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Dirty money: why are so many Latin Americans so poor? Just ask their improbably rich political leaders.

The phrase "Latin American corruption" unfortunately rolls off the tongue as readily as "carnival in Brazil" or "Mexican mariachis:' A long-decried culture of public thievery in the region extends from street kids charging motorists for "watching" parked cars to crooked politicos pocketing millions in kickbacks for public contracts.

Corruption is a major reason why 43% of Latin America's 511 million inhabitants live in poverty and lack decent health care, education and the prospects of a better life. Peter Eigen, chairman of global anticorruption watchdog Transparency International, estimates that US$400 billion is lost each year to corruption. In Latin America, at least 10% of the region's gross domestic product annually is eaten up by graft, according to a 2004 study by the Inter-American Development Bank.

But there are signs that the days of endemic graft may be numbered. The democratization of Latin America, a growing public intolerance of illicit payments, increased media scrutiny--even the global war on terrorism may finally pry corruption from Latin American culture.

Transparency International's 2004 report on 146 countries showed that six Latin American nations improved their scores from the previous year on the group's Corruption Perceptions Index, which ranges from zero--the most corrupt--to a squeaky-clean 10. Countries that improved include Guatemala, Bolivia, Dominican Republic, Peru, Venezuela and Cuba--although several still rank as rampantly corrupt. Chile is the least corrupt with a 7.4 rating while Haiti remains the worst, with a 1.5 score.

But the most telling development in recent years is the record number of former and sitting presidents who have been impeached, jailed, forced into exile or charged with crimes ranging from receiving illegal campaign financing and corporate payoffs to embezzlement and illicit enrichment.

Impeached presidents include Brazil's Fernando Collor de Mello, Ecuador's Abdala Bucaram, and Paraguay's Raul Cubas and Luis Gonzalez Macchi. In Costa Rica, Rafael Angel Calderon and Miguel Angel Rodriguez have been jailed, the latter after he returned in October 2004 from his post as head of the Organization of American States. Arnoldo Aleman is serving a 20-year sentence in a Nicaraguan prison for embezzlement. Argentina's Carlos Menem, Peru's Alberto Fujimori, Ecuador's Gustavo Noboa and Guatemala's Alfonso Portillo have been forced into exile. Former Chilean dictator Augusto Pinochet and Costa Rica's Jose Maria Figueres are the subject of corruption probes.

Current presidents under investigation include Nicaragua's Enrique Bolanos and Costa Rica's Abel Pacheco, who have both been charged with illegal campaign financing. Ecuador's Congress has investigated President Lucio Gutierrez on similar grounds. Most recently, Mireya Moscoso, the former president of Panama, was stripped of her political immunity by the nation's electoral tribunal over allegations that $70 million of public spending was not accounted for under her administration. She has already admitted using $3 million in public funds for personal effects.

For major inroads to be made, Latin American governments must pass legislation that lifts immunity for crooked politicians; makes it mandatory to disclose donations to political parties and candidates; and imprisons corporate executives who bribe officials in exchange for contracts that would not otherwise be awarded. Most importantly, the United States and the European Union must curb the flow of stolen assets into secret bank accounts by punishing financial institutions that help leaders illegally enrich themselves.

Washington has long tolerated corruption in Latin America, yet the U.S. government played an important role in weeding out graft in the post-Sept. 11 era. Despite its many flaws, the U.S. Patriot Act has expanded the range of evidence used in court when investigating foreigners suspected of money laundering, which previously had been a non-issue. In recent years, U.S. investigators have found $100 million held by Nicaragua's Aleman, nearly $8 million belonging to Pinochet and have returned to Peru $100 million from accounts held by that nation's former intelligence chief, Vladimiro Montesinos. Washington has also denied visas to at least three former presidents charged with corruption: Colombia's President Ernesto Samper, Panama's Ernesto Perez Balladares and Peru's Fujimori.

It's imperative that Latin America meet the United Nations Millennium Development goal of halving the number of people living in extreme poverty by 2015. But to do that, its leaders must at least halve the billions lost to corruption.

COMMENTS? WRITE: siliconjack@latintrade.com

JACK EPSTEIN

SILICON JACK
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Author:Epstein, Jack
Publication:Latin Trade
Geographic Code:0LATI
Date:Mar 1, 2005
Words:705
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