Since
the inception of modern western capitalism in 16th century
Italy (the roots of modern banking) and 17th century
Netherlands (the formation of the modern company), Capitalist,
Socialist and Communist economic structures have been prone to a
myriad of schema by individuals and groups.
From
the counterfeiting and 'shaving' of coins to the creation of
deliberately deceitful commercial “projections”, through to the
use of dirty money laundering through apparently legitimate
businesses, through overtly 'creative' accounting methods, the
creation of deceptive financial instruments and of course the nasty
use of sociological and psychological ploys within public and private
realms.
Latin
America has long been cited by the West as an epicentre of financial
and economic corruption, whilst all too conveniently officialdom
either unable to effectively combat the sophistication of
white-collar crime, or deficient in the public punishment of those
(comparitively already with much) who view commerce not as a socially
shared wealth-generator, but as a game for their own economic ends.
Given
the maturity and complexity of the financial structures of Wall
Street, the City, Paris, Frankfurt, Milan etc, from previous 'off
balance sheet' instruments to the growth of 'dark pool' (barely
transparent) exchanges, the goings-on in America and Europe in
reality no doubt make Latin America appear tame and naïve in
comparison.
This
recognised, it cannot be denied that Latin America has long been
identified with the big names of official corruption and criminality.
From long before Batista's military-political stranglehold over a
very economically divided Cuba, to the astounding career criminality
of Colombia's 'drug lord' Escobar; mixing dirty money with
infrastructure development programmes for the apparent social good;
afflicting the lives of those across the globe whilst seen by some as
a local hero.
Unfortunately,
as perhaps the diametric opposite to all too rare cultures such as
Old Scandinavia (wherein there was a singular group struggle to
survive the environment and so form strong common bonds and common
well-being), LatAm's combination of mostly good climate allowing
easier basic survival, its cultural 'mish-mash' (Indigenous, European
and African) and historic social stratas meant that (like the coastal
Mediterranean basin) the socio-economic ties of trade were generally
loose, permissive, easily broken and so open to abuse.
[NB
Previous mention was made of the Portugese (very Separdic influenced)
here today gone tomorrow 'trader' mindset, and its antithesis to
Northern Europe's Teutonic values].
Thus
the greater social 'fluidity' of LatAm and Brazil, and a near
historically entrenched experiences of 'famine and feast' has formed
the popular mentality, from those the bottom to those at the top.
It
is then no surprise to see long-route truck-drivers off-loading part
of their haul through the black-market (foodstuffs to oils to
construction materials) or feigning accidents for insurance scams,
and blaming the losses of on “bad roads”. Or the all too
historically common story of populist leaders (themselves from the
common heartland) apparently “gone bad”.
The
same old stories which though need to be addressed, seem inexorable.
More
worrying have been the recent corporate and political scandals
wrapped in 'Lavo Jato', with money laundering through currency
dealing, bribery regards the awarding of construction contracts, and
the politicised control of the state oil company including asset
over-valuation in its accounts and bribery payments.
Most
shocking though, the near certain (not so) 'accidental death' of the
Supreme Court Judge handling the case in small plane crash.
Parallels
to the Italian mafia have obviously been made in the Brazilian press,
and if the authorities do not continue to take a very hard line in
this and other matters, the enormous potential of Brazil as seen
through the 2000s and 2010s could be lost for decades.
Hence
the question of Corruption has never been so prosaic as at present,
at the beginnings of Brazil's new growth era.
…..................................................................................................................................................
The
WEF discussion panel comprised of:
Jose
Vera – President of HNC News and Chair
Dela
Rubio - President of Transparency International (NGO)
Paola
Beliz - President Microsoft Brazil
Torqauto
Jardim - President of the Ministry of Justice Brazil
Denize
Dresser – Political Analyst, Technical Institute of Mexico
Unfortunately
Carmen Lucia a senior judge and President from Brazil's Supreme Court
was unable to attend the panel.
[As
previous, investment-auto-motives' comments appear within the square
parenthesis]
Chair
-
“Corruption
is a chronic disease that stops the development of our country. The
corruption index by Transparency International includes many LatAm
countries asbeing the worst in the world. From worst to better,
Venezuela, Haiti and Nicaragua, Guatamala, Dominican Republic,
Paraguay, Mexico, Hondures, Equador, El Slavador, Bolivia, Peru,
Panama.
“Only
Uraguay, Chile and Argentina have been better ranked, on par with the
likes of Spain and Portugal. Four LatAm Presidents are presently in
jail, others awaiting extradition to the USA, on parole or being
investigated (with details given).
The
question is “what can be done to break the cycle of corruption and
promote social stability?”
Delia
Rubio -
“I
do believe we can move forward, firstly breaking with the cycle of
impunity, through judges and prosecutors, and other agencies (CC in
Guatamala, MaC in Honduras).
The
first key point is to ensure this trend (of justice seeking) will
become sustainable and 'institutional', promotion of the rule of law,
and independence of judiciary and public prosecutors.
The
second path is the prevention of corruption, we have access to
information through collaboration in technology so that it becomes
more accessible. With a partnership between corporate, civil society
and governments.
As
per prevention, 2 specific areas:
1.
private sector individuals gaining public office standing so blurring
interests (conflict)
2.
the private sector funding of politics (eg the Oderbrecht story
illustrating the door to corruption)
This
represents the procurement of favours and commitments.
Critical
has been social mobilisation on the streets, highlighting the public
anger. We have to channel that social mobility, and create more
practical channels for participation. Technology of course will help
with social networks, but we need to create a consensus. If as now,
the climate is that 'this is how private sector commerce does
business' we will never end corruption. We have to review what
society deems as acceptable and unacceptable, essentially the values
of society.
“We
have to work long-term upon eduction and examples, because it means
changing the culture.
[This
is all good and well, but it is long echoed rhetoric].
Paola
Beliz -
“Corruption
is having an enormous impact in LatAm, and requires and enormous
impact through technology. We at Microsoft aim to to do more with
technology, to rebuild trust and the basics of democracy. Central is
the idea of control, but this may only increase bureaucracy, so
technology needs to ensure transparency, and offer better services to
citizens.
There
are 4 ways :
-
law of access to information since 2005: needs to become more open to
public
-
digital identification : traceability of citizens to fight fraud via
blockchain technologies.
-
public tenders : emergence of AI to create 'intelligent tenders' via
algorithems
-
partnering against corruption initiative : highlighting gov't
actions, campaign finance etc
[This
over-simplifies the challenges of developing and executing blockchain
and other algorithmic technologies. The tech sector is publicising
the revolutionary capabilities of such systems, but the journey from
the likes of Bitcoin and Bitcoin Mining to broadscale public service
solutions is not necessarily unidirectional or simple. Better to make
basic systems work properly providing 'access for all' (including
those without their own personal devices) than to focus possibly
haphazardly upon next generation and beyond systems]
Chair
Vera -
“Besides
the issues of culture and social mobilisation, we have data about
blockchain technology that demonstrated that we are still in the very
early stages of what could be enormously useful. (ie inferring that
such systems are still very premature for all the media hype).
“Another
question is how to control activities in every field”.
[This
obviously raises the issue of societal power structures, something
hardly touched upon by any body since the rise of what might be
decsribed as an increasingly 'panoptican society'].
Denize
Dresser -
“I
come from a country on that list of most corrupt countries, a
critically central is the collusion of public and private sectors.
The Odebrecht case highlighted the failings of the institutional
architecture. To fight corruption, you need good prosecutors who are
independent and autonomous, not affected by or subjugated to
political interests.
“Another
issue is that of transparency of public expense. In Mexico even in
the democratic era, political parties find loopholes in laws to
channel funds in a 'legal' way. So a scrutiny of public expense and
involvement of civil society. How do you make the political classes
oppose corruption when the action itself goes against their own
interests? This comes from the mobilisation of civil society.
[The
idea that 'civil society' will somehow oversee the inner dealings of
government and political parties appears somewhat naïve and
idealistic].
“The
danger is that new institutions formed to fight corruption themselves
become a simulation. The population must be educated about what is
corruption and what is not corruption.
[Again
an overtly simplistic solution. Previously the Catholic Church
provided the guiding light via eons of history, ritual and the use of
endangerment to the soul, per the afterlife. This was indeed a form
of brainwashing, yet it provided for many a moral framework. The
demise of the Church and the freeing of people's minds, has seen that
influence much reduced, for good and bad].
“At
the moment there is enormous social confusion about what is right and
what is not right. So we need to create new social standards for the
behaviour of citizens in what is today's 'transition context'; it is
essential. That possibly starts with the political funding process,
given the way today the parties simply “flood with money”. And in
this independent voices such as the press must be protected,
“We
must convince political parties that anti-corruption measures will
lead to a bigger pie for all, including themselves, so reduced
temptation for corruption. It is believed that in Mexico corruption
absorbs 9% of financing, monies which the private sector could use
otherwise.
“The
corrupt politicians (and others) must be 'cut-out' of the system, so
that they do not infect others within their sphere of influence.
[Much
depends upon the level of corruption present in any body (commercial
companies, political parties, local and central government, the
police, the judiciary etc. If it is essentially institutionalised
then the theory of cutting-out the rot maybe far harder than
believed. Likewise, those lower down the ladder of a body may revere
those at the top and so themselves become corrupted, the process
typically subtle and explained as 'just the done thing'. The good
people with morals and foresight to see what is going on will simply
leave recognising the impossibility of problem or indeed be removed
by those higher up who see them as a real or potential problem. The
only way to create moral bodies is to inculcate from a young age the
importance of ethics and fairness, and ensure the majority good
operate without the mob behaviour so endemic to the righteous far
left].
Chair
Vera -
“We
now call upon Torqauto Jardim. What can we do to end the corruption
cycle?”
Torqauto
Jardim -
“I
agree with all said. I highlight another perspective about the
political advocacy about public positions. From such a position I
wish to discuss both private and public sectors. As long as Brazil
has such enormous political size and power corruption is inevitable.
The
second perspective is an economy controlled by the government, a
state run economy with state owned companies with large deficits and
the existence of large unions; which stopped the recent reform
attempts.
A
large proportion of collected taxes (53%) remains with the central
government and is not distributed to the municipalities. The
Legislature is then funded via central government and the political
funding process likewise comes through similar means. Why such a
concentration of power in the centre?
[Today's
'concentration of power appears to have arisen from a history wherein
local regional and municipal governments themselves were heavily
corrupt, instigating low social and financial return infrastructure
projects and other people's projects through the 1970s and 1980s that
benefited local business more than the broad populace. That
decentralisation was re-centralised in the 1990s to gain greater
accountability].
“A
main concern is the manner in which certain business sectors are able
to lobby central government for protectionist measures or otherwise.
So we should break-up that central political powerbase.
“We
also need to convince the private sector that corruption is
problematic to general growth and prosperity.
“I
was enthralled when talking to taxi drivers in Panama and Dominical
Republic that they had a better grasp of Odebrecht corruption events
than I did, able to name many of the indicted Directors.
“Last
year I visited Germany, and their biggest problem was the prevalence
of absence from work via the provision of medical licenses. There
millions of hours of productivity was being lost to this problem.
This problem starts from a young age during schoolyears when a child
complains of a false health condition and the parents get an approved
medical certificate to show the school. It creates a cycle of abuse,
which we in Brazil must eradicate.
“I
Brazil we have 17 programmes related to the refinancing of the fiscal
debt, those seventeen items are an invitation to avoid taxes and so
slow the repayment schedule of the fiscal debt.
[With
comparatively generous welfare systems within Europe (especially
versus the UK) the Germans recognise the change of their culture in
recent decades and the problems created by staff disingenuously
taking sick leave (this especially prevalent in local government,
educational and other state run realms for all European countries
given the greater innate laxity of professionalism and the culture of
rights over responsibilities).
Given
the size of the Brazilian state employee pay-roll and the even
greater generosity of employee benefits, the productivity effects of
this problem (one of innate culture) is enormous.
This
'low-level corruption' is perhaps when totalled-up as equally –
possibly more - damaging to a country's development as the likes of
the Petrobras and Odebrecht scandals. Since this is occurring in the
core of the new middle-classes, it illustrates the still present
hangover of yesteryear socialism, and Brazil's failing to get the
'cosseted classes' on board with the need for structural
socio-economic change.
Perhaps
its time Brasilia run a TV and radio campaign that wakes the populace
up to the reality of global competition and the thus far lax reaction
from many of Brazil's peoples still with a Latin “Manyana”
attitude?]
Chair
Vera -
“Let's
reconsider why is it that Latin America has such a high level of
corruptio? Is the failing of the state, the judiciary, the
politicians, the private sector...can we come to a conclusion?
[The
truth is that with such historical political and economic volatility,
plus the infighting for power-grabbing, there is little endemic trust
across the whole region at many levels. This societal insecurity, and
the lack of a true socio-political centralism. Hence patterns of a
new gender/race based far left vs order-orientated military
originated far right repeating yet again in the Brazilian election
candidates, with the centre-left and centre-right diminished.
Social
cohesion has once again broken-down and so it bodes badly for
anti-corruption, when small to large corruption is perhaps the most
powerful real-world instrument – over morality - in ideological
politics].
Della
Rubio -
“I
would say corruption is like tango, you need two to dance, therefore
public-private sector deals are done. You should be willing to
denounce or not participate in this game, but the business world
typically says that some business is solely based upon such invisible
(ie slush fund) deals; and justify participation by highlighting the
employers responsibilities toward the workforce.
“To
combat this we need more 'Integrity Pacts' wherein entire sectors
state they will not enter into corrupt deals involving kick-backs
etc. If we all agree, the situation will be over.
[Again
naïve, since there will always be one player who recognises what
they see as a golden opportunity to enter a contract without
effective competition. Many inter-company agreements from cartels to
alliances fail because one of the group seizes the opportunity for
profit].
Denize
Dresser -
“Who
is it that has failed...the parties and electorial institutions. Why
do our politicians act as they do? Because they can. Corruption
advances (careers) until it clashes with resistance. But there is
little effective resistance. In Mexico we presume this is normal
behaviour. Many of the electorate simply want things from their
politicians, not accountability. If we don't change this from the
basis of society it will not change.
“Just
as it takes two to dance a corruption tango, so it takes two to
refute it. Also corrupt politicians need to be denied even the
possibility of re-election.
Torqauto
Jardim -
“I
was revising the 10 promises not complied with in democracy
1.
secret and closed system of power where all socio-politico-economic
levels meet.
Lavo
Jato , involved everyone, partly because of the limited media
capabilities, the news relayed only about 10% of Lavo Jato. So we are
able to see a percentage of what goes on in the large cities, but
because of poor independent media networks, the rest of Brazil
remains outside of this. This is very shocking. Of the 5,517
municipalities, two-thirds saw the money for school-lunches,
education and health disappear. This is more serious than Lavo Jato,
since it is destroying the future of Brazil.
“When
we think of the coming decades, the involvement of civil society is
key, but more so the ability of an independent press to investigate.
Poala
Belize -
“We
need affirmative action...we have the desire and technology.
[This
nothing more than a loose catch-all of current en-vogue phraseology].
Chair
Vera -
“Now
to offer the floor for questions”
An
audience member from Paraguay -
“Corruption
used to be defined as an illegal advantage on public resources. In
the USA the Supreme Court judged that the influence of a millionaire
to influence politics was not corruption – I would say it is.
Denize
Rubio -
“I
would say it is also, but the political financing scheme is different
our countries, our countries are public-private, the USA's 'open
system' is only for the Presidential election, and in that the last 4
candidates chose private funding over public because of the far
greater monies made available.
Torqauto
Jardim -
“This
is very much a cultural matter, in the USA it is the norm, here it is
not.
Denize
Rubio -
“Agreed,
but the private financing of politics is the window-opportunity for
corruption.
An
audience member – The Foreign Minister of Panama -
“Corruption
is defined and puniched in different ways around the world, most
typically that of a company fine. In my country we use a term –
'the civil depth' of a company – which means that if a company is
of systemic importance to the economy it is allowed to carry-on. My
question is 'Is this legitimate? To allow a guilty company to
continue?
Denize
Dresser -
“One
crucial word not mentioned yet is the word 'impunity'. Corruption
continues when there is impunity. In Mexico 98% of those identified
have not gone to jail. This impunity muct be removed through judicial
power and civil society. The ex-President Salinas is still socially
accepted in the elite world of gatherings...there has been no social
sanction. People should be willing to effectively dismiss him,
because otherwise is to condone what he has done. Only in this way
will we start to create a new political culture.
Chair
Vera -
“Yes
this is a good idea, but first he must recognise his mistakes, pay
for them and then be rehabilitated.
Another
audience member: a Brazilian citizen -
“We
will have an election with new of non-donations. But we know that
those with the most cash are drug-dealers and churches. This is a big
risk for the country, to choose from candidates that have connections
to these two sides.
Torqauto
Jardim -
“Well,
you asked and answered at the same time. In electorial law there is a
ceiling for expenses, and the breakdown of costs is pretty well
known. The involvement of organised crime is usually seen by the type
of habitation a candidate may have gained, outside of his/her own
payscale. The churches engaged in politics is an enormous weight for
us. But it seen elsewhere, such as Italy with the Vatican or the
Baptists of the Southern USA, things have become better recognised.
Hence the religious connection is a problem, but the real problem is
with the drugs.
Chair
Vera -
“To
finish....in those countries where corruption is very strong it is
often related to candidates populism. Hence populism and corruption
are not diametrically opposed entities...and this is a problem.
Denize
Rubio -
“Typically
more corruption, less free press...and the more attacks against free
press the more corruption. To fight against it:
-
less impunity
-
less indifference
-
more integrity
Chair
Vera -
“The
President of Transparency International has made a perfect summary of
the aims of this discussion.
…..........................................................................................................................
The
fact is that in countries with large poor populace, and slow or
volatile economic development, run by those who typically see
themselves as part of the ruling elite, exist in what they recognise
as an unstable economic environment. So, many on 'both sides of the
tracks' give little credence to morality or values beyond their
immediate personal sphere; even that not untouched by machination for
the worst of them.
Such
people will typically justify their actions to themselves as either
'their opportunity' to get off the bottom social rung, or at the
highest level see it as part of 'the game'. And in both worlds often
do not have the courage to speak against those who drew them into
corruption; for fear of castigation and social exclusion - often with
little or no faith in the capabilities of the public legal system to
ensure right prevails.
Plus,
all too often the participants in corruption have been so subsumed by
everyday group habits and behaviours, that they fail to analyse or
differentiate their own actions.
The
now very prevalent activity of disingenuous 'social acting' toward
others outside and inside of their group, illustrates an activity in
which the people themselves are so removed from the values of truth
and decency. Many children learn to act as if not guilty when
understood to have been naughty, but instead of truly growing up,
many continue as such and their capabilities of deception become ever
more sophisticated, and their self-accountability never even
considered because they forever operate at the lowest moral level.
Since
the GFC damage of 2008, portions of the world's populace at all
social levels in both the West and LatAm have become personally
ideologically split between those few who are trying to build a new
future and the increased many who are simply using corrupt actions
against others to serve themselves at all levels of society and
across all ages.
As
the saying goes...“power corrupts and absolute power corrupts
absolutely”, but corruption begats corruption begats corruption,
and the societal and economic effect is enormously detrimental when
belief and faith – the lubricants of socio-economic cogs –
deteriorate.
Brazil
is undergoing its own post Lavo Jato top-down cleansing, and much of
the West needs a similar process, from the (broken) middle-up and
middle-down.
LatAm,
led by Brazil, still has an enormous potential that much of America,
Europe etc does not, hence Brexit's reach-out to the the rest of the
world, and the UK's political sub-text to the royal wedding.
But
for all the rhetoric of the WEF discussion, it takes strong moral
leaders whose own actions speak far louder than 'preaching' words. As
seen in the previously drug-infested favellas of Rio de Janeiro and
elsewhere in the run-up to the Olympics, it takes a strong and
hawk-eyed moral political and legal presence of which the corrupt
will be fearful and the everyday person comforted and inspired by.
