October 27, 2004
Central America: The High Cost of Corruption
Inter Press Service

Corruption is one of the main obstacles to development in Central America, according to experts commenting on the recent series of scandals involving top-ranking officials in the region.

José Eduardo Mora

SAN JOSE, Oct 27 (IPS) - Corruption is one of the main obstacles to development in Central America, according to experts commenting on the recent series of scandals involving top-ranking officials in the region.

”It has been demonstrated that corruption in Central America affects the right to health and education, among other basic rights, and therefore contributes to fostering social exclusion,” said Jaime López, director of the non-governmental anti-corruption group Probidad, based in El Salvador.

This happens because, among other reasons, ”corruption disrupts the laws of the market and affects consumers, contractors and the beneficiaries of development projects,” López explained to IPS.

Those who are hardest hit by the consequences of corruption in Central America are the poorest, most vulnerable sectors, who represent half of the region's 38 million inhabitants, he added.

Hans Quevedo, from the Guatemalan Association for Social Studies and Research, concurs with López that corruption particularly undermines the most vulnerable members of society.

As an example, he referred to the tens of millions of dollars embezzled by high-ranking officials from the Guatemalan Social Security Institute (IGSS), which at the same time ”pays ridiculously meagre pensions to the elderly.”

A number of officials are currently serving jail time for their participation in the fraud, including former IGSS director César Sandoval, who was sentenced to 15 years.

A United Nations Development Programme (UNDP) report, ”Democracy in Latin America: Towards a Citizens' Democracy”, points to corruption as one of the seven deadly sins in the region, and refers to the devastating effects of ”dirty money” on political institutions and leaders.

For his part, former Costa Rican president Rodrigo Carazo (1978-1982) told IPS that corruption is a disease that has the entire planet caught up in its grip.

According to López, human rights defenders and prosecutors in Central America are still not fully aware of the problem, and have yet to create mechanisms to systematically track the impact of corruption on the rights of the region's citizens.

Studies conducted by the Inter-American Development Bank (IADB) indicate that in Latin America as a whole, 20 percent of funds earmarked for government procurement are lost to corruption.

In a report released in early 2004, Bernardo Kliksberg, general coordinator of the IADB's Inter-American Initiative on Social Capital, Ethics and Development, stated that corruption accounts for the loss of 10 percent of GDP in Latin America every year.

It is crucial to promote a culture like that of the Nordic countries where this vice is not tolerated, he said.

Central America continues to be shaken by one corruption scandal after another. The most recent came to light in Costa Rica, where the French corporation Alcatel is accused of having given 2.4 million dollars to former president Miguel Angel Rodríguez (1998-2002) in return for winning the bid to install 400,000 telephone lines.

Another former Costa Rican president, Rafael Angel Calderón, is currently being held in the La Reforma penitentiary, charged with accepting a kickback of 440,500 dollars from the Fischel corporation, as payment for having arranged the purchase of 39 million dollars worth of medical equipment for the Costa Rican social security authority.

The Office of the Comptroller General of Costa Rica said it is the country's citizens who ultimately pay for kickbacks like these.

The German-based global corruption watchdog Transparency International (TI) concluded in its 2004 report, released last week, that there is a direct relationship between high levels of corruption and low levels of economic productivity.

The lack of transparency that tends to go hand in hand with government corruption leads to a level of uncertainty that effectively discourages foreign investors, the report underlines.

And according to TI's 2003 Global Corruption Barometer, based on surveys conducted in 47 countries around the world, ”Two out of five respondents on a low income believe that corruption has a very significant effect on their personal and family life.”

The inability of state institutions to confront corruption creates a climate of impunity that tends to make the problem especially widespread in the Central American region, according to López.

”The problem is that in our countries, it is the governments themselves who help to obstruct or delay legal action against those implicated” in acts of corruption,” he said.

The stance adopted by the judicial authorities in Costa Rica, who have initiated legal proceedings against two former presidents and numerous high-ranking officials in less than a month, is highly atypical for the region, López believes.

”In many cases, the officials remain in their posts and nothing happens. What is significant in Costa Rica is not only the response of the prosecutors, but also the strong reaction of the public,” he added.

Every year, TI releases its Corruption Perceptions Index (CPI), which is based on surveys conducted with businesspeople and analysts around the world and rates countries on a scale of 0 to 10, with 10 being the ”cleanest” and 0 the most corrupt.

The Central American country that fared the worst in this year's index was Guatemala, with a score of 2.2. It was followed by Honduras with 2.3, Nicaragua with 2.7, El Salvador with 4.2 and Costa Rica with 4.9.

Guatemalan prosecutors are currently attempting to have former president Alfonso Portillo (1999-2004) extradited from Mexico. He is accused of links to drug trafficking and embezzlement.

Carazo agreed with López that one of the key problems in Central America -- and in Latin America as a whole -- is the absolute impunity enjoyed by companies that pay bribes and kickbacks.

In his opinion, the high levels of corruption seen today are linked to the headlong rush towards privatisation, with public assets being turned over to the control of foreign companies. ”They are trying to sell our institutions at any cost, no matter what the consequences,” he declared.

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