How to tackle coronavirus corruption
Latin American governments have a chance to model a better version of the inspector general, with even greater autonomy, to address graft in the public health sector
Latin America as a region has long had a problem with public corruption, and the coronavirus pandemic has made things worse. As governments shovel public funds to fight the pandemic and its economic fallout, public officials are swindling millions, including in the graft-prone public health sector. Fraud and corruption allegations have so far led to the arrest of Bolivia's health minister for allegedly purchasing ventilators at inflated prices, charges against several Colombian mayors for mishandling the purchase of hospital equipment, and investigations into officeholders in several Brazilian states, including one inquiry known as "Corona Jato."
A pandemic is a tough time to advance reforms. But action on corruption cannot wait. The cost of delay, measured in the loss of scarce public resources and the human cost of substandard medical equipment, is too high. To address this urgently, more Latin American governments should strongly consider adopting a vital tool used to supervise federal spending in the United States: the inspector general.
Historically, Latin American countries have settled for using auditors to root out waste, fraud and abuse in government programs. At last count, 22 Latin American and Caribbean nations had a version of Mexico's Superior Auditor of the Federation or Brazil's Federal Court of Accounts, a legislative agency that audits Brazil's executive branch. But auditors do only half the job. They can be very good at examining documents and ledgers, and finding discrepancies that hint at deeper problems. And they are great at catching the misuse of accounting practices, which can hide the misuse of public funds.
But auditors lack the power and training of field investigators, who can search beyond available documents. Good field investigators conduct interviews, cultivate sources, execute court-ordered search warrants, engage in undercover activities, and use subpoenas to secure testimony and documents.
A pandemic is a tough time to advance reforms. But action on corruption cannot wait.
To solve this problem, the U.S. Congress created the inspector general in the 1970s as part of a series of good-government reforms that followed the Watergate scandal. Inspectors general—more than 70 of them at last count, each embedded inside a federal agency and directing their own staff— spend part of their time performing routine audits, like traditional government auditors in Latin America. But inspectors general also conduct field investigations that often result in civil lawsuits filed by the Department of Justice under the powerful False Claims Act and other statutes. And in cases of fraud or corruption, inspectors general team up with federal and state prosecutors to file criminal charges.
In fiscal year 2017, the last year for which statistics are available, inspector general investigations returned roughly $22 billion to federal coffers, yielded more than 4,000 criminal convictions and produced nearly 1,500 successful civil lawsuits against corrupt public officials. And those funds are over and above cost savings yielded by regular audits conducted by inspectors general. When compared to the total U.S. inspector general budget that year of approximately $2.5 billion, the return on investment is obvious.
Another powerful feature of inspectors general is their relationship with Congress. Although appointed by the president and serving under an agency head, they are legally required to report to Congress every six months, and their reports are typically made public. If they uncover what the law calls "particularly serious or flagrant problems," they must report them immediately to the agency head, who is required to transmit the information to Congress within seven days. The power to expose wrongdoing through public reports to a separate branch of government can be highly effective in catalyzing systemic change.
Some might wonder why independent prosecutors—which exist in several countries in the region— don't fulfill these goals. The problem is that, no matter how independent and competent the prosecutor, there is no substitute for a team of investigators and auditors intimately familiar with the inner workings of a public agency to uncover the facts upon which prosecutions are built. Prosecutors, after all, move from case to case, and handle a variety of crimes, whereas inspectors general specialize in sniffing out public corruption and government fraud. The multidisciplinary team of specialized investigators and auditors collaborating with prosecutors has proven highly effective in the U.S.
To complement auditors, some Latin American nations have created anti-corruption agencies in recent years, with mixed success. In Argentina, for example, the Anti-corruption Office under the last administration made great strides in investigating corruption, increasing transparency and establishing anti-corruption guidelines for government contractors. But it has been dogged by at least a perception of favoritism, both under the last president and again following last year's election, when it dropped criminal complaints that implicate the new vice president and her family.
The U.S. inspector general system has been able to generally avoid the impression of partisanship. Agency heads, for example, are prohibited from interfering with investigations, and the president must give Congress 30 days' notice before dismissing an inspector general. However, U.S. President Donald Trump's recent removal of five inspectors general, at least one widely criticized as in retaliation for unflattering findings, has tested the resiliency of the system. Although it remains fundamentally sound—and inspectors general are busy investigating COVID-19-related fraud—proposals are circulating that would better ensure the independence of these internal watchdogs.
These controversies, however, shouldn't discourage Latin America. Indeed, Latin American governments have a chance to model a better version of the inspector general, with greater autonomy. So far, the closest analogue to an inspector general in the region is Colombia's Procuraduría General de La Nación, which is focused on public officials and the use of public funds, and enjoys investigative and even disciplinary authority, which U.S. inspectors general lack. But that model remains rare.
To improve upon the U.S. model, and address the concerns about the autonomy of inspectors general that arose after Trump's recent actions, countries in the region should better protect the independence of any similar watchdogs they create. One way to do so would be to ensure that the inspector general, although part of the executive branch, has strong legislative reporting obligations and cannot be removed without just cause and a public hearing. That feature is missing from the U.S. system, which requires only that the president give Congress 30-days' notice and a reason for his action, which of late has been no more descriptive than a general loss of confidence. Another improvement could be prescribing a five- or even nine-year term, enough to outlast the president who makes that appointment, thus making clear that inspectors general are not beholden to any particular administration's politics.
In much of the region, political elites have little appetite for strengthening anti-corruption tools. Last year, Guatemala disbanded a popular United Nations-backed anti-corruption agency after it began investigating the president for alleged campaign finance violations. Earlier this year, Honduras buried a similar anti-corruption unit backed by the Organization of American States. Brazil's justice minister recently resigned and accused the president of political interference. In Argentina, investigations into alleged corruption involving former President Cristina Fernández de Kirchner have slowed since her election as vice president last October. (Just two days after her swearing in as vice president, courts dropped two federal indictments against Fernández de Kirchner, including charges of alleged bribery in public works contracts.)
But anti-corruption momentum in Latin America is not completely extinguished. In Peru, for example, President Martín Vizcarra has been battling congress over anti-corruption measures and has remained popular with the public for doing so. Colombia and Costa Rica recently joined the Organization for Economic Cooperation and Development, which requires strict transparency measures. Last year, Mexico's congress voted to sharply curtail the immunity previously enjoyed by presidents. Meanwhile, the public in Latin America remains strongly committed to the cause. In Ecuador, voters in 2018 approved a referendum that prohibited officials convicted of corruption from running for office again. In all, 85 percent of Latin Americans consider corruption to be a major public policy challenge according to Transparency International's Global Corruption Barometer survey, and in many recent elections, voters have highlighted corruption as the key issue informing their preferences.
Policymakers in Latin America should answer public demands to ramp up the fight against corruption, even during a crisis that has strained public finances. Indeed, in light of the United States' experience of a more than tenfold return on its investment in inspectors general, budgetary constraints should not stand in the way of bold action. As cases of coronavirus-related misconduct multiply, it is time for Latin American lawmakers to adopt a new approach to fight a longtime problem.
Daniel R. Alonso, a former federal corruption prosecutor, is a partner at Buckley LLP in New York City.
Benjamin N. Gedan, a former South America director on the National Security Council, is deputy director of the Latin American program at the Woodrow Wilson International Center for Scholars.
Disclaimer: This article first appeared on foreignpolicy.com, and is published by special syndication arrangement.
