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Have Scandals Led to New Efforts to Fight Corruption?

Have Scandals Led to New Efforts to Fight Corruption?
From Latin America Advisor Newsletter
Published by The Inter-American Dialogue
February 9, 2018


Gene M. Smith, President and Co-Owner of Smith Brandon International, Inc. was one of the contributors to a Q&A in the February 9th issue of the Latin America Adviser Newsletter published by The Inter-American Dialogue. Each of the contributors were asked to answer the following question:

"The multi-country Odebrecht corruption scandal has led to the ouster and imprisonment of the vice president of Ecuador, allegations that nearly toppled the president of Peru, and accusations against other prominent politicians including former Brazilian Presidents Luiz Inácio Lula da Silva and Dilma Rousseff and current President Michel Temer. Has the wide-reaching Odebrecht scandal changed the seriousness with which Latin American countries pursue and punish corrupt politicians and business executives? Has the Odebrecht scandal led to new lasting commitments across the region to get graft under control, or will it soon be back to business as usual? Which countries are succeeding in their efforts to clean up corruption, and which are lagging behind, and why?"

Gene's answer is reproduced below:

“Corruption must first be acknowledged, then be addressed. At the turn of the century, anti-bribery conventions such as the 1996 Inter-American Convention against Corruption, and the 2003 U.N. Convention against Corruption were applauded and ratified across Latin America and Brazil. However, conventions are agreements, subject to local application. While strong in theory, enforcement was lax. More recently, new anti-corruption legislation has been enacted locally that is broad in coverage and stern in its penalties. Notable examples include Mexico’s 2017 General Law of Administrative Responsibility and Brazil’s 2013 Clean Company Act. Additional laws have been enacted in Argentina (2017), Colombia (2016), and Peru (2017). Meanwhile, an aggressive U.S. Department of Justice has pursued far-reaching enforcement of U.S. anti-bribery laws, specifically, the Foreign Corrupt Practices Act (FCPA); additional civil enforcement is conducted by the U.S. Securities and Exchange Commission. The unspoken issue: regardless of whether local governments address corruption, enforcement efforts from abroad can be expected to continue. For years, Odebrecht was a powerhouse in Latin America. Its operations frequently involved bribery. But the unveiling of its corruption has had a profound impact across the region, a true wake-up call. Other companies recognize this; citizens have seen it in their daily lives. Companies need
to be alert in order to avoid possible entanglements with corrupt partners. Entering a new business relationship or a new market always requires proper due diligence. Indices like Transparency International’s rankings can provide starting points. For 2016, TI rankings of major U.S. trade partners in the region include: Mexico (number 3 in trade with the United States and number 123 on corruption); Brazil (number 12 on trade and 79 on corruption); and Colombia (26 on trade and 90 on corruption). But while desktop research is a good place to start, it is only the first step for companies seeking strong, sustainable business.””

Smith Brandon International, Inc. (SBI) conducts international investigations and global due diligence investigations. SBI provides actionable business intelligence and risk avoidance counsel to assist companies in their international operations. SBI's principals are grounded in investigative, analytical, and intelligence gathering techniques, drawing on decades of experience in the FBI, CIA, intelligence circles and the private sector.

For more information, please call 202-887-9363.

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