Stratfor, a leading geopolitical intelligence platform and publisher of analysis on the sociopolitical conjuncture worldwide, has published: "Pandora’s Box: Confronting A New Level of Corruption" written by Vortex CEO, Eduardo Salecedo-Albarán. There, he exposes key points to understand the dimensions of the Lavajato case in Brazil, and the difficulties faced by Latin American countries to investigate these macro corruption networks.
"Pandora’s Box: Confronting A New Level of Corruption"
Corruption remains at the core of public administrations across Latin American governments. Although this problem isn’t an exception in West, Central and Eastern Africa, or in Southeastern Asia, recently Latin America has been in a scenario of a massive, transnational and interconnected corruption scandal that simultaneously affected several countries. In the case of Brazilian corruption, the operation uncovered against money laundering, known as “Lava Jato”, has revealed even more unexpected dimensions and scope.
The “Lava Jato” investigations discovered the participation of a group of companies known as “The Club” that obtained million dollar contracts through bribes paid to high ranking officials at the Brazilian parastatal firm Petrobras. Additionally, the corrupt scheme promoted by “The Club” included illicit electoral funding to support public servants who had the capacity to appoint the Petrobras’ officials that perpetuated the corruption.
The massive corruption expanded in Brazil even reaching former presidents Lula da Silva and Dilma Rousseff. The company, Odebrecht, replicated the corruption scheme not only in Brazil, but across Central and South America. According to Marcelo Odebrecht, the CEO, the firm paid million dollar bribes to high ranking officials in Mexico, Guatemala, Panama, Dominican Republic, Colombia, Venezuela, Ecuador, Peru, Chile and Argentina. The entire network of corruption that Odebrecht promoted also included Caribbean and African countries where the bribe money could be traced to laundering.
It calls the attention that the bribes that Odebrecht paid don’t only involve current governments but also previous ones. For instance, in February 2017, a Peruvian judge ordered the arrest of former President Alejandro Toledo who was in office between 2001 and 2006, allegedly for receiving a $20-million-dollar bribe. Administrative controls against corruption of high rank officials clearly failed in those countries.
Although ongoing investigations in most affected countries aren’t conclusive and final sentences will probably be severely delayed, the preliminary information provided by Odebrecht itself illustrates a powerful machinery that challenges current institutions and overwhelms judicial systems.
To have an idea of the potential dimension of the entire transnational network of corruption promoted by Odebrecht in Latin America, two characteristics of the Brazilian network can be considered: the “Lava Jato” disclosed information reveals a complex network of corruption that involves more than 900 nodes - including individuals and firms - who established more than 2.600 interactions.
Therefore, a serious investigation against the entire network of corruption that Odebrecht articulated would require information from at least 11 Latin American countries, and the list only increases if money laundering is also considered. International cooperation among prosecutors is usually enacted as a procedure for confronting transnational corruption; however, in reality, this cooperation doesn’t translate in articulated investigations or shared information.
Additionally, most prosecutors’ offices of the countries involved lack the protocols, methodologies and technologies to classify and analyze high volumes of information such as those generated in “Lava Jato”; therefore, if the situation doesn’t improve at the national level then serious problems, obstacles, and delays are inevitable. Current institutional arrangements - using their concepts and tools at the transnational and domestic levels - are simply inadequate for confronting this complex network of corruption.
In the present age of hyper-connected society, in which a single macro-network of corruption found its way to buy favors of presidents, ministers and deputies across Latin America, there is not a transnational institutional arrangement to investigate the new level of corruption revealed by “Lava Jato”. Now that Pandora’s Box has been opened, and now that we will face the evidence of a real macro-network of corruption, we will need new concepts, protocols and technological tools to confront it. We need radical institutional innovation to confront this new level of corruption.
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