Blogs

Blogs

High levels of corruption in public works projects and impunity from justice in the Latin American region continue to challenge attempts to successfully eradicate fraud in government dealings   

Odebrecht, one of the most important construction and engineering companies in Brazil, confessed to offering numerous bribes to political leaders, political parties and public officials. Its major aim was to obtain contracts for major public infrastructure projects within the region. The investigation has revealed a complex network of bribery that has become one of the largest corruption scandals in Latin American history. The B budget boosts in the region, thanks to commodities' "golden decade," occurred within a weak precedent for the Rule of Law and therefore lax anti-corruption measures permitted widespread illicit profits for major government contractors and inflated costs for tax payers.

ARTICLE / Ximena Barria [English version] [Spanish version].

Odebrecht is a Brazilian conglomerate that through several operational headquarters conducts businesses in multiple industries. It dedicates to areas such as engineering, construction, infrastructure and energy. Its headquarters is located in Brazil in the city of Salvador Bahia. The company operates in 27 countries of Latin-America, Africa, Europe and the Middle East. Throughout the years, Odebrecht has concluded contracts with governments to build public works, with the majority of its projects in the Latin-American region.

In 2016, United States Department of Justice published allegations which detailed evidence of the company bribing public officials in twelve different countries, ten of them in Latin America: Argentina, Brazil, Colombia, Ecuador, Guatemala, Mexico, Panama, Peru, the Dominican Republic and Venezuela. As a result, a full investigation was launched after Odebrecht's senior executives confessed to bribery once discovered.

The corporation granted millions of dollars to local public officials from the countries previously mentioned, in exchange for obtaining public contracts to gain benefits from the projects constructed. Its purpose was to obtain a competitive advantage which permitted them to retain local governmental business in different countries.

In order to cover up illegal transactions, Odebrecht created fictitious, anonymous societies in such places as Belize, the Virgin Islands and Brazil. The company elaborated a secret financial structure to camouflage its payments. The investigation of the United States Department of Justice estimated that the bribes accounted for a total of $788 million dollars. Utilizing this illegal method, and contrary to every political and business code of ethics, the company signed one hundred projects generating $3.336 billion dollars in profits.

A weak judicial branch

This issue, also known as the Odebrecht Case, has created major divisions within Latin American societies. Its citizens consider that these acts should not remain unpunished, as countries need a stronger judicial branch to cement a strong and respected Rule of Law.

According to World Bank indicators, none of these ten Latin American countries impacted by this network of bribes hold 60% or more of the standard efficacy of the Rule of Law and control of corruption. Hence, this explains how the construction company was able to successfully bribe politicians.

 

Worl Bank, 2016

 

The judicial independence and its efficacy are essential for the resolution of acts with these characteristics. The correct exercise of justice moulds an appropriate Rule of Law, preventing that illegal acts or other political decisions could infringe upon it. Contrary to this ideal configuration, the countries who were involved in the Odebrecht case, do not possess optimal judicial independence.  

Thus, according to the Global Competiveness Report for 2017-2018, the majority of the countries affected obtained a low score with respect to the independence of their courts. These figures indicate that the countries lack of an effective judicial system to judge the alleged suspects involved in this case. With the case of Panama and the Dominican Republic, they ranked in the places 120 and 127 respectively, according to the judicial independence of a list of 137 countries.

One of the problems suffered by the Judicial Branch of the Republic of Panama is that it has high number of pending cases awaiting trial at the Supreme Court of Justice. This congestion makes it difficult for the supreme court to work effectively. The high number of processed cases doubled between 2013 and 2016, as the Criminal Chamber of the Court processed 329 cases in 2013 and in 2016 they processed 857. Although the Panamanian Judicial Branch has expanded its budget, this has not represented a qualitative increase in its functions. These difficulties could explain the decision of the court to reject an extension of the Odebrecht investigations, although this may imply some impunity. In 2016, there were only two detainees in the Odebrecht case. In 2017, of the 43 defendants who could be involved in the acceptance of bribes valued at $60 million dollars, only 32 were prosecuted.

The Dominican Republic also faces a similar situation. According to a 2016 survey, only 38% of Dominican citizens trust their justice system. The low percentage may be a result of the fact that the Supreme Court judges who were elected are active members of political parties, something that obscures the credibility of justice and its independence. In 2016, Dominican courts only prosecuted one person related to the Odebrecht case, whereas the US Supreme Court estimated that the Brazilian company had given 92 million dollars in Dominican political bribes, one of the highest amounts outside of Brazil. In 2017, the Supreme Court of the Dominican Republic ordered the release of 9 of 10 suspects implicated in the case due to insufficient evidence.

The need for improved coordination and reform

In October 2017, public prosecutors from Latin America met in Panama City to share information on money laundering, especially related to the Odebrecht case. The officials expressed the need to not leave any case unpunished, in order to solve one of the biggest political, economic and judicial problems in the region. Some prosecutors reported having suffered threats in their investigations. The meeting was valued in a positive way, since it highlighted the need in for greater fiscal coordination and legislative harmony in Latin America. However, it is important to note that the Dominican Republic was absent from that meeting.

All awareness of the public ministries of Latin America is essential in view of the correlation observed among the countries affected by the Odebrecht bribes and their poor position in the indices provided by different international organizations and research centers. The ineffective Rule of Law shows in the lack of control over corrupt companies like Odebrecht, where they succeeded in their bribery policy to obtain a competitive advantage.

The shortcomings of the judicial systems in countries such as Panama and the Dominican Republic make it possible for public officials to go unpunished for the crimes they committed. In addition, the Odebrecht case has a great impact in the region, and could still impede the judicial process if effective reforms are not taken in each country.

More blog entries

Publicador de contenidos

Carrera por los recursos espaciales: de la minería al control de rutas

▲ proposal of lunar base for obtaining helium, taken from ExplainingTheFuture.com [Christopher Barnatt]. GLOBAL AFFAIRS JOURNAL / Emili J. Blasco [8-page document.... ReadmoreAboutRace for space resources: from mining to route control "

Ecuador desaprovecha su salida de la OPEP y pierde producción petrolera

The country left the cartel in order to expand its pumping, but the Covid-19 crisis has cut extraction volumes by 10.8%. Construction of a variant of the pipeline that crosses the... ReadmoreAboutEcuador misses out on OPEC exit and loses oil production "

Argentina ve en Vaca Muerta una tabla de salvación, pero falta más capital para su desarrollo

The hydrocarbon field is the central axis of the Gas 2020-2023 Plan of President Alberto Fernández, which subsidizes part of the investment Activity of YPF, Argentina's state-owned oil and gas... ReadmoreAboutArgentina sees Vaca Muerta as a lifeline, but more capital is needed for its development "

El gas natural licuado cambia el juego en el hemisferio americano

U.S. LNG sales to its neighbors and exports from Latin American and Caribbean countries to Europe and Asia open new perspectives Not to depend on gas pipelines, but to be able to buy or sell... ReadmoreAboutLiquefied natural gas is a game changer in the American hemisphere "

Surinam sigue a Guyana en el ‘milagro’ petrolero

The finding of a "significant" amount of oil in off-shore wells places the former Dutch colony in the footsteps of neighboring Guyana. The intuition has proved to be right and the... ReadmoreAboutSuriname follows Guyana in the oil 'miracle' "

La minería ilegal, la otra destrucción de la Amazonía

Gold mining and oil transport pollute Amazonian rivers It is not only the fires that are negatively affecting the Amazon, which is undergoing an accelerated reduction of... ReadmoreAboutIllegal mining, the other destruction of the Amazon "

Centroamérica aprovecha sus volcanes para generación eléctrica

Geothermal energy already accounts for 7.5% of the Central American electricity mix, with installed capacity still far below the estimated potential. Volcanic activity and tectonic movement... ReadmoreAboutCentral America harnesses its volcanoes for power generation "

Jordan River Basin: Hydropolitics as an arena for regional cooperation

▲Satellite imagery of the Jordan River [NASA]. ANALYSIS / Marina Díaz Escudero Water is an essential natural resource, not only for individual survival on Earth, but also for nation-states... Read moreAboutJordan River Basin: Hydropolitics as an arena for regional cooperation "

Qué hará Bolivia con su gas natural cuando Brasil y Argentina ya no lo necesiten

The upcoming gas self-sufficiency of its two major gas-buying neighbors forces the Bolivian government to seek alternative markets Yacimientos Pretrolíferos Fiscales gas plant in... ReadmoreAboutWhat Bolivia will do with its natural gas when Brazil and Argentina no longer need it "

La nueva Guyana petrolera y su proyección internacional

One of the poorest countries in the Americas may become the world's largest oil producer per capita, disrupting the relationship with its neighbors. The promising oil discoveries... ReadmoreAboutThe new oil Guyana and its international projection "

Acuífero Guaraní: mejor que otros, pero pervivencia no asegurada

Geopolitical misgivings about perceived foreign interests should not distract beneficiary countries from implementing sustainable use. The Guarani Aquifer has given rise to a... ReadmoreAboutAquifer Guarani: better than others, but survival not assured "

El 'boom' de la quinoa

Global interest in this fashionable grain has brought additional income to Andean communities. The localization of quinoa production, especially in Peru and Bolivia (together they account for... ReadmoreAboutThe quinoa boom "

Impulso a la conexión gasística de los países de la Iniciativa de los Tres Mares

Poland-Germany struggle for influence in the European region between the Baltic, the Adriatic and the Black Sea The latest summit of the Three Seas Initiative (TMI) was attended by the... ReadmoreAboutBoosting the gas connection of the Three Seas Initiative countries "

'Guerras del agua' en Asia Central

Central Asian republics dispute scarce water resources in the Aral Sea Basin The lack of effective cooperation between the republics through which the two main water resources of the... Read moreAbout'Water Wars' in Central Asia "

The Nord Stream 2 divides the EU

The EU has backed down on the project, but Germany still gives support to the Russian initiative The project of a second set of gas pipelines through the Baltic Sea, in order to transport Russian... ReadmoreAboutThe Nord Stream 2 divides the EU "

Horizonte del consumo petrolero de América Latina

Domestic demand will increase, in contrast to more advanced regions In the coming decades, oil consumption in Latin America will continue to grow, in contrast to a trend towards... Read moreAboutLatin America's oil consumption horizon "

La batería del planeta: el litio de los salares andinos

Nearly two-thirds of the world's identified lithium reserves are located in Bolivia, Chile and Argentina. The explosion of electric vehicles using lithium-ion batteries has led to the... ReadmoreAboutThe planet's battery: lithium from the Andean salt flats "

China como potencia de recursos minerales

It generates many of the raw materials needed for global technology production. China not only has significant reserves of mineral resources, but also leads the world in the production... ReadmoreAbout China as a mineral resource powerhouse "

The 'why' of renewable energies in America

ESSAY / Martín Villegas Jordán The concept of humanity is a contemporary idea that took shape just recently. Many say that it took place after the conference of Yalta in 1945[1]. In other... ReadmoreAboutThe 'why' of renewable energies in America "

Pulso entre EE.UU. y Venezuela por el suministro de energía al Caribe

Washington's Antillean energy diversification initiative moves forward In view of the success of Venezuela's oil diplomacy in the Caribbean countries (the islands account for 13 of the 35... Read moreAboutU.S.-Venezuela energy supply pulse in the Caribbean "