COVID-19 and Latin America's Epidemic of Corruption

Even during normal times, Latin America, including its public health sectors, struggles to provide adequate services while containing corruption. In Mexico, for example, Impunidad Zero found that between 2014 and 2019, 837 shell companies embezzled $175 million from the health sector. The coronavirus has only amplified this challenge, given the snowballing demand for medications and medical equipment and services. During previous health threats, such as the 2014-2016 Ebola outbreak, there were multiple cases of corruption, and early evidence from today’s pandemic suggests COVID-19 will not be any different. The region’s vulnerabilities, meanwhile, extend beyond the medical sector, and include the generous stimulus programs designed as urgent life support to sputtering economies.

Increased corruption is not inevitable, however. Careful public procurement, real-time transparency, robust monitoring and civil society oversight help prevent corruption, or detect it early. Where investments have been made in these institutions and practices, corruption is less likely, but it is difficult to initiate such reforms during a crisis. Moreover, existing safeguards might be bypassed in the name of expediency. What progress did Latin America make prior to the pandemic to guard against corruption, including in the health sector? Is the coronavirus proving the robustness of these systems, or exposing weaknesses? What steps are governments and civil society organizations taking to respond to the increased threat of corruption?

Selected Quotes

Delia Ferreira

“The situation in Latin America was not the best one in order to face this kind of crisis because, in emergencies, risk of corruption heightened and increased very notably. In this kind of emergency, we have a combination of two factors which makes the situation much more difficult. First, we have the emergency as such, which authorized the excuse for emergency procedures, lack of controls, also a demand for effective, rapid responses from governments and less attention to corruption, accountability, or transparency on the part of the public. On the other side, the emergency has to do with the health sector. The health sector is one of the most prone sectors in public policy to corruption in normal times. It is estimated by our group on health and corruption that more than five hundred billion dollars a year are lost to corruption normally in the sector of public health, medicine, supplies, etc. Imagine the combination of urgency plus the sector, which presents a very complicated panorama.”

“We have also seen a lack of trust in institutions, a lack of trust in the leadership, and also a disenchantment with democracy. According to the last studies and research surveys, we have 71 percent of the population unsatisfied with democracy, which is another complicated element in the panorama. You have to add to that economic crises like Argentina – one very, very notorious case on that crisis—unemployment, inequality in general, and high levels of poverty in the countries. Populistic tendencies or authoritarian regimes and all these things have been enhanced and strengthened during this crisis.”

“You can count on civil society because civil society is working very hard even in front of these kinds of restrictions or attacks on some governments. We have judges in Venezuela doing anticorruption work in a very conflictive and complicated situation, but all the countries in Latin America worked together at the very beginning of this emergency in the region to prepare recommendations for public procurement particularly.”

Daniel Alonso

“In the U.S., anti-corruption officials used to bat around this idea that you can’t prosecute your way to a cleaner government. It’s a very important piece of a broader anti-corruption strategy. Prosecutors are obviously very important. I was also a state prosecutor, and we used to say in the state prosecutor’s office in New York that a crime prevented is always better than a crime prosecuted.”

“Some Latin American countries like Argentina have anti-corruption offices, which in some administrations have been very aggressive, but they’ve always been criticized as being too close to the party. Some others like Mexico have established a special anti-corruption prosecutor, which is a good thing; we’ve done that in the U.S. as well.”

“Transparency is all great, but there’s a lot of data that’s not transparent that is available to government investigators. Most significantly, I’d say, is the database held by financial intelligence units in each country of suspicious activity reports, or SARs, issued by banks. Why don’t we cross-reference the procurement databases with the SAR database and see who’s bidding on these contracts and what kinds of activity they’ve been engaged in? Inspectors general have been data mining for many, many years—it’s very important—but today, using data analytics tools, you can combine a whole bunch of fountains of data in order to create serious investigative leads.”

Daniel Sabet

“There are non-corruption problems as well that we’re seeing all the time in procurement in the region … suppliers that don’t have the ability to provide the goods even though maybe their intentions are good, and governments that don’t have the ability to use the goods. So corruption is a major issue, but there are non-corruption problems as well.”

“It’s important to know that procurement was a problem prior to the pandemic. That the relaxation of rules could in theory be offset by increases of transparency and accountability mechanisms, and some countries have responded very well. But Honduras we can see, like other countries in the region, as a case where you have likely fraud, [and] failure to obtain materials.”

“You can still be transparent about what and how you’re doing it. You can still keep those receipts and document what you’re doing and why you’re doing it, and providing clear justifications for doing so. And that can be done even when you’re moving quickly.”