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What Peru’s new president can learn from Brazil’s fight against corruption

Peru’s new power team. PPK is in the middle. Janine Costa/Reuters

What Peru’s new president can learn from Brazil’s fight against corruption

Peru’s new power team. PPK is in the middle. Janine Costa/Reuters

From the U.K.‘s Brexit vote to the U.S. presidential race, a handful of campaigns and elections around the world dominate news cycle after news cycle.

One election that has gotten less attention than it deserves is the one in Peru, which recently picked a new president. He’s set to take office this week.

Pedro Pablo Kuczynski, an Oxford- and Princeton-trained economist with ample experience in government who is informally known as PPK, will be sworn in on July 28 after narrowly winning the second June contest.

His rival, Keiko Fujimori, the politically adept daughter of a notoriously corrupt former president who is serving a sentence of 25 years in jail, won the first round of elections on Alberto Fujimori’s legacy of establishing order.

Although she distanced herself from the sketchier aspects of her father’s record, the balancing act eventually failed after it became known that one of her closest allies was being investigated on suspicion of money laundering. The scandal reminded voters of the unfortunate events from the elder Fujimori’s time in office.

As he takes the helm, PPK would do well to remember that he won the presidency, in large part, because of how sick Peruvians are of corruption (all of PPK’s recent predecessors face corruption accusations).

PPK should, therefore, prioritize the issue. To do so, he can look to neighboring Brazil, where corruption is successfully being prosecuted, as an example of how to tackle the problem through institutional channels.

My own research shows that corruption control in Latin America is within reach as long as the corrupt face a real risk of being punished. Full disclosure: I am currently engaged in a formal collaboration with two anti-corruption forces in Peru – a civil society group and the Office of the Comptroller General – that have the manpower and technical capacity to support an anti-corruption drive, essential conditions of what led to Brazil’s success.

Peruvians protest against corruption ahead of the recent election. Guadalupe Pardo/Reuters

A scandal-plagued region

Latin America’s scandals are as numerous as they are noxious. Here are just a few of the more recent ones.

In Argentina, several of former President Cristina Fernandez de Kirchner’s associates are facing corruption charges. Among them, her secretary of public works was caught trying to stash large sums of cash at a convent.

In Mexico, President Enrique Peña Nieto and his family were found to be living in a home built and owned by Grupo Higa, a construction firm that had obtained over 80 contracts from the government. The home has since been returned to the construction company in question.

Chile, a country that often tops Latin America’s performance indicators (see, for example, this report), also witnessed an apparent conflict of interest. President Michelle Bachelet’s son was accused in 2015 of leveraging political connections to obtain a US$10 million bank loan that his wife used to buy land and sell it for a large profit. The loan was granted a day after his mother was reelected in 2014.

In Guatemala, a United Nations-backed agency played a pivotal role in uncovering a multi-million dollar customs fraud case involving President Otto Perez Molina. Perez Molina resigned and so joined Fujimori on the list of Latin American presidents who have been removed from office because of corruption.

Brazil’s Dilma Rousseff may become the latest Latin American president to be removed from power. Paulo Whitaker/Reuters

Brazil stands apart

A discussion about failed presidencies inevitably brings us to recent events in Brazil, the host of the soon to be inaugurated Summer Olympics. Recently elected President Dilma Rousseff was removed from office in May and is currently in the midst of an impeachment trial in the Senate.

While her trial examines misreporting of government accounts, the biggest scandal in Brazil is actually the unrelated Lavo Jato Scheme. According to allegations, Lava Jato involved skimming a fraction of the value of state-run oil company Petrobras’s contracts from 2004 to 2014 in order to fund personal and party accounts. Billions appear to have been paid in bribes to Petrobras officials and politicians.

Numerous individuals, including 13 senators, 22 federal deputies and two governors, are under investigation – including Eduardo Cunha, the lawmaker who led the effort to impeach Rousseff. He recently resigned from his job as speaker of the lower house.

What sets Brazil apart from its neighbors, however, is how forcefully its institutions – particularly federal prosecutors and the judiciary – have reacted to corruption. Ironically, the scandals are a positive sign – they show that there is an effort to ensure accountability. So far, authorities have made more than 160 arrests and convicted over 100 individuals. Among those sent to jail is Marcelo Odebrecht, the former CEO of South America’s largest construction company. Jorge Zelada, a former director of Petrobras, was convicted of money-laundering and corruption. The former treasurer of the Worker’s Party, Joao Vaccari Neto, was handed a 15-year sentence.

Thus, Brazil seems to get the prosecutorial aspect of corruption control right, which is more than can be said about other Latin American regimes, where corruption cases appear to outnumber successful prosecutions.

Alberto Fujimori, who ruled Peru for a decade, is serving a 25-year sentence for corruption and other crimes. Enrique Castro-Mendivil/Reuters

Costs of corruption

Peru has not been as persistent or successful in prosecuting corruption.

A major exception to this was the case of Alberto Fujimori, who ran Peru from 1990 to 2000. After fleeing to Japan following a rigged election, he was extradited and jailed in 2009 for his responsibility in ordering an illegal search, the killing of people by pro-government militias and bribing media outlets.

But that is a relatively rare example of justice being served. If only based on accusations, grand corruption remains a problem in Peru.

Presidents Alan Garcia and Alejandro Toledo have been questioned on account of home purchases in two of Lima’s wealthiest neighborhoods. Many also take issue with Garcia’s decision to pardon 400 convicted drug traffickers in what has been dubbed the narco indultos (pardons) case.

The late Alfonso Quiroz, a respected historian, estimated that the corruption of Fujimori’s regime cost Peru $1.5 billion to $4 billion. More recently, some have suggested that corruption costs the country more than $3.5 billion a year.

These figures may lack precision, but there is little doubt that corruption affects all levels of the Peruvian state.

At the subnational level, in 2014, 22 out of 25 outgoing regional presidents were being investigated for embezzlement – one of them was even accused of murdering a local politician and stealing millions from phantom public works. This same governor was said to have ties with a former campaign advisor to outgoing President Ollanta Humala.

President Humala’s troubles did not end there. He faced questions about allegedly taking bribes from Odebrecht, the Brazilian engineering firm at the heart of the Petrobras scandal. His wife also came under investigation on charges of money laundering. The investigation focusing on the first lady was called off a year ago, but not before some of her spending on luxury items had come into question.

Brazil has been successful prosecuting ‘big fish,’ such as former Senator Gim Argello. Rodolfo Buhrer/Reuters

Confronting corruption

The advantage of comparing Brazil and Peru is that it illustrates the extent to which the former’s effort seems to contrast with the region’s standard response to corruption.

Whether on the street or in the courts of justice, Brazilians have confronted corruption in a deliberate manner. If the heads of the corrupt were hung on display as trophies, Brazil’s exhibition hall would be packed with fresh catches.

Meanwhile, for all the corruption allegations brewing in Peru, there is a sense that many of the corrupt are exempt from punishment. In a 2015 report about human rights, the U.S. Department of State declared: Peruvian law “provides criminal penalties for officials engaged in corruption; however, the government did not always implement the law effectively, and officials often engaged in corrupt practices with impunity.”

This foreign message was not without a receptive local audience.

The State Department’s report was picked up by the Peruvian press, and its thesis found support in the fact that the country’s Office of the Comptroller General initiated thousands of criminal charges, but the judiciary has followed up with only a few hundred sentences. Even accounting for potential flaws in the cases against the accused, the enforcement gap is evident.

There is hope

And yet, saying that impunity is king in Peru is taking the claim too far.

The country’s authorities have successfully prosecuted a number of high-level corrupt officials, including the man directly behind the previously mentioned narco indultos. Fujimori’s face behind bars remains a solid graft-busting credential.

Rather than ignoring the issue or becoming immune to its impact, Peruvians consistently state corruption as one of their two main concerns. The topic is regularly covered by the media. Civil society is actively doing its part to counter the problem, and the country has even seen one of its own elected to chair of Transparency International, the world’s leading anti-corruption watchdog.

So, there is hope.

And there is hope that Peru’s new president will contribute to improving the status quo. During his campaign, PPK identified structural obstacles to a well-functioning state before putting forth a series of anti-corruption proposals. He called for the creation of a national anti-corruption system, emphasized the need to further professionalize the civil service, suggested reforming the police and judiciary, and proposed reducing bureaucratic hurdles, among others.

Admittedly, corruption is not Peru’s only concern. Some of the country’s leading intellectuals are calling on PPK to prioritize the fight against crime, as well as socioeconomic and geographic inclusion.

This is a wise suggestion, but PPK arguably owes his victory to an anti-Fujimori vote. As one Peruvian scholar put it, the elections presented the electorate with a choice between decency and corruption. Voters picked him as a way to shun the corruption of the past. Peru’s new president should reciprocate by tackling corruption of the present.

In Brazil, the fact that the corrupt are facing arrests, prosecutions, and jail time will inhibit (though not quite eradicate) future misdeeds. PPK’s ultimate legacy could be a more honest public administration for his country, but only if he commits fully to fighting corruption.

To quote Peru’s new president, “I believe the fight (against corruption) begins at the top.”