the government. The ELN also extorts businesses in their areas of operation, kidnaps personnel, and destroys property of entities that refuse to pay for protection.
Conversely in Costa Rica, one of the more stable Central American countries in the region, things are slightly different.
The US notes that while resources in Costa Rica to combat corruption are limited, it maintains a “strong” institutional framework that allows it to benefit from an aura of believability that when companies/individuals are brought into account for corrupt acts that it is seen as legitimate.
The report states, “Anti-corruption laws extend to family members of officials, contemplate conflict-of-interest in both procurement and contract award, and penalizes bribery by local businessmen of both local and foreign government officials. Public officials convicted of receiving bribes are subject to prison sentences up to ten years, according to the Costa Rican Criminal Code (Articles 347-360). Entrepreneurs may not deduct the costs of bribes or any other criminal activity as business expenses. In recent decades, Costa Rica saw several publicized cases of firms prosecuted under the terms of the U.S. Foreign Corrupt Practices Act.”
In the Dominican Republic, while not considered a Central American country, but due to the fact that it is primarily a Spanish speaking nation, we have decided to include it and share with you the US’s findings.
In the DR, the enforcement of corruption laws are seen as “ineffective” the US notes. “Individuals and NGOs (non-governmental organisations) noted the greatest hindrance to effective investigations was a lack of political will to prosecute individuals accused of corruption, particularly well-connected individuals or high-level politicians. Government corruption remained a serious problem and a public grievance, so much so, that it was a primary political motivation in the 2020 elections, leading to widespread protests. The Dominican Republic’s rank on the Transparency International Corruption Perception Index held at 137 in 2020.”
As for national security, significant threats have materialised due to street level incidences and publicly motivated protests, leaving the country vulnerable to political instability, despite the DR having no known national security threats to its border or public infrastructure aside from its island neighbour of Haiti that is in a perpetual state of political and social instability. The DR has been effective at neutralising the threats border chaos spillovers have created and continue to be cognizant of actors that may take advantage of the instability in Haiti as an attempt to spread discord and chaos in the DR.
The report continues, “Corruption can be a challenge to investment in El Salvador. El Salvador ranks 104 out of 180 countries in Transparency International’s 2020 Corruption Perceptions Index. While El Salvador has laws, regulations, and penalties to combat corruption, their effectiveness is at times questionable. Soliciting, offering, or accepting a bribe is a criminal act in El Salvador.
“Corruption scandals at the federal, legislative, and municipal levels are commonplace and there have been credible allegations of judicial corruption. Three of the past four presidents have been indicted for corruption, a former Attorney General is in prison on corruption-related charges, a former president of the Legislative Assembly, who also served as president of the investment promotion agency during the prior administration, faces charges for embezzlement, fraud and money laundering, and the former Minister of Defense during two FMLN governments is under arrest for providing illicit benefits to gangs in exchange for reducing homicides (an agreement known as the 2012-2014 Truce).”
With regard to public security the US notes that gang activity is the main threat to safety in El Salvador, for the country is known as a breeding ground for the notoriously violent MS-13 Gang and the 18th Street Gang that terrorizes citizenry not only in El Salvador but across the region going up into the South-West portion of the US.
The report says, “Gang members engage in violence or use deadly force if resisted. These “maras” concentrate on extortion, violent street crime, car-jacking, narcotics and arms trafficking, and murder for hire. Extortion is a common crime in El Salvador. U.S. citizens who visit El Salvador for extended periods are at higher risk for extortion demands. Bus companies and distributors often must pay extortion fees to operate within gang territories, and these costs are passed on to customers.”
In Guatemala, the situation is direr as historically it has one of the higher crime rates in the world where the murder rate in 2020 was 15 per 100,000, despite having a 28 percent drop off from 2019 the US notes.
As for public corruption, it is the same as all other countries in the region as the US states, “Corruption remains a serious problem that companies may encounter at many levels. Guatemala scored 25 out of 100 points on Transparency International’s 2020 Corruption Perception Index, ranking it 149 out of 180 countries globally, and 28 out of 32 countries in the region. The score dropped one point compared to the score observed in the 2019 report.
“Investors find corruption pervasive in government procurement. In the past few years, the Public Ministry (MP – equivalent to the U.S. Department of Justice) has investigated and prosecuted various corruption cases that involved the payment of bribes in exchange for awarding public construction contracts. Investors and importers are frequently frustrated by opaque customs transactions, particularly at ports and borders away from the capital.”
The US report continues on for all countries in the Western Hemisphere and is available to be downloaded and manipulated for easy reading.