Devoid of subtlety, headlines often fail to convey the real story. While the bumbling and stumbling governments of Brazil and Venezuela dominate the news out of Latin America, political life on the continent slowly and, at times, hesitantly embraces the rule of law. Corrupt leaders can no longer expect to retire into opulent obscurity. If the ongoing travails of President Dilma Rousseff of Brazil prove anything, it is that the era of impunity is drawing to a close. Of late, voters have grown impatient with the blatantly incompetent and those peddling populist solutions to the complex challenges of development.
Last year, Guatemala showed how it is done. After the UN-backed International Commission against Impunity in Guatemala (CICIG – Comisión Internacional contra la Impunidad en Guatemala) uncovered a corruption ring at the customs and tax office and the public health administration, the country’s chief public prosecutor Thelma Aldana snapped into action, ordering the arrest of all officials involved.
The trail soon led to Vice-President Roxana Baldetti who was forced to resign in May, unable to explain her vast wealth comprised of, amongst others, five luxury homes and a $13m helicopter. Mrs Baldetti was arrested on August 21 and, deemed a flight risk, remains in pre-trial detention. That same day, prosecutors presented evidence pointing to the involvement of President Otto Pérez Molina in the affair.
In a unanimous vote on September 1, Guatemala’s national congress stripped the former army general of his immunity from prosecution. The next day, President Molina tendered his resignation. He was arrested within 24 hours. Seldom has a shorter path been plotted between palace chamber and prison cell than the one trodden by Otto Pérez Molina.
While Guatemala may constitute but a footnote in the grand order of things Latin American, presidents still clinging to power as corruption affairs are brought to light now increasingly feel the heat of public indignation and prosecutorial resolve. Others who have retired from public office, gracefully or otherwise, also have cause to lose sleep.
Venezuela Shrinking
Fearing the worse for the day after, President Nicolás Maduro of Venezuela in December asked the outgoing national assembly to stuff the country’s supreme court with thirteen new judges sympathetic to his government. Ignoring constitutional norms, lawmakers voted to extend their expired mandate by a week in order to comply with President Maduro’s request.
In January, a new national assembly was installed in which the opposition Democratic Unity Roundtable (MUD – Mesa de la Unidad Democrática) holds a super majority of 109 out of 164 seats. Seeking to dissuade parliament from any and all future attempts at dismantling his socialist experiment, President Maduro managed to replace all but three of the supreme court’s 32 members with allied magistrates, setting the stage for a political crisis as MUD leaders vow to review the appointments and threaten to rewrite the constitution if need be.
The proverbial beggar reclining on a bench of gold, cash-strapped Venezuela sits atop the world’s largest oil reserves – an estimated 298 billion barrels (298,000 MMbbl) – yet is unable to pay for even the most essential of imported medicines and foodstuffs. The mismanagement of the country’s finances has reached epic proportions with the Maduro Administration preferring to ignore the bad news rather than publish the dismal economic numbers. Inflation is running at an implied annual rate of approximately 480% while the economy last year shrank by an estimated six percent. The much-touted accomplishments of the Bolivarian Revolution – a rather toxic mix of nationalism, socialism, and patriarchal politics – had been undone in the process with more than 76% of the population subsisting below the poverty line.
Corruption has merely shifted from the old network of discredited politicians to a new one comprised of bombastic Bolivarian leaders, now equally disgraced. Contrary to Guatemala – and Brazil – the country lacks an independent judiciary able to provide even a modicum of checks and balances. Parliamentary freedoms have been severely curtailed to the point where President Maduro may run his country into the ground without much bother.
Brazil … Rising
With the pink tide that engulfed most of Latin America in the early 2010s ebbing away as voters regain their senses, Brazilians are having seconds thoughts as well. The left-leaning Worker’s Party (PT – Partido dos Trabalhadores) that orchestrated the country’s remarkable renaissance in the 2000s has lost much of its electoral appeal now that PT officials and ministers have been exposed as ordinary crooks. Less than a year into her second term, President Dilma Rousseff leads a lame duck administration besieged by scandal that is singularly unable to tackle any of the country’s escalating problems.
Two of the world’s three leading rating agencies recently demoted Brazilian government bonds to junk status. Non-resident holdings of locally-issued debt instruments have descended to their lowest level in fifteen years. Not even annual yields of up to 14.8% on the bellwether 10-year bond could stop foreign investors from exiting the market. The country is currently in the grip of the worst economic recession since the 1930s with its GDP shrivelling by 4.5% in Q3 2015 and forecast to put in a repeat performance this year.
On Ms Rousseff’s watch, the budget deficit has swelled from -2.6% of GDP in 2011 – the year she took office – to -6.7% in 2015. Next year, the shortfall is expected to broach the ten percent barrier. Though the national debt seems manageable at 66% of GDP, Brazil’s exceptionally high interest rates claim fully 8% of national economic output, making the debt about as unsustainable as Greece’s.
As the economy tanks, the nation’s attention remains focused elsewhere – and for good reason. Not a day goes by without new, and often shocking, revelations in the largest corruption scandal to have hit the headlines since the resignation – followed, in a reversal of the usual order, by his impeachment – of President Fernando Collor de Mello in 1992 whose closest aide Paulo César Farias made his boss at least a billion dollars by selling favours to big business and raiding public funds.
In June 1996, PC Farias was shot and killed together with his girlfriend just one week before he was scheduled to testify before a federal judge on the trafficking of power. The double murder remains unsolved though four ex-military police bodyguards were indicted. A jury absolved two of them and concluded the other two members of the security detail were off duty at the time the murder was committed. All charges were dropped.
The current Lava-Jato (Carwash) scandal has so far not claimed any lives. The affair centres on kickbacks and other improprieties at national oil company Petrobras – formerly a source of immense pride to the nation – in which the state maintains a 55.7% share. The scandal first came to light in March 2014 during an anti-money laundering investigation conducted by the federal police. Tracing the origin of the vast sums of cash – now estimated at $5bn or more – through Petrobras’ network of filling stations led the investigators to the oil company where they promptly uncovered an institutionalised scheme of kickbacks. So far, police have made over a hundred arrests, detaining both Petrobras officials, politicians, and directors of sixteen large contractors such as Odebrecht, Andrade Gutierrez, Mendes Júnior, and Camargo Correa. Many remain in pre-trial detention, amongst them a number of billionaires deemed a flight risk.
Administering justice in a surprisingly swift manner, 75 people have already been found guilty by the courts, amongst whom former PT treasurer João Vaccari Neto – fifteen years for passive corruption and money laundering – and former ruling party congressman André Vargas who received fourteen years on the same charges.
The scandal is far from over. Supreme court judge Teori Zavascki last year ordered 28 investigations to be conducted into the dealings of 47 politicians who are suspected to have benefited from the kickbacks. One of the politicians under investigation is none other than disgraced former president Fernando Collor de Mello who in 2007 made a surprise comeback as senator for his home state Alagoas, a position he still holds.
Meanwhile, the affair spreads like an oil spill and now – worryingly – includes misconduct at Eletronuclear, the state-owned operator of Brazil’s two nuclear power plants. The scandal also draws closer to President Dilma Rousseff who, at the time Petrobras was being bled dry from the inside, held ultimate responsibility for the company as minister for energy in the Lula administration. Pundits argue that Ms Rousseff is guilty either way: not knowing of the goings on at the company would imply incompetence, while knowledge would make her an accomplice.
So far, President Rousseff has remained largely untainted. A few members of her immediate entourage were not so lucky and have been detained at the behest of investigating magistrates. While the Lava-Jato affair may seem to confirm all that is amiss with Brazil; it actually proves the country has at long last matured into a fully functional democracy that is guided by the rule of law.
The last big corruption scandal – the one of 1992 that saw President Collor de Mello ousted – did not result in a single conviction. Notwithstanding the overwhelming amount of evidence against him, the impeached president was eventually cleared of all charges and free to resume his political career – and his corrupt ways.
This time, the Brazilian courts and prosecutors have proved much more decisive, doggedly pursuing suspects regardless of their political connections or power. For the first time, the courts have also made full use of the far-reaching authority granted them under the 1988 constitution. Lead investigating federal judge Sérgio Moro of the 13th circuit court of Curitiba has drawn criticism for ordering the detention of nearly all who come to his attention. Young and charismatic, Judge Moro has become a national celebrity and is not about to tone down. To the delight of the nation, he claims that the rich and powerful he ordered detained pose a serious threat to the country’s public and economic order.
And so they do. While Judge Moro wields his power and brings those who leech off the state to justice, Brazil clears the path to its future of the debris left by a shady past. It may be the economy (…stupid!), but for now Brazilians are busy pursuing improved governance rather than accelerated development. The former will undoubtedly enable the latter.
