Odebrecht scandal in Latin America shows need for new technology
The biggest bribery scandal in Latin America’s recent memory — the Odebrecht construction giant’s nearly $800 million in illegal payments to government officials in Brazil, Colombia, Peru, Argentina, Mexico, Venezuela and several other countries — should become a turning point in the region’s fight against corruption.
There are several new ideas that anti-corruption experts are studying that could help countries prevent government corruption. They should be tried right away, before corruption erodes what’s left of public trust in Latin American democracies.
The Odebrecht scandal has already become one of the top threats to political and economic stability in the region. In recent days, a former senator triggered a political earthquake in Colombia by claiming that part of Odebrecht’s bribes ended up in President Juan Manuel Santos’ campaign. Similar charges popped up in Panama against President Juan Carlos Varela, and have circulated for weeks around Brazilian President Michel Temer.
In Peru, a judge issued an international arrest warrant for former President Alejandro Toledo.
While all of them have denied any wrongdoing, there are fears that the Odebrecht investigation could shake up several governments. Prosecutors are just beginning to disclose the names of officials who they say received the bribes. Odebrecht has admitted to having paid $349 million in bribes in Brazil, $98 million in Venezuela, $92 million in the Dominican Republic, $35 million in Argentina, $34 million in Ecuador, $29 million in Peru, $11 million in Colombia and $10.5 million in Mexico, according to US, Brazilian and Swiss officials.
The company also built the Miami airport, but investigators have not disclosed any irregularities in the firm’s US contracts.
What can we learn from this mega-corruption case? In general, it has proven once again that democracy, and a solid system of checks and balances, are the best antidotes against corruption.
It’s no coincidence that most of Odebrecht’s bribes were paid to officials of the populist governments of Dilma Rousseff in Brazil, Hugo Chávez and Nicolas Maduro in Venezuela, Cristina Fernandez de Kirchner in Argentina and Rafael Correa in Ecuador. In many of these countries, there was little congressional oversight or judicial independence.
But, considering that a sizable part Odebrecht’s bribes were used for political campaigns, there are some concrete steps that countries could take to make political campaign contributions more transparent.
In addition to prohibiting cash donations, countries could demand that all future political contributions be done through Blockchain, the financial world’s new technology that uses virtual currencies such as Bitcoin.
Transparency International, the anti-corruption advocacy group, is already experimenting with that idea. It says that Blockchain would make it much easier and faster to trace donations, no matter how many intermediaries they go through.
Under this plan, politicians would only be allowed to receive donations in Bitcoins or another virtual currency that could be specially designed for political contributions. They would use this virtual money to pay for tshirts, caps or any other campaign expenses, and only the last supplier — the t-shirt manufacturer, for instance — would be allowed to exchange the virtual currency for cash.
“Think of it like buying chips in a casino: you can only use them in the casino, until you leave,” Transparency International’s Mexico office director Eduardo Bohorquez told me. “If you wanted to contribute to a political campaign, you would have to do it with a virtual currency whose transactions can be easily traced from beginning to end.”
Another good idea would be to do a world ranking of corruption of multinational companies, much like Transparency International does its annual ranking of corruption perception of countries around the world.
Bohorquez told me a company corruption ranking would be difficult to implement, because it would open the doors to lawsuits by companies that feel unfairly singled out. Instead, TI is working on a system to target multinational companies that are under investigation for corruption charges, so that all countries can be informed of each company’s corruption standing, he said.
The Odebrecht scandal should be an urgent call to take drastic measures to curb corruption. And new technologies such as Blockchain could do what countless government laws and regulations have failed to do. It’s worth trying.