Reasons for Optimism About Latin America’s Wave of Anticorruption Prosecutions: A Response to Professor Balan

What are we to make of the ongoing wave of corruption prosecutions sweeping Latin America in the wake of the Odebrecht scandal? Many are optimistic that these prosecutions, several of which have implicated very senior political figures, including current and former presidents, signal a turning point for the region. But in a guest post last September, Professor Manuel Balan suggested that this optimism may be misplaced, for three reasons. First, he argued that the enforcement patterns suggest that anticorruption prosecutions are becoming a weaponized—that these prosecutions are being used as a political tool used to bring down opponents, and consequently they lack credibility with much of the public. Second, Professor Balan questioned whether these prosecutions would ultimately be successful in holding powerful, popular wrongdoers accountable, and he argued that these prosecutions will just take down leaders whose positions have weakened for other reasons (such as Dilma Rousseff in Brazil). Third, Professor Balan worried that these prosecutions show that judicial power is increasing at the expense of citizens’ power—that they represent an erosion of “vertical accountability.”

I remain one of the optimists. Indeed, I think that Professor Balan is far too pessimistic about the role that the current anticorruption prosecutions in Latin American can play—and to some extent have already played—in addressing the region’s longstanding corruption and impunity problems. Yet his three objections are worth taking seriously and deserve a direct response. Here’s why I don’t find any of them sufficiently persuasive to share his pessimism:

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Guest Post: Why Disclosures in Foreign Settlements Don’t Spur Domestic Prosecutions in Argentina

Natalia Volosin, a doctoral candidate at Yale Law School and clerk in the Asset Recovery Unit at Argentina’s Attorney General’s Office, contributes the following guest post (adapted and from an op-ed previously published in Spanish in the Argentine newspaper Infobae):

The so-called “Lavo Jato” investigation into bribery and money laundering at Brazil’s state-owned oil company Petrobras led to the biggest transnational bribery settlement in history: In December 2016, the Brazilian construction conglomerate Odebrecht reached a settlement with law enforcement authorities in the United States, Brazil, and Switzerland; in exchange for its guilty plea, Odebrecht and its affiliate Braskem agreed to pay the three countries a total of $3.5 billion, of which the first firm alone will pay $2.6 billion. (Odebrecht agreed that the total criminal penalty amounts to $4.5 billion, but the final number will be determined according to its ability to pay, though it will be no less than $2.6 billion.) According to the agreement, Brazil will get 80 per cent of the penalty, while the United States and Switzerland will get 10 per cent each.

Some hope that the Odebrecht settlement will provide a boost to anticorruption investigations in other countries. After all, in the settlement documents, the firm acknowledged to having made illegal payments worth $788 million between 2001 and 2016, not only in Brazil, but in a dozen countries including Angola, Argentina, Colombia, Mexico, and Venezuela. In Argentina specifically, Odebrecht admitted that between 2007 and 2014, in three separate infrastructure projects, it paid intermediaries a total of $35 million knowing that they would be partially transferred to government officials. These criminal practices earned the company a $278 million benefit—a return on “investment” of over 694% (the highest among all the recipient countries). Will these revelations have significant consequences for the prosecution of corruption cases in Argentina?

The answer is probably no, at least not in the short term. Continue reading