Corruption in Peru: When Pandora’s Box is Opened

When Peruvians went to the urns last year, corruption was visible on the campaign agenda of all leading candidates. President Pedro Pablo Kuczynski became President in July 2016 on an “anti-corruption” agenda, managing to convince over 50% of the voting electorate that he could be trusted to stamp out rampant corruption at all official levels. Just over 18 months later, few could predict the term today would be more polemic than ever, having been thrust to the forefront of politics in an unprecedented manner, implicating politicians at the highest political level – not least Kuczynski himself.

The Pandora’s Box was opened in December 2016 when Brazilian construction company Odebrecht signed the largest ever settlement for corrupt behaviour, after admitting to bribing officials in a number of countries, including in Peru. The scandal will surely go down as one of the highest level corruption scandals of the era. Specifically, the company admitted to having paid bribes worth approximately USD 29m to Peruvian government officials during the administrations of former presidents Alejandro Toledo (2001-06), Alan García (2006-11) and Ollanta Humala (2011-16) – Humala is currently in preventive custody for alleged money laundering.

Image Courtesy of Presidencia Perú
via Flickr, © 2016, some rights reserved

Kuczynski himself was the latest head on the block. He narrowly avoided impeachment in December in a motion that was called by opposition Congress people on the grounds that he was “morally incapable” of leading the country after allegations that he too received bribes from Odebrecht. Kucznski’s salvation was likely less to do with the congressional belief of his innocence and much more as a result of a quid-pro-quo deal with the opposition to save himself in return for the release of imprisoned disgraced former president Alberto Fujimori (1990-2000).

What can we expect in coming months? More people will fall. With Jorge Barata, former head of Odebrecht in Peru, to testify in front of judges in the coming weeks, the outcome is likely to be catastrophic for a number of politicians and result in investigations into more officials and, potentially, companies. Investigations into alleged corrupt political officials will continue into 2018, potentially implicating former presidents and high-level politicians from all over the political spectrum. Kuczynski himself is likely to face further a further impeachment vote, and he may struggle to save himself in this one.

A common question from the international observer is whether all this demonstrates that we are in front of unprecedented levels of corruption in Peru and more broadly in the region. However, this does not accurately explain what we are seeing today. What we are seeing is unprecedented levels of public intolerance and regional pressure for corruption investigations. The influence of social media has meant that previously inaccessible information is now very much in the public sphere and corruption went from being something intangible to something whose effects are very visible, and it is now clear how much harm it is doing. Not only are high-level officials taking the hit, something that is demonstrating accountability at the highest levels, but the effects of corruption are more visible and available than ever. Clear statistics have now become common knowledge, thanks in part to the social media revolution; for example, local media in December 2017 revealed that 14 of 25 regional governors were under investigation for corruption-related crimes, and in August 2017, local media stated that corruption was responsible for the loss of up to 5% of the national budget annually.

This has generated a gradual change in the perception of corruption. According to Transparency International’s Corruption Perceptions Index 2016, Peru ranked 101st of 176 countries (where 1 is considered least corrupt), down more than 20 places since 2011. It used to be common to hear discussions where locals accused politicians or companies of robbing from the state, but people balanced this by stating that at least the projects they were working on were completed. Now, Peruvians not only want those very same projects to be carried out transparently but they are gradually demanding such transparency. That is the reason why we have seen massive marches against corruption – both in Peru and more broadly in the South American region.

The government is aware that opinion is changing and that it needs to keep up, not least to improve its own dire popularity levels. In January, a law passed which will prevent local politicians convicted of corruption from competing in regional or municipal elections. For a country where almost 12,000 local officials have been proven guilty of corruption between 2009 and 2017 (according to the Comptroller General), this was a long time coming. It also remains to be seen how effective this law will be, given high rates of impunity for corruption.

The situation is not perfect; there are major flaws in certain elements of legislation, and a blanket independent approach to rooting out corruption is far from likely in the short term. It is also important to understand how the political situation will affect the government’s ability to combat corruption. Kuczynski will be hindered by Keiko Fujimori’s Popular Force party (FP) (which holds 61 of 130 seats in Congress) and other small opposition groups. He will be forced to compromise on some of his more ambitious reform policies, including the potential for reforming public-sector bodies and potentially investigating certain controversial projects. The reason for this is related to the FP’s objections for a variety of reasons, including ostensibly to protect public officials favourable to the FP and also to show the ruling party as weak and inept, which will allow them to gain ground for the 2021 elections.

Nonetheless, the future is not entirely dire. The population has been made aware of the depth of the issue and will increasingly demand that the public servants and companies are made to take responsibility for their actions. The government will have to step up its game, or it will find that accountability is increasingly imposed from the bottom up.

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