May 26, 2021
Combatting corruption in the Northern Triangle: Prioritizing a whole-of-society approach
Public corruption and weak rule of law are arguably the most persistent and long-standing challenges for strengthening democratic institutions and sustaining inclusive economic development in the Northern Triangle. Guatemala, Honduras, and El Salvador have grappled with widespread corruption that has fueled mistrust in political and wealthy elites, eroded democratic norms, exacerbated poverty, widened social inequality, and contributed to the conditions that force migrants to leave their homes.1“Literature Review: Corruption as a Driver of Migration,” U4 Expert Answer, Anti-Corruption Resource Centre, Transparency International, and CHR Michelsen Institute, December 2015, https://knowledgehub.transparency.org/assets/uploads/helpdesk/Literature_review_corruption_and_migrations.pdf.
According to the 2020 Corruption Perceptions Index from Transparency International, the Northern Triangle countries have a worse ranking than at least one hundred and three of the one hundred and eighty countries surveyed, with Honduras ranking at one hundred and fifty-seven, Guatemala at one hundred and forty-eight, and El Salvador at one hundred and four.2“Corruption Perceptions Index,” Transparency International, 2020, https://www.transparency.org/en/cpi/2020/index/. A confluence of internal and external forces in recent years—including the penetration of organized crime and narcotrafficking into local governance and national politics, and the fiscal measures that the COVID-19 pandemic and natural disasters have demanded—has opened new ground for corrupt practices and exacerbated old ones.
Breaking the vicious cycle of corruption in the region will require a holistic, long-term approach that brings together governments, civil society, and businesses under a common anti-corruption agenda with bold, innovative, and locally driven policy solutions. As the situation at the US southern border worsens, the Joseph R. Biden Jr. administration is devoting resources and strategic focus to addressing the drivers of migration (the previous brief in this series focused on the role of the private sector in unlocking economic growth in the Northern Triangle), placing a special emphasis on building capacities, strengthening existing cooperation with local partners, and finding new spaces for collaboration to combat corruption over the long term in Central America.3“Statement by Homeland Security Secretary Alejandro N. Mayorkas Regarding the Situation at the Southwest Border,” US Department of Homeland Security, March 16, 2021, https://www.dhs.gov/news/2021/03/16/statement-homeland-security-secretary-alejandro-n-mayorkas-regarding-situation.
This brief—the second of a three-part series by the Atlantic Council’s Adrienne Arsht Latin America Center and DT Institute—focuses on pragmatic recommendations to assist societies in Guatemala, Honduras, and El Salvador in tackling corruption and strengthening the rule of law, with a look at what has worked in the past and how to apply lessons learned. In close collaboration and through repeated consultations with the Center’s Northern Triangle Advisory Group (NTAG), this brief highlights the following themes around corruption in the region: reforming the justice and electoral systems; combatting corrupt practices in public bids, tenders, and acquisitions; and confronting illicit campaign financing. If the in-region conditions are created to address these issues holistically, coordinated actions in these areas can help to curb corruption, support institutional resilience and inclusivity, and reduce unauthorized migration.
REFORMING THE JUDICIAL SYSTEM TO STRENGTHEN THE RULE OF LAW AND REDUCE IMPUNITY
Understaffed, undertrained, and underinvested prosecutors’ offices and police forces, lack of independence in the selection of judges and court magistrates, the absence of protection for those officials, and the corrupt influence of criminal groups and narcotrafficking networks across all branches of government are among the main factors contributing to a weak rule of law, high levels of impunity, and pervasive graft in the Northern Triangle. The justice systems need reforms, capacity-building efforts, and resources that incentivize accountability and transparency over impunity and corruption. The 2014 Plan of the Alliance for the Prosperity in the Northern Triangle (A4P) provides an initial blueprint to update and expand upon for supporting national, regional, and international anti-corruption efforts, and rethinking efforts that fell short of their intended objectives.
Past and Existing Efforts at the National, Regional, and International Levels
National Efforts: Efforts led by Northern Triangle governments have included the creation of courts and tribunals that have national jurisdiction over corruption and extortion cases. In Guatemala, this was accomplished through the establishment of the Special Prosecutor’s Unit Against Corruption Impunity (FECI), created in 2008, and the 2017 Specialized Fiscal Unit Against Corruption in Honduras. However, in a step backwards, the legislatures in Guatemala and Honduras have passed secrecy and confidentiality laws and approved reforms that interfere with the legal authorities of these entities to investigate and take legal action against government officials, deputies, and even civil society organizations accused of civil or criminal acts, or have links to organized crime.
In El Salvador, prosecutorial power lies with the attorney general’s office, in coordination with the police. But recent legislative elections gave absolute majority to President Bukele’s New Ideas party. As in Guatemala and Honduras, the new legislative majority is likely to obstruct investigations that are currently underway, including cases related to pandemic spending. On the first day of the new legislative session in May 2021, the Salvadoran legislature took action to remove five Supreme Court judges—a worrisome trend by President Bukele and his party undermining the separation of power.
Regional and Multilateral Efforts: In Guatemala, the emblematic 2015 “La Linea” customs fraud investigated by the United Nations (UN)-backed International Commission against Impunity (CICIG) and the attorney general directly led to the jailing of both then-President Otto Pérez Molina and then-Vice President Roxana Baldetti. In Honduras, in 2016, a case at the Honduran Social Security Institute—where an estimated $300 million in public funds were embezzled—provoked civil unrest and sparked the creation of the Organization of American States (OAS)-backed Mission against Corruption and Impunity in Honduras (MACCIH).4Mike Lasusa, “Honduras Officials Investigated by Anti-Corruption Body,” InSight Crime, August 17, 2016, https://insightcrime.org/news/brief/honduras-anti-corruption-body-eyes-top-officials-in-social-security-scandal/. Today, both CICIG and MACCIH have ceased operations following decisions by Guatemala’s then- President Jimmy Morales and Honduras’ President Hernández to terminate the mandates of the anti-graft entities. The decisions were widely criticized by the United States and the international community and seen as a step backwards in the fight against corruption in both countries.
El Salvador is currently the only country in the region that maintains an OAS-approved International Commission against Corruption and Impunity, known as CICIES. While it started out with considerable public skepticism, CICIES has supported investigations against potential offenders, while maintaining a relatively low profile. At the time of writing, the future of CICIES is uncertain. Following a congressional vote on May 1, 2021, that ousted Attorney General Raúl Melara and five supreme court judges, President Bukele has appointed Rodolfo Delgado as the new attorney general. On May 3, 2021, Delgado stated his intention of revising and reconsidering the future of the commission, citing the experiences of Guatemala and Honduras as examples to avoid.5Beatriz Calderon, “Nuevo Fiscal General Revisará el Convenio con la CICIES y las ‘Actuaciones’ de Raúl Melara para ‘Enmendar’ Errores,” La Prensa Grafica, May 3, 2021, https://www.laprensagrafica.com/elsalvador/Nuevo-fiscal-general-revisara-el-convenio-con-la-CICIES-y-las-actuaciones-de-Raul-Melara-para-enmendar-errores-20210503-0015.html.
US and International Efforts: Political and financial support from the United States and the European Union have been crucial to promoting stronger and more transparent judicial institutions in the Northern Triangle.6“Promoting Swift and Accessible Justice in Honduras,” EuroJusticia-JUSTHO, European Union, 2014–2018, https://developmentpoles.com/en/eurojustice; “Justice, Human Rights and Security Strengthening Activity (Unidos por la Justicia),” United States Agency for International Development, 2017, https://pdf.usaid. gov/pdf_docs/PA00D5VP.pdf. As a result of the A4P under the Barack Obama administration, Northern Triangle countries committed to creating independent anti-corruption auditing mechanisms and developing plans to professionalize public service. Despite having gained momentum at the outset, they ultimately failed to fully deliver on these commitments due to a lack of national and international follow up, the gradual languishing of anti-corruption protests and the eventual demise of CICIG and MACCIH.7“Fact Sheet: The United States and Central America: Honoring Our Commitments,” White House, Office of the Press Secretary, January 14, 2016, https:// obamawhitehouse.archives.gov/the-press-office/2016/01/15/fact-sheet-united-states-and-central-america-honoring-our-commitments. Also, during this time, El Salvador presented a bill criminalizing bulk cash smuggling, an effort supported by the United States Bureau of International Narcotics and Law Enforcement, that has led to the arrest and prosecution of money laundering crimes.8International Narcotics Control Strategy Report (Volume II), Money Laundering, Bureau of International Narcotics and Law Enforcement Affairs, March 2020, https://www.state.gov/wp-content/uploads/2020/03/Tab-2-INCSR-Vol-2-508.pdf. Since the asset forfeiture law was implemented in 2014, the Salvadoran Attorney General’s office has made great advancements in seizing and forfeiting criminal assets. From 2014 through November 2019, the attorney general’s office seized 1,141 assets valued at over $182 million. These efforts also led to the arrest of the leader of an MS-13 cell with significant reach in the United States, who has since been sentenced to prison on money laundering charges. In 2016, the Guatemalan Congress passed a law allowing “semi-freedom” through electronic monitoring as part of the transition to an innocent-until-proven-guilty judicial system – and in an effort to reduce prison overcrowding. Despite initial expectations of less-crowded jails, the law has not been effectively enforced due to longstanding practices of justice operators making excessive use of pre-trial detention.9Ley de Implementación del Control Telemático en el Proceso Penal, Decreto 49-2016, http://perso.unifr.ch/derechopenal/assets/files/legislacion/l_20191208_04. pdf
US and European Union (EU) efforts have also helped to organize civil-society efforts to demand more transparent and open processes that ensure the independence of the judicial branches and the selection of judges and magistrates. This civilian oversight has helped mitigate potential interference by other branches of government (particularly from members of the legislature). Lastly, US and EU embassies have played an important role in providing advice on legislation and criminal enforcement policies, and effectively vetting candidates for prosecutors and nominations for supreme court judges. Not only are these efforts important to combat corruption, but also to unlock further US funding.10Combating Corruption in Latin America: Congressional Considerations, May 2019, https://www.everycrsreport.com/reports/R45733.html.
Recommendations and Thinking Ahead
Public Sector: Reforming the selection process for judges and magistrates is necessary but will require significant—and currently nonexistent—political will. Including nonpolitical actors (for instance, academia through law schools, bar associations, and civil-society organizations) in the nomination and selection processes would help to ensure that potential candidates’ profiles are more aligned with the qualifications required to be appointed as judges or magistrates, under conditions of equality and based on merit. Importantly, judges and prosecutors of high moral integrity are better able to resist political pressure and private interests.11Thelma Aldana & Iván Velásquez, The Right Livelihood Foundation, 2018, https://www.rightlivelihoodaward.org/laureates/thelma-aldana-ivan-velasquez/. In addition, reinforcing early-career training for lawyers in morals and ethics is crucial.
Similarly, reforms to optimize the public administration system—including reforming bureaucracies, campaign-financing laws, and how courts function—across the Northern Triangle are necessary and long overdue. If done right, reformed laws would strengthen transparency in the public sector. This was a commitment included in the A4P but was discontinued, partially due to lack of oversight and monitoring from the Trump administration. Reforming civil-service laws so that careers in public administration are based on merit is necessary for rooting out nepotism and political patronage, which are the currencies of corruption.12A decade of civil service reforms in Latin America (2004–13), 2014, https://publications.iadb.org/publications/english/document/Serving-Citizens-A-Decade-of- Civil-Service-Reforms-in-Latin-America-(2004-13).pdf. Despite the obvious national differences, case studies from Organisation for Economic Co-operation and Development (OECD) countries like Costa Rica, Chile, and Uruguay offer lessons learned for similar policies that could be implemented in the Northern Triangle. Adapting best practices—such as strengthening strategic human resources management, improving multi-level governance, developing a stronger, shared identity and organizational culture across the public sector, and exploring new ways of multi-stakeholder engagement in policy-making processes—could help to limit high turnover among personnel due to political transitions and weak or politicized senior-level management.13Integrity for Good Governance in Latin America and the Caribbean An Action Plan, OECD, October 2018, https://www.oecd.org/latin-america/regional-programme/Integrity-for-Good-Governance-in-Latin-America-and-the-Caribbean-Action-Plan.pdf.
Private Sector and Civil Society: A private-sector and civil-society alliance that results in an education campaign in the media—radio, television, and newspaper ads—across the region would help to advance a national and regional anticorruption agenda. Such a campaign could empower society action by quantifying the cost of corruption and showing how much is lost in potential government services for everyday citizens.
US and International Community: Agencies like the United States Agency for International Development (USAID) and EuroJustice should continue to strengthen public prosecutors’ offices through training in best practices and capacity building that incorporates the use of innovative technologies and open data. Such efforts, coupled with hiring additional human resources to improve efficiency in indicting and convicting perpetrators (consequently reducing the backlog of cases), could go a long way. The United States should also put in place a program to support and protect Northern Triangle prosecutors and judges once they leave office. Such a program should include employment opportunities outside of those countries to protect former officials from threats posed by criminal organizations and gangs, while providing them with incentives to do their job honestly while in office. Additionally, political and technical support from US and EU embassies can help to bring together civil society to oversee and demand open procedures, which can strengthen the independence of the judicial branch.
COMBATTING CORRUPT PRACTICES IN PUBLIC PROCUREMENT
Public procurement is one of “the largest government spending activities” and, as such, is highly susceptible to corruption.14Carlos Pimenta and Natalia Rezai, “Public Procurement in Latin America” in Public Financial Management in Latin America: The Key to Efficiency and Transparency (Washington, DC: Inter-American Development Bank, 2016), https://www.elibrary.imf.org/view/IMF071/22577-9781597822268/22577- 9781597822268/ch08.xml?language=en&redirect=true. In 2019, the estimated cost of corruption in Central America was $13 billion, or around five percent of the region’s gross domestic product (GDP).15Imelda Cengic, “Report: Central America is Losing US $13 Billion to Corruption,” Organized Crime and Corruption Reporting Project, October 31, 2019, https:// www.occrp.org/en/daily/11028-report-central-america-is-losing-us-13-billion-to-corruption. With the COVID-19 pandemic, the number will likely be much higher as governments operate under states of emergency and many traditional processes are sidestepped.16“Corruption Could Cost Lives in Latin America’s Response to the Coronavirus,” Transparency International, March 31, 2020, https://www.transparency.org/en/ news/corruption-could-cost-lives-in-latin-americas-response-to-the-coronavirus.
But, governments and public institutions are not the only ones under scrutiny when it comes to corruption in public procurement. Because of the inherent nature of public procurement (buying goods and supplies or building infrastructure), the private sector also has a role in pushing for increased transparency and governance and going beyond job creation.17“Corruption, Economic Development, and Governance: Private Sector Perspectives from Developing Countries,” Global Corporate Governance Forum, International Finance Corporation, 2006, https://www.ifc.org/wps/wcm/connect/2cbf2146-95a5-4ba1-b7d7-73bcf64b611a/ Final%2BPrivate%2BSector%2BOpinion%2528Issue%2B2%2529.pdf?MOD=AJPERES&CVID=jtCxlJh.; https://www.wilsoncenter.org/sites/default/files/media/ uploads/documents/US%20Foreign%20Aid%20Central%20America.pdf. This can have a strong effect in the Northern Triangle, where monopolies and duopolies inhibit open-market competition.18“Making Anti-Corruption Reforms Stick in the Northern Triangle,” Council on Foreign Relations, March 12, 2021, https://www.cfr.org/blog/making-anti-corruption-reforms-stick-northern-triangle. While some companies––national and multinational––do abide by the law, others collude with government officials on anticompetitive and illicit tactics to monopolize contracts and hamper competition.19Jeff Ernst, et al., “US Foreign Aid to the Northern Triangle 2014–2019: Promoting Success by Learning from the Past,” Woodrow Wilson International Center for Scholars, December 2020, https://www.wilsoncenter.org/sites/default/files/media/uploads/documents/US%20Foreign%20Aid%20Central%20America.pdf.
Additionally, while foreign assistance and loans include transparency clauses as part of the terms and conditions required prior to disbursing funds to recipient countries, there is no such language for national investments and funding.20Shakira Mustapha and Rodrigo Olivares-Caminal, “Improving Transparency of Lending to Sovereign Governments,” Overseas Development Institute, July 2020, https://cdn.odi.org/media/documents/200710_debt_transparency_final_v2.pdf. The notion that others’ funds should be tied to such expectations, while there is less concern with using national funds adequately, is highly problematic. In the particular case of Guatemala, for example, all lists of territorial infrastructure plans are confidential, including the bidding process for private construction projects and the chosen bids.
Past and Existing Efforts at the National and Regional Levels
National Efforts: To date, governments in the region have responded to crises of legitimacy superficially, mainly by increasing bureaucracy through the creation of new anti-corruption bodies that lead to duplicating functions. For instance, in Honduras, after a series of corruption accusations by the National Anticorruption Council (CNA) and the local Transparency International chapter (ASJ) regarding irregular purchases of medical products during the COVID-19 pandemic, the Juan Orlando Hernández administration created a Transparency Ministry with a mission that overlaps that of the CNA.21“Nueva Secretaría de Transparencia Nace con los Antecedentes del Gobierno Actual,” Criterio.Hn, November 10, 2020, https://criterio.hn/nueva-secretaria-de-transparencia-nace-con-los-antecedentes-del-gobierno-actual-cna/. This decision appears to be part of a strategy to promote and protect the government’s anti-corruption and anti-impunity agenda, when in fact, the work of the Transparency Ministry hinders the fight against impunity by rendering CNA’s capacities redundant and doing little to address structural issues of corruption in public procurement. The Transparency Secretary, Maria Andrea Matamoros, has criticized Transparency International’s Corruption Perception Index and defended the actions of the Honduran government.22Honduras: New Ministry of Transparency as an obstacle to the fight against corruption, Justicia en las Américas, February 2021, https://dplfblog. com/2021/02/23/honduras-new-ministry-of-transparency-as-an-obstacle-to-the-fight-against-corruption/
On the other hand, civil society has created apps that show that citizens are able to hold the government and other sectors accountable. For example, the Association for a More Just Society (ASJ), in partnership with the Anticorruption Legal Assistance Center (ALAC) and the Public Ministry (MP) in Honduras, launched the initiative “Say it here Honduras,” a mobile tool that provides citizens with a mechanism for reporting corruption.23“Consulta el Estado de tu Denuncia de Corrupción en Dilo Aquí Honduras,” ASJ Honduras, https://asjhonduras.com/webhn/en/tag/dilo-aqui-honduras/. The initiative lasted almost five years, but eventually disappeared due to lack of funding and a reduction in citizens’ corruption complaints. Similarly, in El Salvador, the Government Integrity Project (GIP), funded by USAID and implemented by Tetra Tech, was a joint government and civil society initiative aimed at improving transparency, accountability, and public-services delivery at the national and municipal levels by improving the monitoring of public resources.24“El Salvador Government Integrity Project,” Tetra Tech, https://www.tetratech.com/en/projects/el-salvador-government-integrity-project. But this approach had some limitations, as it did not lead to the adoption of institutional integrity as a matter of national policy. It would have had greater impact if applied as a tool to strengthen efficiency, transparency, and accountability of public organizations. One concrete action could have been to require by law that all government agencies disclose their allocated budgets on official online webpages––from payroll to funds and resources spent on executed programs, projects, and initiatives.
Crime Stoppers is a similar program implemented in Guatemala. It is an international platform that encourages citizens to anonymously report criminal and corrupt acts in their communities through a website or phone call. This information is then transferred to local police and courts, helping to create new investigations. Crime Stoppers is funded by private donors in Guatemala, and could be replicated regionally to foster accountability while helping people lessen the fear of reporting crimes. Because these platforms can be downloaded via mobile applications, anyone with a smartphone and an Internet connection can report any act of corruption—from contraband and extortion to drug trafficking or irregularities in public works.
Regional Efforts: Best practices from other Latin American countries, such as Colombia, Chile and Costa Rica, point to the use of new technological tools such as blockchain— which is designed to prevent data from being modified or manipulated—to facilitate digital government and promote transparency.25“Blockchain,” Builtin, https://builtin.com/blockchain. As identified in a previous Atlantic Council report, an effective way to reduce corruption in public bids and contracts is to digitize paperwork and implement e-government for transparency in acquisitions.26María Fernanda Pérez and Tamar Ziff, Hacking Corruption: Tech Tools to Fight Graft in the Americas, Atlantic Council, June 18, 2019, https://www.atlanticcouncil. org/in-depth-research-reports/report/hacking-corruption-tech-tools-to-fight-graft-in-the-americas/. In Mexico, big data, artificial intelligence, and digital signatures like DocuSign have been used to implement digital audits of public purchases, and to effectively oversee corruption in public contracting.27Alejandro Landa Thierry and Aldo Gonzalez, “Mexican Businesses May Consider Electronic Signatures for Signing Legal Documents Amid COVID-19,” Holland & Knight, March 27, 2020, https://www.hklaw.com/en/insights/publications/2020/03/mexican-businesses-may-consider-electronic-signatures-for-signing.
Recommendations and Thinking Ahead
Public Sector and Civil Society: To improve transparency in public-procurement procedures, government agencies offering concessions should require bidding companies to subscribe to a memorandum of understanding (MOU), to ensure compliance with integrity provisions in the process of awarding contracts. An agreement could be chartered in which both parties commit that they will not engage in corrupt practices for the extent of the contract and agree to oversight by civil-society groups.28What are Integrity Pacts? European Commission, 2015, https://ec.europa.eu/regional_policy/sources/conferences/integrity_pacts/what_are_integrity_pacts.pdf. Publishing public-procurement information will allow civil society and other actors to play a leading role in identifying and denouncing corruption, especially if a government does not have the capacity to prosecute corrupt actors.
Private Sector: To promote integrity in public procurement and government concessions, incentives and deterrents for the private sector should be combined to reduce corruption. There are a number of frameworks and tools available to companies for adopting strong anti-corruption policies. One of those is Transparency International’s Business Principles for Countering Bribery to effectively deal with the challenges and risks posed by bribery. The OECD has also created a set of Principles of Corporate Governance to provide guidance and suggestions to develop and implement good corporate governance and promote transparency by setting up efficient internal control and compliance mechanisms to reduce the opportunities for fraudulent practices.29Tools to reduce private sector engagement in grand corruption during the award of public contracts, concessions and licenses, Anti-Corruption Resource Center, April 2013, https://www.u4.no/publications/tools-to-reduce-private-sector-engagement-in-grand-corruption-during-the-award-of-public-contracts-concessions-and-licenses.pdf.
US and international community: Technology—specifically blockchain—may help to address some of the most flagrantly expensive forms of corruption. The national Ministries of Technology can partner with multilaterals to synchronize and implement transparency mechanisms in public spending at a national level, which can then be replicated at subnational and local levels. The US Department of Commerce’s Commercial Law Development Program should continue its work of strengthening regional trade facilitation through capacity-building efforts with public and private sector to enhance transparency initiatives such as inclusive public consultations through automated processes. It could expand the scope of the program to include working with procurement agencies in the Northern Triangle to improve the transparency and effectiveness of its procurement systems and procedures, primarily in citizen security institutions. Another priority should be to improve access to government contracts for small and women-owned businesses, like they do in the Dominican Republic.30Commercial Law Development Program, Central America and the Caribbean, https://cldp.doc.gov/countries-regions.html.
Beyond publishing procurement data in an open format, the next step in improving the public procurement process is to create a fully digitized and automated e-procurement portal.31María Fernanda Pérez and Tamar Ziff, Hacking corruption: Tech tools to fight graft in the Americas, Atlantic Council, June 2018, https://www.atlanticcouncil.org/ in-depth-research-reports/report/hacking-corruption-tech-tools-to-fight-graft-in-the-americas/. The case of Brazil and Paraguay, with the “electronic reverse auctions,” may be applied to the Northern Triangle countries. When specific government agencies and institutions purchase goods through reverse electronic auctions, a virtual “auction” kicks off. If a Health Ministry announces an intention of buying N95 masks and other personal protective equipment, suppliers are able to bid online for the Ministry to buy from them. This enables competition, transparency, and streamlines communication of the public bidding process.32Carlos Pimenta and Natalia Rezai, “Public Procurement in Latin America.” International Monetary Fund. https://www.elibrary.imf.org/view/books/071/22577- 9781597822268-en/ch08.xml?language=en But there is a caveat: open data in government will only work if it can be understood and used by citizens. The secrecy and confidentiality surrounding the plans has provoked mistrust for decades and represents an important setback in public procurement transparency.
CONFRONTING ILLICIT CAMPAIGN FINANCING: IMPROVING ELECTORAL LAWS
Weak political-finance systems, unforced electoral legislation, lack of political will for reforms, and deficient auditing and oversight bodies to investigate, monitor, or sanction the misuse of resources, have long affected campaign-finance transparency. Illegal financing of campaigns is an endemic problem in Central America. It has led to the perpetuation of a corrupt political class, and for decades, led to the region’s ranking as the worst of eleven components evaluated in the Political Election Integrity Index (PEI).33“Political Integrity Lacking in Latin America and the Caribbean, Especially Around Elections,” Transparency International, September 23, 2019, https://www. transparency.org/en/news/political-integrity-lacking-in-latin-america-and-the-caribbean-especially-a; Rossana Andía and Yukihiko Hamada, “The Integrity of Political Finance Systems in Latin America: Tackling Political Corruption,” Institute for Democracy and Electoral Assistance, 2019, https://www.idea.int/sites/ default/files/publications/integrity-of-political-finance-systems-in-latin-america.pdf. The continuous penetration of organized crime into politics has aggravated the problem, particularly at the local level. Collusions between local politicians and criminal networks, mainly drug cartels, introduce dirty money into electoral politics, which is very difficult to trace.
Past and Existing Efforts at the National Level
Guatemala: In 2016, the Guatemalan Congress approved reforms to the Electoral and Political Parties Law (LEPP).34“Decreto Número 26-2016,” Congress of the Republic of Guatemala, 2016, https://www.tse.org.gt/images/descargas/decreto262016.pdf. The reforms established mechanisms for the control and oversight of political organizations; prohibited anonymous contributions; set limits on campaign spending; and imposed a more robust system of sanctions, including the creation of a Specialized Unit for the Control and Oversight of Political Party Finances within the Supreme Electoral Tribunal. As a result, US courts convicted former Guatemalan presidential candidate Mario Estrada, and other officials (at least one former mayor and some congressional candidates) after discovering their political campaigns had been infiltrated by drug-trafficking money. Although a positive step forward, the centralized structure of this unit has limited the possibilities of monitoring campaign expenditures, particularly at the local level.
El Salvador: Although the enactment of the Political Parties Law of El Salvador in 2013 included the regulation of private donations, candidates are not obligated to report contributions. Auditing is discretionary to the parties, and there is no oversight body or unit to investigate, monitor, or sanction the misuse of resources, which reduces the transparency of political campaigns. This lack of oversight makes it easier for candidates to amass wealth and political power by illicit means. US agencies can help local electoral bodies with technical assistance to in reforming these laws to foster greater accountability.
Honduras: In Honduras, the Clean Politics Law (Ley de Financiamiento, Transparencia y Fiscalización de Partidos Políticos y Candidatos) was passed in 2016 as a result of MACCIH’s collaboration with the TSE and Congress. The law seeks to enforce greater controls and transparency for political financing. It represents an important step forward, as it establishes a new financing and oversight regime, sets limits on campaign spending, limits private donations, and prohibits anonymous contributions. In addition, the Financing, Transparency and Oversight Unit was created to sanction illegal financing—including the dissolution of political parties that do not comply with the regulations.
Although the Clean Politics Law filled an important gap in political financing in Honduras by strengthening the legal and institutional framework to oversee the income and expenditures of parties and candidates, the Clean Politics Unit that oversees compliance with the law is drastically underfunded and understaffed. Therefore, illicit financing continues, as many candidates and public officials—including President Hernández and the attorney general—have been accused of drug trafficking and face criminal charges. The DEA and US prosecutors have uncovered conspiracies between corrupt politicians, police, and military personnel, and some of the most powerful drug kingpins in the world, including President Hernandez’s brother, who was sentenced to life in a US prison. These actions send a powerful message of zero tolerance to Honduran political and business elites involved in organized crime and narco-activity.
Recommendations and Thinking Ahead
Public Sector and Civil Society: Independent civil-society groups should review electoral laws in the three countries to identify gaps and loopholes, mainly with the implementation of clear and rigorous sanctions; this would help to ensure consistency and enforcement. All political parties must be required to submit financial reports through an open website created and supervised by political finance oversight agencies in each country. Local civil society organizations could partner with USAID to finance this online portal and provide workshops to train political parties, campaign donors, and independent media on how to use it effectively. Providing public access to information about political financing makes it easier to monitor and analyze the origin of funds. The financing and designation of the unit that regulates electoral finance should be independent—and not under the control of those who are chosen through the electoral processes they are overseeing.
Private Sector: Electoral laws in each country should require that private entities disclose all donations and contributions to both individual candidates and political parties. The laws should impose penalties for donors that do not comply with the legal campaign spending ceilings. Active civil-society participation is required to push for campaign-financing reforms. The Biden administration should provide additional financial and technical resources for capacity-building efforts that support civil-society organizations’ oversight of electoral process.
US and international community: USAID, along with cooperation agencies from European countries, should join efforts with diplomatic missions in the Northern Triangle to promote increased transparency in electoral legislation. Electoral laws should be reformed to provide for an autonomous regulatory body that has sufficient funding and a mandate to sanction illicit financing in national and municipal politics, including, for instance, in the case of El Salvador, oversight of financial support received from the Salvadoran diaspora. As well, a mobilized, empowered, trained, and continuously involved civil society and independent media will be important factors in pushing for electoral reform to be part of the political agenda. Developing a campaign—endorsed by the United States, the European Union, and embassies in the three countries—with specific messages targeting different audiences would spark higher public interest and demands that parties enact legislative changes.
There is no one answer for ending the multifaceted corruption that plagues the Northern Triangle. This brief puts forward ideas to help guide US engagement and support with the region, chief among them reforming the judicial system, combatting corrupt practices in public procurement, and confronting illicit campaign financing. These proposals are a result of consultations with the Atlantic Council’s Northern Triangle Advisory Group, a group of thirty public, business, and civil society leaders that focus on generating support for innovative policy solutions to some of the most pressing challenges in the Northern Triangle, which are similarly many of the root causes of migration in the region.
For change to occur, implementation of judicial and campaign-financing reforms will require political will from all sectors of society, and sustainable mechanisms for oversight and tracking via comprehensive metrics. The international community must show a zero-tolerance approach to corruption and augment local capacities to enforce sanctions. As well, it is vital to set a precedent by penalizing dishonest public and private leaders—especially those with links to organized crime and drug trafficking—through the US Departments of Justice and Treasury.35The “Engel List” focuses exclusively on creating a list of corrupt and undemocratic actors in the Northern Triangle. Furthermore, the authority provided in the Global Magnitsky Human Rights and Corruption Accountability Act could also be applied to hold corrupt government officials accountable through travel and financial sanctions (e.g., revoking US visa privileges).
Pressure from US members of Congress on democratic promotion, the separation of powers, and the independence of the judiciary in the Northern Triangle should be maintained to foster reforms and to pass legislation to sanction corrupt officials (i.e., Leahy and Magnitsky Laws and Engel List). The Biden-Harris administration should create a task force with officials from the US Departments of Justice and State to help local prosecutors fight corruption in the Northern Triangle.36U.S. weighing anti-corruption task force for Central America -envoy, Nasdaq, April 2021, https://www.nasdaq.com/articles/u.s.-weighing-anti-corruption-task-force-for-central-america-envoy-2021-04-22. This initiative would help judicial institutions to move forward on specific corruption cases and investigations that have been intentionally delayed.
The Biden-Harris administration has shown determination in becoming a reliable partner to ensure that all the lost progress regarding corruption and impunity in Central America is regained—and that it sticks. The recently launched Western Hemisphere Drug Policy Commission Report recognizes significant advances in the fight against corruption but emphasizes the need for a more timely strategy.37Report of the Western Hemisphere Drug Policy Commission, December 2020, https://foreignaffairs.house.gov/2020/12/engel-releases-western-hemisphere-drug-policy-commission-report Such a strategy should include mechanisms through which results are measured, accountability is exercised, and misuse of foreign aid is punished. The road ahead is not an easy one but inroads to fight corruption will yield significant benefits across society.
This issue brief is the second of three publications as part of the work of the Adrienne Arsht Latin America Center’s Northern Triangle Advisory Group (members listed below), a high-level group of policymakers, business leaders, and civil society from the Northern Triangle that seek to create a basis for consensus and galvanize support for strengthening the rule of law and mitigating corruption, increasing productivity and enabling sustainable economic development, and reducing conflict in Guatemala, Honduras, and El Salvador. Thank you to Jason Marczak, María Fernanda Bozmoski, Domingo Sadurní, and Eva Lardizábal at the Adrienne Arsht Latin America Center for leading this effort and to the Center’s in-region consultant Gina Kawas for her research and writing support. This publication was produced with the generous financial support of DT Institute. Thank you to DT Institute for their insights and collaboration.
ABOUT THE AUTHORS
María Fernanda Bozmoski is deputy director, programs at the Atlantic Council’s Adrienne Arsht Latin America Center, where she leads the Center’s work on Mexico, USMCA, and Central America, and contributes to projects on regional trade integration as well as disinformation in Latin America. Bozmoski has co-led the Center’s Central America Task Force, managed the Center’s trade portfolio, and programmed events in Asia for US policymakers. She speaks native Spanish, English, and French, fluent Italian, and near fluent Portuguese.
Carlos Hernández is president of the Board of Directors of the Association for a Fairer Society (ASJ) and of Transparency International in Honduras, where he has helped with designing public policies. He also serves as president of the Transformemos Honduras coalition and is on the Board of Directors of both the Alliance for Peace and Justice and the Federation of Non-Governmental Organizations for the Development of Honduras (FOPRIDEH)—all organizations with considerable success in advocacy and social oversight on issues of peace, citizen security, and transparency. In Honduras, Hernández is an opinion leader on issues related to public policy, corruption, transparency, democracy, and development. He has also spoken at international conferences on security, transparency, and development. In recent years, Hernández has worked on reforming the Honduran security, justice, education, health, and democratic system, while also strengthening the transparency of the State.
Roberto Rubio is executive director at Fundación Nacional para el Desarrollo (FUNDE), a think tank based in El Salvador. He is also coordinator for Transparency International’s chapter in El Salvador. Rubio is founding member of Fundación Democracia, Transparencia y Justicia (DTJ), a non-profit organization focused on building citizenship and promoting dialogue among people with diverse ideologies. From 1997 to 2009, he was a member of El Salvador’s National Commission for Development. He has been a columnist for “La Prensa Gráfica” since 1997. Rubio has a doctor’s degree in development studies from the Catholic University at Louvain-la-Neuve, Belgium and doctor’s degree in economics from the Complutense University in Madrid, Spain. He has a bachelor’s degree in economics from the Central American University “José Simeón Cañas” (UCA) in El Salvador.
Domingo Sadurní is assistant director at the Adrienne Arsht Latin America Center, where he covers Venezuela and Central America. Sadurní joined the Council as an intern in February 2018, previously working at J.P. Morgan’s private bank and Banco Popular de Puerto Rico. Sadurní earned a bachelor’s degree in finance and political science from Boston College. He speaks native English and Spanish.
The Adrienne Arsht Latin America Center broadens understanding of regional transformations through high-impact work that shapes the conversation among policymakers, the business community, and civil society. The Center focuses on Latin America’s strategic role in a global context with a priority on pressing political, economic, and social issues that will define the trajectory of the region now and in the years ahead. The Center’s Central America programming has focused on providing insights, analysis, and galvanizing bipartisan support for sustainable solutions to the Northern Triangle’s economic, rule of law, and security challenges. Past marquee work includes our 2017 Northern Triangle Security and Economic Opportunity Task Force, our 2020 Central America Economic Reactivation in a COVID-19 World report, and our ongoing 2021 work with the Northern Triangle Advisory Group. Other select lines of the Center’s programming include: Venezuela’s crisis; Mexico-US and global ties; China in Latin America; Colombia’s future; a changing Brazil; Caribbean development; commercial patterns shifts; energy resources; and disinformation. Jason Marczak serves as Center Director.
DT Institute is a funder and implementer of peace and development projects. It focuses on co-creation and co-investment, as well as measurable impact and sustainability. DT Institute works with governments and our on-the-ground partners to address pressing issues—from conflict to economic crisis— and to establish a foundation for lasting stability, peace, and prosperity. It is in the organization’s DNA to be bold: DT Institute relentlessly innovates, creates, and measures its ability to drive innovation, strengthen communities, develop the next generation of leaders, and positively impact the lives of those we serve.
NORTHERN TRIANGLE ADVISORY GROUP
Northern Triangle Advisory Group members have provided critical insight and ideas as part of the drafting of this issue brief. Findings and recommendations of this brief, however, do not necessarily reflect the personal opinions of the individuals listed below or the organizations to which they are affiliated.
María Eugenia Brizuela de Ávila
Adrienne Arsht Latin America Center/Former Minister of Foreign Affairs, El Salvador
Diego de Sola
Grupo de Sola/Glasswing International
Fundación Nacional para el Desarrollo (FUNDE)/Transparency International, El Salvador
Asociación Nacional de la Empresa Privada (ANEP)
Fundación Salvadoreña para el Desarrollo Económico y Social (FUSADES)
Claudia Umaña Araujo
Democracia Transparencia Justicia
Marcos Andrés Antil
Instituto Centroamericano Estudios Fiscales (ICEFI)
PDC Capital/Fundación para el Desarrollo de Guatemala (FUNDESA)
Global Network of Indigenous Entrepreneurs of Guatemala
US Guatemala Business Council
Consejo Nacional Anticorrupción (CNA)
Jacqueline Foglia Sandoval
Consejo Nacional de Inversiones (CNI)
Asociación para una Sociedad Más Justa/Transparency International, Honduras
Guillermo Peña Panting
Mari Carmen Aponte
Former Assistant Secretary of State for Western Hemisphere Affairs
Open Society Foundation
Inter-American Development Bank
Jenny Willier Murphy
Centro de Estudios de Justicia de las Américas (CEJA)
Matthew M. Rooney
George W. Bush Institute–SMU Economic Growth Initiative
Mary Ann Walker
Adrienne Arsht Latin America Center Advisory Council
BEYOND THE NORTHERN TRIANGLE
INCAE Business School
Jaime Roberto Díaz
Central American Bank of Economic Integration (CABEI)
The Adrienne Arsht Latin America Center broadens understanding of regional transformations through high-impact work that shapes the conversation among policymakers, the business community, and civil society. The Center focuses on Latin America’s strategic role in a global context with a priority on pressing political, economic, and social issues that will define the trajectory of the region now and in the years ahead. Select lines of programming include: Venezuela’s crisis; Mexico-US and global ties; China in Latin America; Colombia’s future; a changing Brazil; Central America’s trajectory; Caribbean development; commercial patterns shifts; energy resources; and disinformation.