Central America has made world headlines. Thousands of citizens are flooding streets and social networks across El Salvador, Guatemala, Honduras and Panama. They are angered by local government corruption scandals - from public funds trafficked into private bank accounts to shady associations with non-governmental organizations (NGOs) and foreign states. Consequentially, there has been a significant increase in public demands to amend these issues.
According to a 2012 Transparency International report, establishing conditions that ensure a transparent and proper management of public resources are top priorities. Given this scenario, most states have committed to implement international standards on fighting corruption. This is executed through the ratification of various legal instruments (including declarations, conventions and agreements) or by voluntary membership in multilateral initiatives. But scandals continue and protests remain strong.
Today, modernity and history are clashing. The cancer of corruption is not new to Central America. The isthmus has endured domestic and international hardships dating back to the 15th century European colonialist era. However, many analysts debate that colonialism- or better termed “imperialism” - is not quite the past. They stress that the region is geographically close to the so called modern “imperio” (the United States), where geographical positioning, Western complacent ideologies and natural resources have defined the extent of Central American state’s sovereignty before. Corporate and military interests are also actors whose influence continues to reach the government at high levels.
The situation inspires us to question what the historical background of these tensions is and what types of corruption have engendered the current distrust of local administrations? We will also review the current scandals per country.
History and Types of Corruption
When it comes to history, numerous analysts have accused Latin American governments of being “obsessed,” as termed by Argentine-born CNN journalist Andres Oppenheimer in his 2010 book iBasta de historias! Oppenheimer accuses those who speak of the past as impeding present and future productivity. This is especially so concerning issues in need of resolution; in this case, political corruption.
However, there are those who argue the contrary. Many can agree that history is the foundation of the present. And while it certainly does not always govern the present or future, cause and influence from the past cannot be ignored. Central American corruption reinforces this position.
In this article, we will review three sectors where Central America’s corruption scandals are present: politics, the military and economics. We will also briefly examine the little analyzed counterproductive role of the democratization in this traditionally destabilized region.
Political, military and economic corruption in Central America is often attributed to profound divides within social-economic class - causing tension. Notably, much Western-origin research disregards certain factors which contributes to this tension. One such factor is decades of Western-backed dictatorships and additional abuses of power that have not been forgotten in Central America. Democratically elected heads of state - particularly those with populist tendencies - were frequently overthrown and replaced by US-compliant regimes. All of these replacement regimes were to the far right on the international ideological scale and severe human rights abuse cases were reported. An example is the fate of Guatemalan President Jacobo Arbenz (1951-1954).
Arbenz was originally an army officer who witnessed US backed dictator, Jorge Ubico, utilize the military to brutally suppress agrarian laborers. Young Arbenz himself was required to arrest many of these “delinquents,” who he began to recognize as common, typically innocent men. These experiences led Arbenz to become involved in populist movements, specifically in the labor sector. When he won the presidency years after Ubico’s fall, he began to implement pro-populist, less US government and corporate-friendly policies. These policies included agrarian reform laws, land nationalization and a highly popular program of social reform aimed at ending Guatemala’s feudalistic labor system of previous regimes. It was not a simple choice. It quickly rubbed the United Fruit Company (UFCO) the wrong way. Renamed Chiquita Brands International in 1984, many critics regarded it as the East Indian Company of the 20th century which was in the US “backyard.”
The UFCO had major investments in Guatemala thanks to generous concessions granted to it by local dictatorships. With their Guatemalan autocratic alliance gone, the UFCO advocated to have Arbenz deposed, accusing him of communist sympathies during the rise of the Cold War.
Arbenz was ultimately overthrown in a coup d’état engineered by the United States Department of State and the Central Intelligence Agency (CIA). The move was orchestrated by American brothers John Foster Dulles (52nd US Secretary of State under President Dwight D. Eisenhower) and Allen Dulles (5th CIA Director under Presidents Eisenhower and John F. Kennedy). Both men had major investment interests in UFCO. Unsurprisingly, Arbenz was then replaced by a military junta which eventually handed power to Colonel Carlos Castillo Armas. Arbenz was forced into exile where he was psychologically tortured, his family gradually destroyed ( his daughter committed suicide) and he descended into alcoholism dying in Mexico in 1971.
The Arbenz case study is one of many examples of Central American political instability involving domestic and international actors. While foreign interest remains powerful within Guatemala and the rest of the isthmus - and individual politicians are by no means flawless - citizens are now demanding an end to corruption.
Corruption in Politics and Economics
Economics are also a major incentive that motivate protests for change. Tax evasion by the region’s elite and senior officials has created government millionaires. The Drug Wars effect most sectors and overlap the political, military and economic sectors.
One example involves mutually beneficial relationships among cartels, corporations and national politics. Powerful, non-governmental networks occasionally finance electoral campaigns. Through this modus operandi, there is suspicion that legal and illegal third parties have - to an extent – assumed some control of some Executive, Legislative and Judicial systems.
By the Cold War’s end, many intelligence networks - national and abroad - were covertly associated with Colombian or Mexican cocaine smugglers. Operations were intricately indirect as the resulting money was typically large and used for military or private political spending although the connection was a public taboo. For example, the US-supported Nicaraguan Somoza regime would receive lucrative narcotic shipments from Panama’s Dictator Manuel Noriega who in turn received it from Colombia’s Medellin Cartel. In public, the US and the Medellin Cartel’s world infamous head Pablo Escobar were enemies.
Honduras president: firms linked to graft scandal helped fund my campaign http://t.co/NVTAzZY73C
— Reuters World (@ReutersWorld) June 3, 2015
Affairs slightly changed when these entities began to increasingly face the democratization processes. This made it inherently more difficult to proceed with corrupt alliances which typically were under the suspicion of local populations even if not by their Western counterparts. As a response in the 90’s, these entities either lowered their profile or ceased to exist all together. But in 2000, several resurfaced with de-facto US headquarters. Miami and the Mexican border continue to be hot spots and Central America has continued to be the isthmus between the producing South and the consuming North.
Therefore, it is difficult to hypothesize how local administrations could, with their limited authority, overpower the situation in order to effectively combat this cancerous corruption culture. It does not help that the “North Triangle” countries (Guatemala, Honduras and El Salvador), have porous borders that are difficult to regulate. Relying on foreign arms aid has resulted in the US military training and patrolling the Guatemalan-Belizean border. The question arises whether there has been a deliberate corruption of state sovereignty in favor of publically helping combat organized crime.
Exceptions are those as the 2009 Honduras coup in 2009 despite continuing allegations of municipal and national electoral fraud, and concerns of narco-influence in local politics. However, Central America is thought to have achieved an electoral democracy which respected results at the polls. However, democratization has also brought on decentralization of corruption. Some officials continue to merge interests with the narcos - a power game that further weakens states. Impunity of public officials also continues to be evident in the region, where murder may or may not ever reach the justice system. Now the “political class” has acquired autonomy and some suspect that the state is now a business.
Many parties are corporations without ideology. In this way, sovereign states risks becoming subservient to private institutions that in turn drain state resources as directed by the President, ministers or heads of autonomous entities. Lawmakers can receive envelopes with thousands of dollars by passing a law or decree, paid for by the company concerned.
US Senator Patrick Leahy has claimed that these Central American states are “governed by corrupt oligarchs and organized crime,” where leaders and their entourages grow rich. He goes onto accuse that all three of the Triangle states are a threat to US national security. While Senator Leahy’s accusations may be extreme, corruption is undeniable. Thus, some of the Triangle youth entering the labor market each year will find work, others will make informal work or will migrate north. The future often represents a corrupt, jobless environment with security issues.
Comprehending the foundations of these three corrupt sectors and the negative effects on Central American democratization play a major role in understanding the isthmus’ realities, causes and effects. Those participating in the current demonstrations know this reality too well and want change.
The biggest political scandal since the republic’s 1985 democratic restoration is underway. The high-profile corruption case has linked Vice President Roxana Baletti and her closest associates to a multi-million dollar scheme within the national customs services. According to the Washington Office on Latin America, customs service personnel associated with Superintendence of T ax Administration officials forged import documents to reduce shipment duties. Bribes up to 60% of merchandise value meant that only 40% reached public coffers.
After thousands of protestors gathered across the country, Baldetti and several other officials were forced to resign. However, President Perez remains firm. “I am going to continue my term. It is a constitutional responsibility,” he asserts. But pressures are mounting and resignation calls continue.
According to the current indictment, Perez has direct responsibility for the fraud. On April 16, the Prosecutor and the International Commission against Impunity in Guatemala (CICIG), a United Nations-supported body, assigned to clean up the Guatemalan judicial system, revealed the existence of this network of bribes, which represents a classic example of political and business corruption.
Neighboring Honduras also faces a political crisis. While Presidents Perez and Honduras’ Juan Orlando Hernandez both refuse to resign, Hernandez has attempted to assume the role of an appealer. Recently he admitted that his National Party received U$S 136,000 from the Honduran Social Security Institute (IHSS) for the campaign that brought him into power in 2013. Local opposition accuse him of receiving much more funding, ranging from US$90 to 330 thousand. 42% of the population lives under extreme poverty by global standards, reports Spain’s newspaper, El Pais.
According to Brazil’s Radio Globo, a number of IHSS officials are currently being detained and investigated on corruption charges. Yet so far there has been no investigation opened formally against members of the National Party or the current head of state. Popular outrage persists, not only to denounce the suspected partiality of the prosecution, but to protest the high level of impunity and state violence since the US-backed coup d’état against Ex-President Manuel Zelaya. There are also popular suspicions about successor administrations’ constant complicity with foreign governments.
The Honduran sociologist, Marvin Barahona, feels that the equation is simple. “This recognition of President only confirms what the organs of civil society have been saying for years, that in Honduras there is a system of impunity” and the “rich steal from the poor.”
One of the most visible protests was a hunger strike titled the “Indignant Movement of Honduras.” A group of one hundred youths pitched tents in the capitol of Tegucigalpa, fearing police onslaught in the coming hours. On June 30, peasant organizations of the Copan region staged the temporary closure of the department’s main roads, a common Latin American protest tactic.
The cancer of corruption also extends to El Salvador. There, a trial has been set against Ex-President Francisco Flores (1994-2004) for diverting US$10 - 15 million donated by Taiwan to finance the election campaign of his party in 2004. The donation had been formerly designated for reconstruction projects following two earthquakes which devastated the tiny, densely populated republic in 2001.
Vox populi on social networks are also publicizing several corruption acts allegedly committed by the republic’s first leftist president, Mauricio Funes, a former guerrilla of the Farabundo Marti National Liberation Front (FMLN). The allegations are unique as they are based on more private-life matters. One incident pertains to Funes, allegedly under the influence of alcohol and narcotics, destroyed a Ferrari one morning. The major Latin American, Miami-headquartered news site the PanAm Post reports that the car was worth several hundred thousand dollars. There is also intelligence relating to the president’s traveling with a younger man who local opposition analysts claim led to the leader and his wife separating.
In Panama, while there have been allegations of Ex-President Ricardo Martinelli (2009-2014) using cocaine and prostitutes with Italian Prime Minister Silvio Berlusconi, he and close associates are being investigated over crimes against public administration. So far, these investigations into the ex-administration have cost the state approximately US$ 100 million according to reports by the current president of Panama, Juan Carlos Varela in an interview with the daily La Prensa published last month. According to Varela, that number could increase as the Attorney further investigates the cases. “These are very important cases of unjust enrichment of officials and patrimonial injury,” said Varela.
Several ministers and senior government officials including businessmen and a former court magistrate are in prison or facing prosecution for corruption and illicit enrichment. Due to mounting public discontent, Martinelli has remained outside of Panama for the past three months.
Corruption threatens not only the well-being of Central Americans but the legitimacy of local institutions. Throughout history, national and international criminal actors have infiltrated and co-opted public agencies and are charged with negatively affecting people’s lives. So while scandals are not new to the isthmus, publicity and protests are newer.
The recent wave of protests reflects a popular victory and transmits a message to the third world; it is increasingly difficult to hide irregularities in a democratic era of increased access to information. High governmental officials have resigned, been imprisoned or left the country. Shady institutions have been revealed and brought under official investigations. Illegalities have been admitted. The common man in Central America is progressively rising up against the cancer of corruption.