On February 21st, Transparency International released its Corruption Perceptions Index, which listed numerous Latin American and Caribbean countries among the world’s most corrupt. According to Transparency International’s survey, 62% said corruption had risen in the previous year, more than half said their government is failing to address corruption, and nearly a third said they had to pay a bribe in order to use a public service.
The Central American countries of El Salvador, Guatemala, Honduras, and Mexico all ranked poorly in the latest index, with more than half of Mexico’s population saying they had to pay a bribe in order to use public services. Little faith resides with public institutions, such as the government and police. Despite the presence of organizations such as the International Commission Against Impunity in Guatemala, and the Support Mission Against Corruption and Impuinity in Honduras, corrupt forces in these jurisdictions remain entrenched. Citizens in these countries have recently protested government efforts to roll back anti-corruption campaigns, and hold their politicians accountable.
In recent years, Brazil has suffered from budget cuts, increasing crime, and corruption scandals. Recently, tapes of Brazilian President Michael Temer encouraging bribes leaked to the public, leading to widespread public outrage. His predecessor, President Dilma Rousseff, was forced to resign after the country endured two massive corruption scandals involving Petrobras, Brazil’s state-owned oil entity, and Odebrecht, a Brazilian construction conglomerate. These bribery schemes undermined the integrity of bidding processes and public confidence in their government. In recent days, the Brazilian government has sought to militarize crime fighting efforts, beginning with Rio de Janeiro, while critics argue militarization does not address the systemic factors of what drives crime, and it risks further corruption amongst the troops.
Venezuela, which has held the distinction of the most corrupt country in Latin America since 2014, shows signs of deteriorating even further as it confronts plunging oil prices and critical food shortages. Venezuela’s President, Nicolás Maduro, expanded his powers last summer, electing a new law-making body that replaced the existing opposition-controlled legislature. Numerous oil industry executives have been arrested, and over thirty judges were forced to flee the country, setting up a “Supreme Court in Exile.” To make matters worse, allegations persist that Maduro has cooperated with terrorist groups such as Hezbollah, Bashar Al-Assad’s regime in Syra, and OFAC-sanctioned governments, such as Cuba and Iran.
How can businesses effectively manage their risks in conducting business in Latin America? Partnering with a third party due diligence provider can ensure your company identifies concerning personal history, regulatory enforcement measures, ongoing litigation, and illicit activities. Due to the high risk nature of many Latin American countries, performing enhanced due diligence can not only help your company comply with AML, FATCA, FCPA, PATRIOT Act, and UK Bribery Act regulations, but it can help ascertain the overall reputational profiles of individuals and organizations, both positive and negative.
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