Anti-corruption enforcement loses momentum in Latin America | Analyst Picks| RiskMap 2021
Anti-corruption enforcement loses momentum in Latin AmericaAdriana Thomas | Associate Analyst
In 2021, pressing socio-economic issues and complex politics will see further degradation in Latin America’s capacity to combat corruption. The deep-seated culture of graft has long been among the greatest concerns for business in the region. An unprecedented wave of anti-corruption efforts in recent years raised expectations that Latin American governments were serious about tackling the problem. But now, anti-corruption enforcement seems to be losing force.
As highlighted in our 2020 Capacity to Combat Corruption (CCC) Index, corruption “enforcement fatigue” is clear. Pressing issues, including socio-economic grievances, continue to accumulate and are gradually taking the central stage of policymaking and activism. The side-tracking of the corruption crackdown is also a result of increasingly complex political scenarios. Peru, for example, where the pandemic and fragile governability prospects – the country had three presidents in a week in November 2020 – have relegated anti-corruption matters.
Combating graft has become increasingly complicated due to its politicisation and the drive of vested, elite interests in reversing some of the gains against corruption around the region. In countries such as Ecuador, Argentina, Bolivia and Mexico, high-profile cases, as well as policymaking, more often reflects political expediency than a comprehensive commitment to fight corruption. In other parts of the region, including Brazil and Guatemala, the undermining of agencies has impeded further advancements of the anti-corruption agenda.
The COVID-19 pandemic has increased corruption concerns, particularly regarding emergency procurement and spending of public funds. Claims of embezzlement, internal fraud and opaque public purchasing have emerged from north to south. Corruption in the health care sector is a long-standing, regional issue. The current situation is an example of how the pandemic has accelerated and intensified a series of pre-existing risks. This trend will continue throughout 2021.
Social awareness around corrupt practices has increased in recent years throughout the region. Companies making complex deals with authorities will face increased scrutiny. This understanding of corruption risks during the pandemic will see growing discontent with the handling of the COVID-19 crisis and disillusionment with the political class.
Most countries are in a better position now than they were five years ago in their capacity to combat corruption. Companies operating in Latin America have gradually adopted compliance protocols and anti-corruption standards in a systematic way. Progress at the political and national levels will move more slowly in 2021.