STRENGTHENING TRANSPARENCY IN CENTRAL AMERICA
4 Mechanisms to prevent, detect, expose, and penalize corruption
Central America, June 2013
Year 4, No. 1 Konrad Adenauer Foundation Central American Network of Think Tanks and Advocacy –laRED– June 2013 Guatemala, Guatemala ISBN: 978-9929-618-21-3 The contents of this study do not necessarily express the opinion of the Konrad Adenauer Foundation or of the institutions that form the Central American Network of Think Tanks and Advocacy. Its partial or total reproduction is permitted, as long as the source is cited.
Responsible Editors Eduardo Stein Annette Schwarzbauer Jorge Benavides Fernando Spross Editorial Coordination Mariano Rayo Claudia Maselli Cover Design Christian Barahona Interior Design and Layout Serviprensa English Translation Silvia Chinchilla de Palomino Text correction Serviprensa Printing Serviprensa S.A. 3ra. avenida 14-62, zona 1
[email protected] PBX: (502) 2245-8888 1,500 books
Index
Executive Summary 9 Presentation 15 Introduction 17 1. The Government’s Budget as a potential Corruption focus 23 • Adopting International Standards 25 • Steps to improve the disclosure of budgetary information 30 2. Main action areas to strengthen Transparency 33 • Existing elements that strengthen Transparency 34 • Obstacles to combat Corruption 38 3. Proper Operation of the Public Information Integrated Systems 41 • Supervision Systems for the Quality of Public Expenditure 46 4. Strengthening the Institutions that Audit the Budget 51 • Processes to appoint and remove Authorities 54 • Independence in the Performance of their Duties 56 5. Cooperation and Participation Environments for Citizens 59 • Acknowledgement in the regulatory framework of each country 61 • Application of the Citizen Participation Mechanisms 67 6. Discretion in the Public Budget management 71 • Potential Corruption Sources 72 • Discretion in the Budgetary execution 75 7. Ethical Dimension of Strengthening Transparency 79 • What is the situation in the Central American countries? 80 Recommendations 91
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Graphics, Illustrations and Charts Graph 1.
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Global Competitiveness Index 2013: Factors that limit competitiveness according to the entrepreneurial perception
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Graph 2.
Budgets in Central America: executed budget at the end of the year (figures in US$ million)
72
Graph 3.
Budgets in Central America: arbitrariness in the execution of the public funds according to the Object of the Expense
77
Illustration 1. Reference framework: variables included in the analysis
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Illustration 2. Budgetary Cycle: stages for defining, approving, executing, and evaluating the Budget
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Illustration 3. Budgetary Information: Documents for the Open Budget Index
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Illustration 4. Public Information Integrated Systems: logical framework for operation in institutions
42
Illustration 5. Statement on the Open Government: commitments undertaken by the signatory countries
44
Illustration 6. Quality Spending: evaluation criteria to include in the public information systems
47
Chart 1.
Open Budgets Index: evaluation scores based on the amount and quality of the budgetary information
27
Chart 2.
Budgetary Information: Documents for the Open Budget Index
27
Chart 3.
Budget Information: areas to improve to promote greater citizen involvement
31
Chart 4.
Current legislation: regulations in Central America to strengthen Transparency
34
Chart 5.
Institutions: Central American entities that promote Transparency 35
Chart 6.
Cooperation and Involvement Environments: structures that promote the citizens participation
36
Chart 7.
Process of the Fight against Corruption: obstacles to strengthen Transparency in Central America
38
Chart 8.
Public Information integrated Systems: Tools implemented in Central America
45
Chart 9.
Quality of the Public Expenditure: Institutions that evaluate the quality of the budgetary execution
48
Chart 10.
Fight against corruption: Institutions that monitor the budget in Central America
51
Chart 11.
Control Institutions: appointment and removal processes of authorities in Central America
55
Chart 12.
Citizen Participation: mechanisms recently used in Central America to strengthen Transparency
69
Chart 13.
Budgets in Central America: executed budgets by Expenditure Group (figures in US$ million)
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Chart 14.
Budgets in Central America: Budget yield by Object of the Expense (figures in US$ million)
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CENTERS MEMBERS OF la red COSTA RICA Fundación para la Paz y la Democracia - FUNPADEM Tel. (506) 2283-9435 e-mail:
[email protected] www.funpadem.org EL SALVADOR Fundación Nacional para el Desarrollo - FUNDE Tel. (503) 2209-5300 e-mail:
[email protected] www.funde.org Fundación Salvadoreña para el Desarrollo Económico y Social- FUSADES Tel. (503) 2248-5600 e-mail:
[email protected] www.fusades.org GUATEMALA Asociación de Investigación y Estudios Sociales - ASIES Tel: (502) 2201-6300 e-mail:
[email protected] www.asies.org.gt Fundación para el Desarrollo de Guatemala - FUNDESA Tel: (502) 2331-5133 e-mail:
[email protected] www.fundesa.org.gt HONDURAS Instituto de Investigación de Políticas Públicas de la Universidad Tecnológica Centroamericana (IIPP-UNITEC) Tel: (504) 2268-100 y 2202 4400 e-mail:
[email protected] www.unitec.edu NICARAGUA Fundación Nicaragüense para el Desarrollo Económico y Social-FUNIDES Tel. (505) 2270-6490/91 e-mail:
[email protected] www.funides.com Instituto de Estudios Estratégicos y Políticas Públicas -IEEPP Tel. (505) 2278-6535, 2270-5104 www.ieepp.org LA RED COORDINATION Tel: (502) 2201-6300 Fax: (502) 2360-2259 e-mail:
[email protected] www.laredcentroamericana.org
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Executive Summary
T
he greatest impact in countries where there is a lack of transparency in the management of public funds concentrates in the least favored segment of the population, since in the presence of high corruption levels, many of the human and financial resources that should be destined to alleviate poverty and the most urgent needs of the people are reoriented to activities that generate additional costs related with the payment of particular favors, the decision-making in favor of interest groups, overvaluing, and the search of private income for individuals. The number of problems resulted from the existence of corruption in Central America is extensive; however, instead of compiling the information and studies on the issue prepared by expert institutions during the last years, our aim was to make a contribution, delimiting the problem to those areas that, through a higher citizen’s participation, allow the strengthening of transparency, the reduction of opacity, and the cultivation of accountability as tools to fight corruption in Central America. As a reference, the methodology of analysis used in the approach of this study delimits the analysis of corruption to three dimensions that interact with one another: (1) the first one includes the roles of institutions, the regulations for the interaction between the public sector and society, and the participation spaces created to strengthen transparency in each of the countries involved in this study; (2) the second one takes into consideration the prevention, detection, accusation, and sanction of corruption practices, and (3) the third one analyzes the four different stages of the budgeting cycle of the Government. This type of outline contributes to reach a higher degree of specificity on the recommendations that can be made to the four countries included in this study: Guatemala, El Salvador, Honduras, and Costa Rica. The first chapter of the study analyzes the budgetary process in the four countries studied, identifying the improvements that can be made with the participation of the citizens as a controlling and participating entity on the Central American central Governments designation of administrative funds. This information gives rise to the structure of the next chapters, where we rescue the role that regulations, institutions, and citizens’ participation spaces have in the prevention and fight against the existing corruption in the public budgets of the Central American central Governments.
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Strengthening Transparency in Central America
From the results of the analysis are some key points below: (a) Current legislation: The acknowledgement of specific laws against the illicit enrichment and for the public procurement and contracting is highlighted. It is also important the fact that the four countries recognize the regulation of the civil service as a crucial issue to promote transparency. Among the challenges to approach are the regionalization of the Asset Forfeiture Law, the improvement of the regulations for the Information Systems, and the application of the Statement of the Open Government (2011). (b) Institutions: Three countries have two institutions in common: the Court of Audit and the special office against corruption in the Public Prosecutor’s Office. It is clear that a greater coordination between these two institutions would reinforce the regional results on the combat against corruption; it is important to recognize weakness in preventing corruption. Thus, we highlight the important role that the Economic and Social Committees play as agents of change and improvement in the public budgets. (c) Environments for Cooperation: This area has abundant projects and programs to jointly address corruption with the aid of the civil society. However, more than participation, evidence shows that the little legal recognition given to the cooperation and participation institutions has damaged Central American democracies, thus preventing the weaving of strong social fabrics that favor public actions to make an optimal use of the resources available and to strengthen transparency in the execution of the national budgets. On the other hand, for each one of the stages in the combat to corruption, there are concrete actions that will help eliminate the obstacles that prevent a proper accountability to the citizens as a mechanism to promote transparency through more participation, strengthening institutions and adapting the current legislation to the actual challenges of each country. Below are the most relevant findings of the analysis: (a) Prevention: The results in the four countries show the absence of an appropriate regulatory framework to promote the prevention of corruption, of which the promotion of an ethics code is important, as well as more controls to the performance of public servants. It is interesting that the four countries identify as a characteristic of this stage the lack of cooperation environments and of participation that allows the civil society keep track of the resources execution, and the need of a national policy on open government. (b) Detection: supervision and control systems that provide access to information of the bidding, selection, execution, liquidation, and revision processes and to inspect the quality of the goods and services acquired by the Government. It has special importance to work on the systems that
10
Executive Summary
allow the evaluation of the quality of the public expenditure in each one of the countries. (c) Accusation: On the accusation stage, the analysis of the particular cases for every country shows that the point in common is the lack of follow-up to accusations that the citizens make on suspicious activities that may be an indicator of corruption. The little availability of resources for the operation of the offices against corruption cause the impunity indexes to rise every year, intensifying the lack of confidence from the citizens to the institutions in charge of fighting against corruption. (d) Sanction: In the sanctioning for corruption crimes, there is still work that needs to be done in the classification of crimes specific to the diversion of resources, trading in influences, and illicit enrichment. The inexistence of transparent procedures, technical requirements and previous experience is a shortcoming in almost every country in the appointment of officials of control institutions. To these institutional weaknesses we can add several juridical breaches, such as the lack of legal frameworks in the protection of witnesses to corruption activities, although several countries have advanced in the approval of laws against corruption and illicit enrichment. As a summary, we highlight the importance of respect to the institutional framework among powers as a foundation of Central American Institutions. Despite the fact that general regulations recognize the independence of the institutions responsible for controlling the budget, a common practice has been the intervention in attributions when appointing and/or removing the authorities for each one of these institutions; it is necessary to depolitize the appointment of those responsible to fulfill the key positions in the prevention and fight against corruption in Central America. More participation causes the citizens become involved in screening the information available and in demanding the public servants to provide full and timely disclosure of the initiatives related with their performance, the achievement of goals in the country, and in the acquisitions of goods, services, and assets. Direct communication becomes essential with the representatives, as well as the indirect communications through the media, traditional and new. Recent evidence shows that the new media and the social networks have become important instruments in the prevention and fight against corruption. Finally, as a conclusion we must recognize that there is an additional factor that induces to practice corruption, which is related with the willpower of the public servants in the proper management of the public resources; this is the point where their ethical behavior on their discretional use in executing the budget comes to the test, where fraudulent activities are promoted. The mechanisms that were analyzed allow a meticulous follow-up to the budgeting process, following the current regulations and to the processes defined for the acquisitions and contracting in the Government; however, if there is more
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Strengthening Transparency in Central America
discretion in managing resources, there is a higher possibility of corruption when the public officer is not controlled by the Governmental institutions or by the citizens. As part of the analysis, we made an effort to scale the dimension of the public funds under the charge of the Governments from each one of the countries included in the study (executed budget of every year). With a higher or lower degree of availability, we note that every one of the analyzed countries manages an annual budget that ranges between US$ 3,600 million and US$ 12,150 million, amounts on which it is necessary to evaluate the destination of the execution and items where there is a higher or lower level or arbitrariness in the public servants. The thesis of this part of the study is that, the higher the discretion in the use of funds – explained as the degree of freedom that the public servant has at the moment of deciding the final destination of the public funds without an adherence to current law (on this matter, there is a direct link with the quality of the public expenditure) – the higher is the probability of suspicious practices on the type of good or service contracted, the valuation of the acquired asset, or the objectivity of the personnel contracted for public service. A specific analysis of each expenditure object and group allows us to identify the potential corruption areas in the budgets; nevertheless, the category that calls for more attention corresponds to those items with a high probability of arbitrariness for illicit means, in which we find the purchase of materials and supplies, and the current and capital transfers. The amount of resources destined to these items in the four countries amount to US$ 7,310 million or the equivalent to 24.3% of the total funds executed on 2012. The study ends with a discussion on the ethical dimensions of the public service, mainly by answering the question: Is there tolerance to corruption in the Central American countries? There are interesting findings about the “proper environment” that corruption needs in order to prosper. These environments are created by those tolerant societies that protect corruption and by others that do not allow or protect the development of corruption practices. Therefore, it is not strange to find in the second societies political regimes that are relatively stable while on the others the institutional structure of the Governments are more fragile. As a conclusion, working to strengthen transparency in the Central American countries is directly related to the will of building solid democracies capable of opportunely and efficiently treating the most urgent needs in the population, with a long-term vision, and admitting that an efficient public funds management is the first step to begin building societies that are capable of generating more and better opportunities for the development of their citizens. On the contrary, when opacity is the standard, citizens become more permissive to the existence of corruption in public servants, in the private
12
Executive Summary
segment, and in civil society, and when justice bodies cannot reduce the high impunity rates and the delays in addressing cases related with the issue, we face a society that can do very little in solving the conditions of poverty, inequality, marginalization, and lack of opportunities. The governmental budget is the main tool to implement public policies; however, when weak regulations or their failure to enforce it, the little institutional alignment with the country goals (excessive bureaucracy and the multiple steps to execute the budget) and the lack of citizens’ empowerment do not allow an optimal use of such resources, we must recognize the need of urgent and radical changes. On the recommendations section, we list approximately 20 items to be worked in the future with a view to the efficient prevention and combat of corruption from the institutions responsible, considering that a larger citizen’s participation will be crucial to obtain lasting and long-term results.
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Presentation
T
he cancer of corruption and its multiple ramifications, implications and consequences, along with public insecurity and violence, has become one of the most important obstacles for the development and governance of Central American societies.
This issue does not require many qualifications and the population of the isthmus find it everywhere, in purchases and investments, from the local and municipal environment to the large governmental environments. Likewise, the national and regional media constantly reflect on their screens, microphones or sheets, signs of corruption or clear reports of corruption, most of them coming from the public sphere. The problem is heightened with the general perception that little or nothing can be done, especially when the ethics of a tolerant or opportunistic public combines with institutions that are weak in their functions of control and inspection, that are incapable of preventing corrupt actions, investigating them, deducting responsibilities and then prosecuting them in exemplary fashion, regardless of the position a corrupt official may hold or his real economic or political power. Some events are discovered and reported, but it always seems that nothing happens… Corruption, like a real multiple-headed monster, becomes very difficult to face, avoid, contain and reduce; when corruption exists, operates and nurtures from the sophisticated complicity between public decision-makers and their private suppliers – either national or international -, develops in the middle of a defective justice system or an accommodating or resigned society. Corruption, under the blanket of impunity, results in an enormous challenge to any society that genuinely desires to improve the democratic coexistence and its living conditions, and to multiply their legitimate options for human development. Therefore, the issue of fight against corruption must be a priority subject in the public agenda, as noted in the introduction of this document and must be accompanied by the promotion of transparency and accountability in every segment, encouraging the certainty of punishment to the corrupt. Accordingly, the study that the member institutions of laRED present, with the support of Fundación Konrad Adenauer, is a logical consequence of the work
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Strengthening Transparency in Central America
we have done in the past on Central American organized crime and money or assets laundering, key issues for the political and democratic health of Central American societies, and for real development possibilities in the individual, family, community, national and regional scope of our population. In this document, corruption is approached systemically from several points of view that result fundamental from the methodological as from the socialpolitical views. On one side, we have the elaboration, discussion and approval process of the national budget and all the public information – by law, with unrestricted public access–, that can be useful for public auditing and supervision of the Governmental controlling bodies. On the other hand, supervision and public auditing, besides being the responsible supervision entities, provide aid to the organized surveillance society. The budget elaboration and approval process, as an essential principle in the public spending chain, becomes the starting point that allows the broadest interrelations between the priority issues of the governmental agenda and their thematic emphasis, as well as in the quality of the management performance. It also links the parties represented in the Congress and the preferential environmental for future public spending, initiating the explanation of the future purchases and hiring government agenda. Furthermore, the emphasis on the citizens’ commitment to monitor the public spending, starting from the budget elaboration and discussion process, needs the involvement and responsibility of an organized society, a responsible society that wants to aid its public institutions have better performance. Public institutions without the involvement and monitoring from society have shown to have the tendency to opacity. Joining these two dimensions and platforms can offer the opportunity to a closer, detailed follow-up and nurture the potential of improving the performance in politics and in the political parties.
Eduardo Stein Barillas Coordinator of la RED
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Annette Schwarzbauer Representative of the Konrad Adenauer Foundation for Guatemala and Honduras
Introduction
C
orruption is a burden that hinders development in the countries, since it is accompanied by funds misappropriation from a society anxiously in need of welfare to particular destinations far away from legality. The greatest impact that countries suffer where there is need of transparency in the public funds management and opacity is the rule, concentrates in the least favored segments of the population; when the corruption levels are high, many of the human and financial resources that should be destined to relieve poverty and society’s most urgent needs are reoriented to activities that generate additional costs related to the payment of particular favors, to decisions made in favor of interested groups, overvaluation, and to the search of private income.
It is important to note the relevance of generating change in corruption; these advances are a magnificent signal for the future development of the region, not only for the link found between corruption and poverty, but also for the evidence found by professor Johan Graf Lambsdorff, from Passau University, responsible of the preparation of the Corruption Perception Index –CPI–1 from Transparency International: “Proof shows that an one-point improvement on the CPI (on a 10-point scale) increases the capital income by 0.5% of the gross domestic product of a country and the average income up to 4%”.2 Likewise, the perception on the effect that corruption has on the development of the countries negatively affects the creation or more and better development opportunities. The factor that limits the most in the Central American northern triangle, besides the high criminality rates3, is corruption, according to the Global Competitiveness Index4, prepared by the World Economic Forum 1
The Corruption Perception Index (CPI) has the objective of classifying countries by the grade of the existing corruption in public servants and politicians that is perceived. This index is based on the survey results prepared by several institutions, as well as interviews made by entrepreneurs and analysts on the corruption levels present in each country. 2 Transparency International (2011) “Corruption Perception Index 2011“. Edition in charge of Transparency International. Transparency International, Germany. 3 The entrepreneurial survey designed by the World Economic Forum to evaluation the Global Competitiveness Index defines a perception of insecurity from entrepreneurs caused by the existence of constant criminal actions related with contract killings, extortion, theft of goods, and homicides rate. 4 The Global Competitiveness Index is a tool prepared by the World Economic Forum (WEF) to identify and compare the ability to provide economic development opportunities to
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Strengthening Transparency in Central America
in 2013 based on the survey made to entrepreneurs in each country. Costa Rica holds the fourth place in the analysis; although corruption is not the main limiting issue for competitiveness, according to entrepreneurs, it still is in fourth place on this list, which is closely related with the main subject mentioned on the results for this country: bureaucratic inefficiency. Graph 1: Global Competitiveness Index 2013: Factors that limit competitiveness according to the entrepreneurial perception 30% 25% 25.50% 20% 15%
17.10%
10%
21.20%
20.20%
18.40%
16.40% 12.60%
5%
7.00%
0% Guatemala
El Salvador
Honduras
Costa Rica
u Los valores representan el porcentaje de respuestas que indicaron que (x) es el factor que más limita la competitividad en el país
Source: own preparation based on the information published by the World Economic Forum.
The previous graph shows the sense of urgency to obtain solid and visible outcomes. We cannot continue allowing that structural deficiencies in the public management, licit as well as illicit, undermine public policies to benefit others and risk quality in the government, as its ability to act in favor of the general welfare. Fight against corruption must be a priority issue in the national and regional public agenda, along with the promotion of transparency and accountability in every segment (e. g. the public segment, the private segment, and the civil society), encouraging the certainty of punishment to the corrupt. High levels of corruption, beyond the evident economic cost, prevent investment in social matters, such as education, health and basic infrastructure. Similarly, corruption becomes a vehicle to criminal groups and consumes resources that could be used for crime prevention and the reintegration into society of people who had conflicts with the law. the citizens of the countries analyzed. It analyzes 108 indicators grouped in 12 pillars that evaluate 3 categories: basic requirements, efficiency enhancers, and innovation and sophistication factors.
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Introduction
The amount of problems that come with the existence of corruption in Central America is extensive. However, instead of compiling the information that the studies from expert institutions have prepared during the last years, it is necessary to do something about it, narrowing down the problem to those areas that, through more involvement from society, allow the strengthening of transparency, reduce opacity, and raise accountability to be used as tools to fight corruption with the management of public funds in the central governments. We do not suggest reductionism or to minimize the problem of corruption, but the analysis we present in this document aims to be a starting point to be used as a foundation for prevention and fight against corruption in other environments and through other tools, such as strengthening the political parties and their supervision function from the Congress or a larger involvement from society in defining policies and spaces for budget execution. Furthermore, transparency covers various areas, such as civic culture, social and political capital accumulation, accountability on a national and sub-national level, relationships between the Government and its suppliers, and the set of policies destined to favor or set back the economic activities of the interest groups. Despite this, again, the aim of this study concentrates on the use of the information system in order for society to know in a timely manner how the national budget is executed and have a higher incidence on the quality of the funds that will be spent. For the previous reasons, the following document aims to identify those areas where society can participate to contribute in the prevention and fight against corruption. We have focused our attention to those stages of the public budget formulation and approval that show a greater vulnerability to the corruption threats, highlighting the specific action areas that need to be considered to strengthen transparency in the public funds management. We highlight that the lack of transparency in public decisions and budget execution are conditions that undermine the confidence that citizens may have on the ability of the Government to professionally fulfill the designated duties in accordance with the regulations in force in each country. Continuous accountability, quality expenditure and the management of involvement spaces are tools that will improve the public opinion of the public servants performance and will help in the construction of strong democracies that are self-sustainable and have the capacity of generating development. Moreover, the third variable that will direct the analysis will be to target efforts to fight corruption in every stage of development, from prevention, to detection and reporting, ending with punishment. To emphasize the previous, we do not aim to go deeper in every instance where corruption happens nor do we aim to develop the transparency topic in its whole extension to fight this issue; on the contrary, the analysis is confined to the central government budget analysis, identifying the tools that will allow society to have a positive impact on the whole corruption cycle.
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Strengthening Transparency in Central America
Prevention
, 2
Discussion and Approval
Detection
, 3
Execution in the Fiscal Year
Accusation
, 4
Evaluation and Control
,
Sanction
Cooperative and Participative Environments
1
Drafting the Budget
,
Institutions: Weak or nonexistent
,
Legislation: Missing or Dismantled
Illustration 1: Reference framework: variables included in the analysis
Source: own preparation for illustrative purposes.
The reference framework used in this study limits the analysis of corruption to three interactive dimensions, technically structuring the strengths and weaknesses of the control and accountability systems in Central America: (1) the first one includes the roles of institutions, the regulations for the interaction between the public sector and society, and the involvement spaces created to strengthen transparency in each of the countries involved in this study; (2) the second one takes into consideration the prevention, detection, accusation, and sanction of corruption practices, and (3) the third one analyzes the four different stages of the budgeting cycle of the Government. This type of layout contributes to reach a greater degree of specificity on the recommendations that can be made based on the information gathered for the four countries included in this study (Guatemala, El Salvador, Honduras, and Costa Rica). We would like to refer to those issues subject to improvement in the budgeting system and to the connection among the different phases in the combat against corruption and the particular elements related to legislation, institutional structure, and the cooperation and involvement from society. Starting from this layout, throughout the document we refer to the budget allocated by the central government of the four countries included in the study, referring to the budgeting cycle in force during the fiscal year. It is convenient to highlight that the non-financial segment, the autonomous and decentralized entities, and the local governments (e. g., governorates and municipalities) have been set aside due to a lack of homogeneous and updated information for Central America. However, we make an invitation to deepen in this matter to the extent possible, preparing possible extensions to the analysis presented in every one of the countries included in the study. The study then analyzes in detail the regulatory and institutional obstacles that prevent a proper accountability on the public budget management, with the objective of identifying the procedural failures in the accountability systems and the audit methods. It is important to highlight that the accountability
20
Introduction
systems are not the only tools by themselves that citizens have to keep track of the execution of public funds. Still, we rescue this practice as the first instance for the citizens to document the fulfillment of the government goals and the quality of the expenses made, since it works as evidence when detecting anomalies, and submitting in a timely manner any dissent on the governmental recruitment and asset acquisition process. We have included a specific section that analyzes every item on the budget and the existing levels of arbitrariness when public funds were executed, which allows to highlight the priority areas that need special attention. It means to evidence the complexity behind the contract allocation process or payments to suppliers, supporting the reduction of the discretional sources that do not follow the quality expenditure international regulations. The problem with discretionary actions is that it becomes arbitrary, either by deviations or by a lack or counterbalances and limits, and becomes arbitrariness from the public servants, to the detriment of the interests of the country, the efficiency criteria, and the optimal use of the governmental resources. Finally, the document aims to contribute on how to strengthen the operations of the national institutions under the control of corruption, to identify the possibility of improving management in the supranational institutional systems. We also highlight the importance on the involvement of society throughout the whole prevention, detection, accusation, and sanction process, not just as a controlling actor that controls and assesses the use of resources in the Government, but as an active agent in the execution of funds. We add a timely reflection on the existence of a certain tolerance level in the Central American countries on the corruption practices that are reported by the media and by the governmental budget supervision entities. We make a call to discuss the ethic implications of a greater involvement of society in preventing, detecting, accusing, and sanctioning corruption. The following document is an invitation to consider practical ways to fight and prevent corruption. We list important recommendations that can make a difference to the existing reality in four of the Central American countries. The institutions part of laRED thank all those who collaborated in the generation of the data for analysis in the present study, which is a very optimistic starting point to improve the development conditions for the region.
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1
The Government’s Budget as a potential Corruption focus
After specifying that the main objective of this analysis is the budget from the central Governments of the Central American countries under study (Guatemala, El Salvador, Honduras, and Costa Rica), we must first understand the stages of the budget formulation cycle and the conditions these budgets must fulfill to guarantee citizens an easy access in order to promote transparency through involvement and control. The budget is defined, approved, executed, and evaluated through a process called budgetary cycle, formed by a series of successive stages that must be followed within a fixed period of time with a feedback from a permanent control and evaluation. The four countries that are being analyzed have budgets with a period of 12 months, from January 1 to December 31 every year (denominated tax or fiscal year); the obligations that the Government has during the fiscal year must be executed against the budget in force within the same period. The analyzed countries have slight differences on the temporary period of each stage; the budgeting process covers the four essential stages which have constitutional character in every one of the countries.
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Strengthening Transparency in Central America
Illustration 2: Budgetary Cycle: stages for defining, approving, executing, and evaluating the Budget Definition: Governmental institutions request their budget allocation according to the policy guidelines and budgetary rules, as well as their expenditure ceiling, prioritizing their programs and projects to execute in accordance with their institutional goals.
Evaluation and Control: This stage is designed to review, correct and improve the activities performed by every institution so that it shows if goals were reached, resources were used properly, and to rate the quality of the results.
2
1 Key Stages in the Annual Budget Cycle
4
3
Discussion and Approval: The commissions in the Congress discuss internally the budget to issue an opinion and then send it to the plenary for its approval, disapproval or modification, as well as their considerations on income and institutional allocations.
Execution: Includes the acquisition of goods and services for the government institutions based on the programmed goals. It also includes disbursements to pay suppliers, debt servicing and modifications through transfers.
Source: own preparation for illustrative purposes.
Proper knowledge of these stages will allow the identification of the period in which the budgeting process needs to be strengthened in order to reduce the possible arbitrariness from the public servants when and how the destination of the funds is assigned; this is the first effective step for encourage transparency and reduce corruption. There is a tendency to believe that the greatest sources of corruption are discovered during the execution stage thanks to the evaluation and control from the monitoring systems throughout the year through selective audits or at the end of the fiscal year through a general audit of the budget. However, the analysis shows some corruption sources that could be detected and corrected during the discussion and approval stage in the Congress (e. g. the deputies alter with arbitrary decisions the assignations defined in local or decentralized instances). To avoid these events, the option of including the citizens in the discussion of funds allocation before the approval in the Congress through initiatives related with budgets that are more open, participative and decentralized should be considered. The first recommendation is oriented to promote the involvement of experts from the civil society in reviewing the assumptions that support the budget project that the Executive Body and the Central Banks present to the Congress. A timely opinion on the macroeconomic projections that the country will face during the fiscal year, as well as the definition of attributions at
24
1. The Government’s Budget as a potential Corruption focus
the moment of modifying the original budget allocations will allow the reduction to a minimum the options to the public servant to deviate the use of public funds. These activities are already taking place, to some degree, under the direction of the Ministry of Finance and the entities in charge of the tax collection; however, some citizens participation, even if it is not linked to any decision made by the Government, would allow a more informed discussion on the perspectives of what can be done with the budget every year, thus expediting its later evaluation. This will be a proper space for the civil society to participate in conditioning the possible destinations for the resources; it will also allow a more detailed scrutiny of the possible debt sources for the fiscal deficit control. A further supervision on the execution of the budget would be easier if an alert guide to possible irregularities on the resource disbursement is explained in advance. The different Economic and Social Councils (Consejos Económicos y Sociales, CES) in the region have advanced o this matter; these could be strengthened with a larger involvement from society.
u Adopting International Standards The Open Budget Survey is a tool that performs a comprehensive analysis on the ability that people and supervising institutions have to access the information on the elaboration and execution of the governmental general budgets. The main objective of this tool is to qualify the disposition that the governments have to be subjected to control by the civil society; this is the main international standard to evaluate the budgeting process. According to international definitions, corruption has several fronts, from embezzlement of public funds and payment for political favors to overvaluing public works and biased patronage. However, the International Budget Partnership is focused on informing the citizens the procedural deficiencies of the budgeting processes in the world, covering nearly 90% of the population in 100 countries. Summarizing, in this document we provide the most recent index for Central America, highlighting those areas that allow the evaluation of the available public information on the budgeting process and the faculties of the involved parties. “The lack of information and opportunities for citizen involvement means that the citizens cannot understand the budget nor can they hold the governments responsible”, commented Warren Krafchik, director of International Budget Partnership. “Additionally, this facilitates abuse and the inappropriate and inefficient use of public funds, undermining the economic development at a moment in which resources transferred to the Government represent a great effort from the citizens. There are very serious consequences in the living quality of millions of people around the world”.5 5
Open Budget Partnership (2013) “Open Budget Survey 2012“. Edition in charge of Open Budget Partnership. International Budget, Washington D.C., U.S.A.
25
Strengthening Transparency in Central America
The survey is not based on the opinion from experts; it is based on a standard methodology that aims to collect information on the measures implemented by the governments as well as common practices registered in the nominative settings of the country. An equipment of more than 100 researchers worldwide work on-site in the countries that are included in the survey collecting information on topics related to the information available regarding the budget for every country, the budgeting practices that contribute to accountability, and the responsibility that authorities have on assigning and executing public funds. All the answers to the questionnaire are backed with the evidence provided by each country, such as quotes from documents related with the approval of the budget (laws or decrees), the current legal framework for each country, and interviews to government employees, members of the Congress and/or national experts on the approval and execution process of the budget. After the survey was completed, researchers review every answer and, in case of doubt, omission or confusion, they submit this answer to discussion and acceptance to the country’s officers. This process has the objective of consistently applying the methodology and the possibility of having comparable results. 6 Finally, to validate the results, the survey crosses its information with the information provided by international institutions and multilateral agencies such as the International Monetary Fund, World Bank, and the Organization for Economic Cooperation and Development (OECD). Additionally, the Governments from the countries evaluated are invited to comment the results obtained (on 2012, only 41 Governments gave their opinion, the four countries from our study were on this list7). The first input on the survey generates an international comparative index, dividing the evaluated countries into a five-category scale according to the scores obtained on the 2012 version of the survey, making an assessment on the quality and the quantity of the budgetary information available. Following is an illustration of such scale, as well as a listing of some of the Latin American countries included in each category:
6 The reports for each one of the countries included in the analysis were prepared by the following persons: • Guatemala: Jorge Arturo Valenzuela Obando (Centro Internacional para Investigaciones en Derechos Humanos) • El Salvador: Jaime López and Mónica Cerritos (Fundación Nacional para el Desarrollo –FUNDE –) • Honduras: Elda Dariela Díaz Vásquez (Fundación Democracia sin Fronteras – FDSF –) • Costa Rica: Juan Guillermo Murillo Chinchilla and Steffan Gómez Campos (Programa Estado de la Nación) 7 For further information, the 2012 Guideline for the Open Budget Survey is available on the following address: http://internationalbudget.org/wp-content/uploads/Guide-OBS2012_ Final_ESP1.pdf. The full list of questions can be reviewed on http://internationalbudget. org/wp-content/uploads/OBS2012-Questionnaire-FINAL_ES1.pdf.
26
1. The Government’s Budget as a potential Corruption focus
Chart 1: Open Budgets Index: evaluation scores based on the amount and quality of the budgetary information Information Extensive Significant
Scores 81 – 100 61 – 080
Countries 06 17
Some
41 – 060
36
scarce inexistent
21 – 040 00 – 020
15 26
Countries in Latin America --Brazil, Chile, Mexico Guatemala, El Salvador, Honduras, Costa Rica Argentina, Colombia, Nicaragua, Peru Dominican Republic, Ecuador, Venezuela Bolivia
Source: own preparation from the information of Open Budget Index 2012.
The previous chart shows that the largest number of countries is located in the category of having some availability of the budgetary information needed to guarantee transparency in each country. However, it is distressing to see that the index counts 26 countries in which there is no information on budget approval and implementation, which evidences a complete lack of transparency in managing public funds. Now, as a complement to that information, the Open Budget Index analyzes if the country has continuously published the 8 documents that are internationally considered as standard on the distribution of budgetary information. Chart 2: Budgetary Information: Documents for the Open Budget Index
Description • Preliminary Document: information that relates
policies with the government budgets
• Budget Proposal from the Executive Body:
includes the government plans to earn tax revenues
• Approved Budget: legal instrument that authorizes
earning revenues, spending and contracting debt
• Citizens’ Budget: non-technical presentation to
the citizens of the objectives of the policies
• Reports delivered during the year: information
with periodic measures on the budget advances • Mid-year Review: general description of the results and adjustments of the economic variables • End-of-the-year Review: information that compares the budget execution with the approved budget • Auditor’s Report: independent evaluation of the government’s accounts prepared by the controlling entity
Guatemala El Salvador Honduras
Costa Rica
Published
Internal use
Published
Not produced
Published
Published
Published
Published
Published
Published
Published
Published
Published
Published
Published
Not Produced
Published
Published
Published
Internal Use
Not Produced
Not Produced
Published
Not Produced
Published
Published
Published
Published
Published
Internal Use
Published
Published
Source: own preparation from the information of Open Budget Index 2012.
27
Strengthening Transparency in Central America
Chart 2 allows us to highlight the difference in the four countries that were analyzed; Honduras is the only country that fully complies with the international requirements on the documents publication, although the quality of the contents is not discussed in detail. It is noteworthy the fact that El Salvador does not have publicly available two documents and that it has not produced – like Guatemala – the budget mid-year review, essential to control the degree of progression in reaching the governmental goals and to perform the adjustments that may be needed in the macroeconomic projections of the country8. Of gravest concern is the case of Costa Rica with the unavailability of a document and the nonproduction of three, one of them being the budget mid-year review. This situation, as a first approach to the analysis of the budget as a potential source of corruption shows that, excepting Honduras, the other three countries included in the analysis difficult the access to primary information on which accountability can be requested to public servants, thus somehow limiting the citizens’ participation in controlling the public funds and strengthening transparency. Thus, as a complement to the qualitative data the Open Budget Index provides access to the public to the comparative results of the whole region for the evaluations performed between 2006 and 2012, providing a clear signal of the performance of countries with similar economic, social and political characteristics, and identifying if the behavior of the included countries subject to study is a regional tendency or if, on the contrary, it is an isolated event that needs further study. The following illustration shows us a list of the 15 countries in Latin America that are and have been part of the evaluation of the index (Uruguay, Paraguay and Panama are not included in the analysis), that compares their performance in the global ranking during the four evaluations of the index, having as a reference point the scores obtained in each one of the evaluations (this evaluation is scored on 100 points). The table shows the scores obtained on each one of the evaluations, the order of the countries is in accordance with the ranking obtained (a higher ranking on the table is a signal of a higher level of transparency on the publication of the budget information and its corresponding access to the citizens).
8
28
In the case of Guatemala, it must be noted that the lack of publication of these documents contravenes one of the obligations contained in one of the articles of the Organic Law of the General Comptroller’s Office: Article 21: Reports. The Sub-comptroller of Public Expenditure Quality must provide periodic reports, at least twice a year, to the General Comptroller and to the Congress of the Republic on all the evaluations, analyses, studies, researches, surveys, proposals, and measurements that take place.
1. The Government’s Budget as a potential Corruption focus
Illustration 3: Budgetary Information: Documents for the Open Budget Index Countries (2006)
Countries (2008)
Countries (2010)
Countries (2012)
77
Peru
74
Brazil
72
Chile
73
Brazil
74
Brazil
67
Peru
71
Brazil
66
Chile
57
Colombia
61
Colombia
65
Peru
61
Mexico
50
Mexico
56
Argentina
61
Colombia
58
Colombia
46
Guatemala
55
Mexico
56
Argentina
57
Peru
45
Costa Rica
46
Guatemala
52
Mexico
53
Honduras
40
Argentina
45
Costa Rica
50
Guatemala
51
Guatemala
38
Honduras
39
Ecuador
47
Costa Rica
50
Argentina
32
Ecuador
37
El Salvador
37
El Salvador
50
Costa Rica
28
El Salvador
35
Venezuela
37
Nicaragua
43
El Salvador
21
Bolivia
19
Nicaragua
34
Venezuela
42
Nicaragua
21
Nicaragua
12
Dominican R.
31
Ecuador
37
Venezuela
12
Honduras
14
Dominican R.
31
Ecuador
7
Bolivia
13
Bolivia
29
Dominican R.
11
Honduras
12
Bolivia
Source: own preparation from the information of Open Budget Index 2012.
The countries that lead the region are Chile, Brazil, and Peru, closely followed by Colombia – which has been the most stable country during the four evaluations. Guatemala, even if it has improved by five points compared with the first evaluation, has not been able to improve its position in the ranking, which proves that the other countries of the region, especially those who have performed better, have advanced at the same rhythm on the matter of promoting budgetary transparency. At the present, El Salvador has a better score than the previous years, although it has not been sufficient to achieve a higher position in the ranking, while Costa Rica has continuously fallen every year. The greatest surprise has been Honduras, considered by the International Budget Partnership as the country with the greatest advance compared with the previous evaluation. Today it placed is above Guatemala, after improving its score by 42 points, which allowed it to leave the last position of the region to reach position number 6 in Latin America and 36 worldwide. As an
29
Strengthening Transparency in Central America
outstanding data that is convenient to highlight, Honduras is the only country in Central America that fulfills the publication of the eight documents that are standard for the budgetary transparency, although we must clarify that there is not criteria to evaluate the quality of the published contents.
u Steps to improve the disclosure of budgetary information As a result of the analyses performed on every country, there is a series of recommendations on the aspects that need to be improved to let the citizens receive information on the budgetary execution on a more regular basis. These recommendations go from strengthening the entities that supervise the use of the governmental resources to a more inclusive and participative discussion on the assumptions and priorities that rule the budgeting project every year. However, and as a relevant point for the objectives of this document, there are some suggestions that could be rescued in the matter of citizens’ participation and access to the budget information, which would be a key point to increase the transparency levels during the full budgeting cycle. Experience from research and the incidence of civil society during the last 15 years has proved that in order to be effective, transparency needs the public involvement. The synergy obtained between the population and the Government boosts the positive results in the preparation of the budget; following this line, the Open Budget Index draws attention to the spaces where there are greater involvement opportunities for the citizens in the decisionmaking processes of the national budget. Nevertheless, given the specificity of the recommendations for each country, we only show those for Guatemala, El Salvador, Honduras, and Costa Rica, thereafter taking into consideration the specific for each country. Taking as a reference the reports available to the public9, the following chart summarizes the measures suggested:
9
30
Reports available online on the website of International Budget Partnership: • Guatemala: http://internationalbudget.org/wp-content/uploads/OBI2012GuatemalaCS-Spanish.pdf • El Salvador: http://internationalbudget.org/wp-content/uploads/OBI2012ElSalvadorCS-Spanish.pdf • Honduras: http://internationalbudget.org/wp-content/uploads/OBI2012HondurasCS-Spanish.pdf
1. The Government’s Budget as a potential Corruption focus
Chart 3: Budget Information: areas to improve to promote greater citizen involvement Guatemala El Salvador Honduras Costa Rica
Process followed before consultations… • Formal requisites for public involvement
Nonexistent
Nonexistent
Nonexistent
Nonexistent
• Defining objectives for public involvement
Nonexistent
Nonexistent
Nonexistent
Nonexistent
Nonexistent
Nonexistent
Exists / Strong
Nonexistent
• Participation mechanism: preparing the budget
Nonexistent
Nonexistent
Nonexistent
Nonexistent
• Public hearings to discuss the budget
Nonexistent
Very weak
Nonexistent
Very weak
• Public hearings to discuss funding by institution
Nonexistent
To be improved
Very weak
To be improved
• External technical opinion of the budget
Nonexistent
Very weak
Very weak
Nonexistent
• Participation methods: executing the budget
Nonexistent
Nonexistent
Nonexistent
Nonexistent
To be improved
Very weak
Very weak
To be improved
• Qualified opinion on the use of the public inputs
Nonexistent
Nonexistent
Nonexistent
Nonexistent
• Publication of budgeting hearings reports
Nonexistent
Nonexistent
Nonexistent
Very weak
• Final opinion: implementing recommendations
Nonexistent
Nonexistent
To be improved
Very weak
• Distribution of the audit report after it is completed Consulting Processes…
• Participation methods: auditing agenda Process followed after consultations…
Source: own preparation from the information of Open Budget Index 2012.
According to international standards defining the Open Budget Index, Central America has worked in some extensions of the citizen involvement during the preparation and execution of the budget; however, there is still much to be done in the preparation of the public budget objectives and the results evaluation at the end of the fiscal year. Finally, the report concludes in a general way through a series of calls to the different institutions that participate in the budgeting process. On the first instance it recommends the Executive Body to assume the responsibility of continuously reviewing the economic assumptions in the budget, as well as the goal fulfillment throughout the fiscal year. The Congress is invited to dedicate more time in the discussion of the national priorities, encouraging the execution of funds in a decentralized and participative form. Lastly, it stresses the need of more citizen involvement, following up to the funds execution as well as the goal fulfillment and publication of accountability reports.
31
Strengthening Transparency in Central America
This information gives rise to the structure of the following chapters, where a specific analysis is made on the regulation that allows citizens to participate in strengthening transparency, in the performance of the institutions in charge of accountability and the systems used to provide access to such information, and finally, in the environments were citizens can participate in a more proactive way for the goals of each country.
32
2
Main action areas to strengthen Transparency
F
ollowing the logic of delimiting the analysis to regulation, institutions, and cooperation and involvement environments to allow citizens strengthen transparency in Central America, this chapter includes a general analysis of each one of these elements, taking as a reference the budgeting cycle and the different stages where corruption practices are present on every country’s central governments use of the budget.
The implementation of good practices that go hand in hand with the access to public information, a periodical accountability from public servants and a more active involvement from the citizens in the budgeting cycle is a combination with a high success rate for the timely identification of any squandering and misuse of the public funds. Generation of wasted resources and missed opportunities are obstacles that prevent the improvement of the citizens’ living conditions in a quick and efficient way. As a minimum, the guarantee on the proper use of the national budget is the main responsibility that governments have with the citizens since they were designated with the power to use these resources for everyone’s benefit. “Transparency is one of the most powerful weapons against corruption, squandering and bad government, and provides a foundation from where people can hold politicians responsible and demand a change if necessary”, explained Justine Greening, Secretary of International Development in the United Kingdom for the International Budget Partnership10. However the international numbers for the open budget survey show an already worrying statistic: “The national budgets for 77 of the 100 countries evaluated, in which half of the world population lives (3.41 billion people of 49.5% of the world population), do not fulfill the basic standards of budgeting transparency since they reached a score that is equal or lower than 60 over 100. The average score in the 100 countries in the study was 43 points over 100, and the governments of 21 of the evaluated countries do not even publish the Executive body budget project, the most important document to understand how the government plans to manage the country’s finances”. 10 Open Budget Partnership (2013) “Open Budget Survey 2012“. Edition in charge of Open Budget Partnership. International Budget, Washington D.C., U.S.A.
33
Strengthening Transparency in Central America
With the objective of identifying the action areas to work in the four countries that base this analysis, we divide the methodological outline in two large areas of emphasis as follows: (1) the existing elements that strengthen transparency in every country, and (2) the main obstacles for transparency in the public management, related to prevention, detection, accusation and sanction of corruption. This outline will allow the comparison of the work that is actually being done in the still weak areas in every country.
u Existing elements that strengthen Transparency The action areas have been systematically delimited to strengthen the current legislation, the supporting institutions, and the cooperation areas. The analysis performed in this first stage lists such elements in order to define the work that is done today in the fight against corruption, which will allow later a verification of the action areas where improvements must be introduced. In the Current Legislation, we aimed to identify in every country a summary of guidelines that regulate the fight against corruption and that dictate the procedures that all the governmental institutions in charge of executing public funds must rigorously follow. We understand that there are specific regulations on how the control and regulation institutions function for citizens; however, the following chart identifies the most recent legislation related with the strengthening of transparency in Central America, where issues as the civilian service regulation, the illicit enrichment and general public management laws are highlighted. Chart 4: Current legislation: regulations in Central America to strengthen Transparency Guatemala In addition to the Organic Law from the General Comptroller’s Office, two laws were recently approved: Decree 31-2012: Law against Corruption, and Decree 51-2008: Law for the Access to public information
El Salvador
Along with the constitutional regulations that rule the Court of Accounts and that regulates the illicit enrichment, can be found the Law on Illicit Enrichment of Public Officials and Employees (LELEFP, for its initials in Spanish) from 1956 and the Civil Service Law from 1961. Additionally on 2000 Additionally, the following provisions were included was approved the Law for Public Procurement in the Criminal Code, the Asset Recovery Law, and State Contracting, and on 2006 was approve (Degree 55-2010), the Law on Probity and the Government Ethics Law. Responsibility on Public Officials and Civil Servants (decree 89-2002) and the Law of State The Law on Court of Accounts (1995) and its Contracts (decree 57-92). The advances in the regulations, the Criminal Code (Decree 1030, 1997), budgetary execution regulations that are annually the Code of Criminal Procedure (Decree 733, 2008), approve are also included. and the Law on Access to Public Information (2011) are also listed.
34
2. Main action areas to strengthen Transparency
Honduras The legal rules in force to fight against corruption are divided in three: (1)Public Funds Management: General Public Administration Law, Law on Administrative Procedures, Law on Administrative Efficiency, Law of State Contracting, and Law on Municipalities. (2)Public funds management control: Organic Law of the Comptroller’s Office, Organic Law of the General Attorney’s Office and Law on illicit enrichment. (3)Judicial Actions: Criminal Code, Code of Criminal Procedure, Law on the Jurisdiction of the Contentious-Administrative, La won Public Prosecution and the Tax Code.
Costa Rica More than 20 regulations to fight against corruption have been issued since 1949; however, during the last two decades juridical production has increased, which include the General Law on Public Administration that establishes the working regime for public servants and its sanctions. Also important are the Law on Illicit Enrichment by Public Officials and the ratification of the InterAmerican Convention Against Corruption. Finally, recommendations to improve the prevention of corruption through reforms to the Civil Service regime are included.
Source: own preparation from the information provided by the collaborators in each country.
Separately, for those institutions recognized by each Government in the combat and prevention of corruption, is a list of those which have had greater prevalence during the last years, not just highlighting those institutions related with the supervisory function, but also sanctioning public officers and the role of Commissions within parliaments. Chart 5: Institutions: Central American entities that promote Transparency Guatemala • General Comptroller’s Office • Courts of Auditors • Ministry of Public Finances and its viceministries • Presidential Commission of Transparency and Electronic Government – COPRET, for its initials in Spanish – • Public Prosecutor’s Office Against Corruption (Public Prosecutor’s Office) • Commission on Probity for the Congress of the Republic • Extraordinary Commission for the Transparency on the Congress of the Republic • Special Verification Intendance (IVE, for its initials in Spanish) from the Superintendence of Banks • Presidential Secretariat for Planning and Programming (SEGEPLAN, for its initials in Spanish) • National Institute for Public Administration – INAP, for its initials in Spanish –
El Salvador • • • • • • • • •
The Salvadorian Court of Audit Office on Government Ethics Institute for Access to Public Information Legislative Assembly Undersecretary for Transparency and Anticorruption Probity Section of the Judicial Body Research Section of the Judicial Body Professional Research Section of the Judicial Body Law Commissions from the Civil Service
Continue…
35
Strengthening Transparency in Central America
Honduras • • • • • • • • • • •
Supreme Court of Audits Superintendence for Concessions from the State Attorney General Office Attorney General Special Office against Corruption Ministry of Security (Internal Affairs Unit) Judicial Body Revenue Executive Directorship National Commission of Banks and Securities National Human Rights Commission Transparency Municipal Commissions National Anti-Corruption Council
Costa Rica • • • • • •
General Comptroller’s Office Ministry of Presidency and National Planning Technical Secretariat for Digital Government Offices and Prosecutors against Corruption Ombudsman Public Ethics Office from the Attorney General Office (PGR, for its initials in Spanish) • Legislative Assembly Commissions • Public Prosecutor • Assistant Prosecutor’s Office for Integrity, Transparency and Corruption
Source: own preparation from the information provided by the collaborators in each country.
The previous list of the institutions responsible for the prevention and fight against corruption shows a strong commitment from the Central American Governments to eliminate this scourge from the public funds administration. Nevertheless, there are national authorities outside the public sector that aid with their efforts to strengthen transparency. Within this line of ideas, we would like to make a special mention on the multisectoral and inter-agency cooperation scope to prevent and fight corruption, in which we include workshops, International Transparency national chapters, special initiatives, programs, projects, and follow-up mechanisms to the international conventions (e. g. Follow-up Mechanism for the Implementation of the Inter-American Convention against Corruption: MESICIC, for its initials in Spanish). Chart 6: Cooperation and Involvement Environments: structures that promote the citizens participation • Inter-American Convention against Corruption and Follow-up Mechanism for the Implementation of the Inter-American Convention against Corruption (MESICIC) • United Nations Convention against Corruption • Guatemala Declaration for a Corruption-Free Region 200611 (applies to members of SICA) • Statement of the Open Government 201112
Continue…
11 The heads of State and Government from the country members of the Central American Integration System (SICA, for its initials in Spanish), met on November 15, 2006, in the city of Guatemala for the 12th International Anti-Corruption Conference and signed the Guatemala Declaration for a Corruption-Free Region 2006. 12 For further information, refer to: http://www.opengovpartnership.org/declaraci%C3%B3nsobre-gobierno-abierto
36
2. Main action areas to strengthen Transparency
Guatemala • STAR: Stolen Asset Recovery Initiative (a World Bank initiative) • CoST: Transparency in the Construction segment • EITI: Extractive Industries Transparency Initiative • Open Wolf: Virtual Transparency Platform • ALAC: “Legal and Anti-corruption Assistance Center” of Acción Ciudadana (Citizen Action), as a national chapter of Transparency International • Round tables: Transparency and the Social Audit • “Governing with the People” and “Mobile Cabinet” • Citizen Attention Office for corruption cases
Honduras
El Salvador • Government Internal Audit Units • Integrity Pacts between the Ministry of Public Works and construction companies • Citizen Observatory for Public Works • Construction Code of Ethics • ALAC: “Legal and Anti-corruption Assistance Center”. Office that is part of the National Foundation for the Development (FUNDE, for its initials in Spanish), national chapter of Transparency International (TI) • Social Audit Initiatives from the Civil Society • Legislative observatory • Association for Growth with the U.S.A. Costa Rica
• Efficiency and Transparency Program in • Interinstitutional Transparency Network Governmental Purchases and Contracts • National Chapter of Transparency International • Internal Audit Units in the public institutions • “Digital Social Agreement” • Social Audit Initiatives • National Chapter of Transparency International Source: own preparation from the information provided by the collaborators in each country.
Each one of the items analyzed provides important findings on the existing common grounds of the four countries object of the study, thus giving a clearer idea on the initiatives that could provide better regional feedback and be implemented and coordinated in Guatemala, El Salvador, Honduras, and Costa Rica. Following are those items deemed important when suggesting improvements on the fight against corruption in Central America: (a) Current Legislation: The Court of Audits is constitutionally created in the four countries, although Guatemala and Costa Rica this institution is accompanied by the Comptroller General´s Office, with the power to independently exercise the jurisdictional functions in accounting matters. It is also important the creation of a specific law against illicit enrichment and a law for the public procurement and State contracting; such tool allows the positive regulation of the payment processes to suppliers and employees, as well as the purchase of goods, services and assets. Finally, it is important that the four countries recognize the regulation of the civil service as a key factor to promote internal transparency. (b) Institutions: There are two institutions that stand out in common in three of the countries: the Court of Audits and the Attorney General´s Special Office against Corruption. It is clear that a greater coordination between these two institutions would reinforce regional results in preventing corruption. Thus, it is interesting to note that the Presidential Commission has been created as a supporting entity in the four countries, which evidences the need to
37
Strengthening Transparency in Central America
confront the issue from the Executive Body and not only from Congresses or Judicial Bodies. •
Cooperation Areas: This area has an abundance of projects and programs to jointly work against corruption along with the participation of the civil society. However, it is important to remember the prevalence of the ratification of the four countries to the United Nations Convention against Corruption and the Inter-American Convention against Corruption, with great advances in its follow-up mechanism known as MESICIC. It is also important to highlight the Guatemala Declaration for a Corruption-Free Region that applies to countries members of SICA, and the Open Government Declaration signed on 2011.
u
Obstacles to combat Corruption
Along with the previous analysis, we would like to refine it by including a diagnosis on the obstacles that prevent an efficient action for transparency, detecting those areas that need improvement in every one of the stages in the combat process against corruption in every one of the countries. The following outline clearly illustrates the areas that must be nationally and regionally addressed to achieve better results in the medium term on missing legislation (LF), weak or non-existing institutions (IDI) and cooperation and involvement areas (ACP): Chart 7: Process of the Fight against Corruption: obstacles to strengthen Transparency in Central America Prevention
Detection
Accusation
LF
IDI
ACP
LF
IDI
ACP
LF
IDI
• Guatemala
x
x
x
x
x
• El Salvador
x
x
x
x
x
• Honduras
x
x
x
x
x
x
• Costa Rica
x
x
x
x
x
Sanction
ACP
x
x
x
x
x
LF
IDI
x
x
x
x
x
x
x
ACP
x
x
Source: own preparation from the information provided by the collaborators in each country.
For every one of the stages in the process of the fight against corruption, there are concrete actions that will help eliminate the obstacles that prevent a proper accountability to the citizens as a mechanism to promote transparency through more involvement, strengthening institutions and adapting the current laws to the actual challenges in each country. The most relevant findings of the analysis are listed next:
38
2. Main action areas to strengthen Transparency
(a) Prevention: We highlight the lack of political commitment on the regular and constant dissemination of information that largely involves the citizens in the participative processes on the execution of the budget. Thus, the results in the four countries show the lack of a proper regulatory framework to promote the prevention of corruption, in which the promotion of a code of ethics and greater controls in the performance of public servants are important, from the financial disclosure to a review of their functions and the quality of their results. It is quite interesting to note that the four countries identify as a common characteristic in this stage the lack of cooperation and involvement that allow the civil society be aware of how resources are spent; an open government national policy is needed, which can be better implemented through participative budgets, open meetings and citizen overseers. (b) Detection: On the matter of timely detection of corruption practices, there are obstacles to overcome in the application of the supervision and control systems, which provide access to the information on the bidding, selection, execution, liquidation and quality control processes of the goods acquired by the Government. It will be crucial to work on a more rigorous regulation that links the different government information systems, by establishing crossed requirements that condition the allocation of contracts, payment against products and appraising the quality of the results obtained. (c) Accusation: On the accusation process, the analysis of the particular cases for every country shows that a common feature is the lack of followingup the denunciations made by citizens on suspicious activities that could be indicators of corruption. Randomness on the annual audit of the budget execution generates a lack of confidence about the transparency on the use of public resources, and the little availability of resources for the proper operation of the offices against corruption cause impunity indexes to grow every year, intensifying the lack of confidence in the citizens for the institutions in charge of combating corruption. (d) Sanction: It is necessary to work in a specific definition of crimes related to embezzlement of resources, trading in influence, and illicit enrichment on the matter of punishing corruption crimes. Experts point out the importance of reviewing the regulations in the Criminal Code, Procedural Code and the Law on Probity and Ethics. Additionally, there is a need to speed up the processing of the corruption cases, given that there is a very small rate of solved cases compared with the number of accusations. As a last item, the analysis points out the need to prioritize the support and protection for the prosecutors in charge of such cases.
39
3
Proper Operation of the Public Information Integrated Systems
O
n the area of regulations to prevent and fight against corruption, there have been many advances in the designation of responsibilities in the investigation chain, accusation and sanctioning, the specification on the powers of the institutions, and defining crimes. This is evidenced by the ratification of international conventions and the subscription to different declarations on the matter, which has allowed the countries to have a sufficient legal body to handle corruption in its different stages. However, as a result of the contribution from experts in each country involved in this study, a point that needs special attention at the moment of involving citizens in strengthening transparency was brought to attention, which is related to the operation of the public information integrated systems. The ability of a country to identify corruption practices depends on the quality of the systems in charge of providing timely information on the public resources management. In an integrated manner, accountability must be a standard practice in the institutions that participate in the budget execution, where there is coordination among the different entities that authorize and control the acquisition of goods, services, and assets. The following illustration outlines the form in which every institution should answer to the accountability processes on the programmed goals and activities that are performed on a daily basis, continually emphasizing the information of the advances made:
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Strengthening Transparency in Central America
Illustration 4: Public Information Integrated Systems: logical framework for operation in institutions • Decision-Making
• Accountability
Budget Execution: Use of public funds in accordance with policy guidelines and budgeting regulations, respecting the expenditure ceiling and prioritizing the programs and projects based on their institutional goals.
Fiscal Year (January to December every year)
EXECUTING UNITS
Investment
Operation
Execution of activities, projects and programs
Linking Government policies and objectives
Control and Accountability Systems
Result controls and evaluations (information)
feedback
Source: own preparation with illustrative purposes.
The best quality of the cycle is the support that information systems provide to correct the budget execution, with the goal of controlling the proper use of the public funds, which allows issuing an opinion on their adherence to the quality and transparency regulations defined for each country. This matter becomes one of the greatest challenges for the Central American countries at the moment of enforcing the existing regulations, while the integration and functioning of these systems in the institutions and between territories are still pending. Despite the existence of the systems, the regulations that rule their feeding and evaluation, as well as their access are still unclear. Without the existence of such systems, the regulatory process ends in the authorization of funds disbursement, without providing the opportunity of detecting in time any anomaly in the use of the resources, unless a particular audit is made to the institution. The existence of the information systems allows a reduction to a minimum the control of the public servant as a factor that limits access to the information of the budgetary execution. That said, there is a polemic on the best approximation method to evaluate the quality of these systems, knowing that it is important to consider not only their operation and use from public servants as information providers, but also from the citizens who demand information, represented by civil society organizations and the media.
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3. Proper Operation of the Public Information Integrated Systems
To solve this issue, the Electronic Government is a very useful tool in strengthening information systems, providing a greater level of transparency to the budget execution, benefiting from the evidence provided to follow up anomalous activities. However, and despite the fact that in the four countries analyzed exists the Integrated System of Financial Administration (commonly known as SIAF, SAFI or SIAFI), national regulation is not equivalent in scopes and objectives, while regional regulation is still new, it is still needed to define the matter as a priority action to discuss at the highest level. The added value of a regional regulation on the public information integrated systems is that it would improve the accusation of corruption practices, aligning the incentives with a better prevention beyond the country’s frontiers, since the possibility to detect these actions would be greater. However, when these systems are regulated with very little structure and with technical variations among institutions and countries, the ability of the citizens to provide significant contributions in strengthening transparency disappears. For this reason, we take again the commitment made on 2011 by the signatory countries on the Statement on the Open Government where they recognized that “countries from around the world demand the government a greater openness, more citizen participation in the public matters, and seek for ways for more transparent, sensitive, responsible, and effective governments”. Signatory countries accepted the responsibility of “strengthening our commitments to promote transparency, fight against corruption, empower citizens and benefit from the power of new technologies to make the government more efficient and responsible”. Under this perspective, and although there have not been significant advances on its implementation, the issue is still on the table, making emphasis on the four commitments included in the statement that should be taken as a reference for the work that will be done from now on to strengthen transparency through the integration of the public information systems, more specifically on budgetary execution. Below are the undertaken commitments:
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Strengthening Transparency in Central America
Illustration 5: Statement on the Open Government: commitments undertaken by the signatory countries u Increase the available information of governmental activities. Governments
collect and store information on behalf of the people, and the citizens have the right to request information on the governmental activities. We commit to provide more access to information and disclosure on every level of the governmental activities. We commit to strive to systematically collect and publish information regarding the public expenditure and the performance of the essential activities and public services. We commit to actively provide high-value information, including the primary information, in a timely manner, in formats that the public can easily find, understand and use, and in formats that facilitate their re-use. We commit to provide access to efficient resources when the corresponding information or registries are improperly withheld, even through an efficient supervision of the appealing process. We recognize the importance of the open standards to promote access to the civil society to public information, as well as to facilitate the interoperatibility of the government information systems. We commit to request comments from the public to learn which information is more useful to the public, and we commit to take into account those comments as far as possible.
u Support the involvement of citizens. We value the involvement of all the people, equally and without discrimination, in the decision making and policy formulations. The public involvement, including the full participation of women, increases the governmental efficiency, which benefits from the knowledge, ideas and ability of the people to provide supervision. We commit to make more transparent the formulation of policies and the decision making, through the establishment and use of paths to request the public opinion, and by increasing the public involvement in the performance, follow-up, and evaluation of the government activities. We commit to protect the ability of nonprofit organizations and the civil society in order for their operations to be coherent with our commitment to free expression, association and opinion. We commit to create mechanisms that allow more collaboration among governments, civil society organizations, and companies.
u Apply the highest professional integrity standards in all our governments. A
responsible government requires high ethic standards and conduct codes in its public servants. We commit to have solid policies, practices and mechanisms against corruption, that guarantee transparency in the management of public finances and governmental acquisitions and that strengthen the rule of law. We commit to maintain or establish a juridical framework to publish information on the income and assets of the national public servants. We commit to issue and apply regulations that protect complainants. We commit to inform the public the activities and efficiency of the bodies in charge of enforcing anticorruption laws and avoiding it, as well as the appeal proceedings to such bodies, respecting the confidential nature of such specific information related to the enforcement of the law. We commit to increase the number of dissuading elements against bribery and other forms of corruption in the public and private segment, as well as to exchange information and experience. u Increase access to new technologies for opening and accountability. New technologies offer opportunities to exchange information, have the public participate and collaborate. We have the intention of taking advantage from these technologies to make more information public in a way that people can understand what their governments do and influence in their decisions. We commit to create accessible and safe spaces online such as platforms to provide services, have the public participate, and to exchange information and ideas. We recognize that the equal and affordable access to technology is a challenge and we are committed to search for a larger connectivity on line and mobile, while at the same time we identify and promote the use of other mechanisms for the citizen participation. We are committed to have the civil society and the entrepreneurial community participates to identify efficient practices and innovative approaches to take advantage of the new technologies in order to empower people and promote transparency in the government. We also recognize that a greater access to technology means supporting the ability of the governments and the citizens to use it. We commit to support and develop the use of technological innovations with public servants and citizens. We also understand that technology is a complement and not a substitute of clear, profitable and useful information.
Source: own preparation with illustrative purposes, based on the Statement of the Open Government (2011).
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3. Proper Operation of the Public Information Integrated Systems
These principles must be laid down in a specific regulatory framework that allows more access to the information that the Governments generate, expediting the citizens participation in controlling the public servants’ performance in search of the fulfillment of the policies relevant for each institution, efficiently using the technological tools available today in the countries. The importance of information systems lies in the evidence they provide to initiate the accusation process against corruption, having an indirect impact on prevention and a direct impact on sanctioning. It is true that its use may require a certain degree of experience and very specific knowledge, therefore its wider dissemination on its use and scope will be one of the activities that must be promoted regionally, aiming to find a way of integrating and consolidating the budgetary information produced in the Central American countries. Knowing the available public information systems in each country will be the first step to regionally integrate them. Following is a list of those information systems that have been identified in the four countries included in this study: Chart 8: Public Information integrated Systems: Tools implemented in Central America Guatemala • Government Procurement and Contracting Information System: GUATECOMPRAS • SIAF: Integrated Finance Administration System • SAG: Government Audit System • SIAF-Muni (municipalities) • SICOIN: Integrated Accounting System • SIGEPRO: Projects Management System • SIGES: Computing Procurement Management System • SIGOB: Presidential Goals by Results Programming and Management System • SNIP: National System of Public Investment • SINPET: National Strategic Planning System • eRegulations System
El Salvador • COMPRASAL: Government Procurement and Contracting Information System • SAFI: State Financial Administration System • Sistema e-Regulations El Salvador: information of proceedings with the Government • Customs information System (online) • Fiscal Transparency Portal of the Ministry of Finance
Continue…
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Strengthening Transparency in Central America
Honduras • HonduCompras: Government Procurement and Contracting • SINEG: National Management Evaluation System • SISPU: Public Investment System • SINACOIN: National System for International Cooperation • SIAFI: Integrated Finance Administration System • Virtual Platform for the Commissioner for Human Rights –CONADEH– • Social Forum for Foreign Debt of Honduras –FOSDEH–
Costa Rica • CompraRED: Electronic System for Government Procurement • Integrated Financial Information System • CPAR: System of Public Procurement • Costa Rican Juridical Information System • SNIT: Geographical Information System • Regional Information System for the strengthening and development of the small and medium enterprises and local governments • SIPO: Information System for Target Population
Source: own preparation from the information provided by the collaborators in each country.
u Supervision Systems for the Quality of Public Expenditure After the explanation of why more specific regulations are necessary in the use of integrated information systems, we emphasize those spaces in public management that deserve special attention when there is a supervision of the public funds execution through such systems. In those spaces, we highlight the critical importance that quality expenditure has been gaining as the item in the budget that receives more questioning from the public opinion. In each one of the analyzed countries was highlighted the importance of the institutional power that courts and/or offices have as the institutions in charge of the supervision, control and audit of the Government management, also for being the entities responsible for budget control after its execution, as the main efficiency and quality measure for the use of public funds. However, it comes to light that, among their attributions, the one that has more questionings is the public expenditure quality supervision. The objective of this study is to identify if, besides the general supervision of the budget in following payment procedures to employees and suppliers and the procurement of goods, services and assets, there is a mechanism to qualify the quality of the acquisitions and contracts of the Government, not only on fulfilling the minimum requirements, but also on the final price, fulfilling standards and products used. Initially, it is necessary to know what we mean by “quality spending”, for this, we present below an illustration that summarizes the basic conditions that an information system for the evaluation of the quality of the public spending, as explained by the World Bank, CEPAL, and the Inter-American
46
3. Proper Operation of the Public Information Integrated Systems
Development Bank –IADB– (2006)13 in different studies made to specific social programs that have functioned in Latin American countries. The following illustration describes the general evaluation criteria that must be included in every evaluation for quality public spending in Central America. Illustration 6: Quality Spending: evaluation criteria to include in the public information systems
EVALUATION CRITERIA:
Government environments where it is necessary to evaluate the Quality of the Expenditure
Durability Suitability Relevance Utility Assessment
It is also necessary to determine the surcharge and/or standardization.
Services provided by the Government through national/ local entitiesor by state-owned companies
Suitability of a supplier, evaluating if it should be the Government or an external entity
Goods and services received by the population, whether from infrastructure investment or social services
RESTRICTION: budget availability + Government policies and goals
Source: own preparation for illustrative purposes
This outline allows to identify how the Quality of the Expenditure supervising systems work; however, it also demonstrates that such systems go beyond a simple evaluation of procedural follow-up or the compliance of budgetary regulations, since they imply a judgment of technical issues related with the best possible use of funds. After this caution, we proceeded to research the existence of specific institutions in charge of such systems in all the countries studied, this is a very important link on which we should further research for the strengthening of transparency in Central America, but which, apparently, is not being done. Following are the results obtained:
13 Roberto Machado (2006). “Los sistemas de gasto público en América Central y República Dominicana: disciplina fiscal y eficiencia”. Inter-American Development Bank.
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Strengthening Transparency in Central America
Chart 9: Quality of the Public Expenditure: Institutions that evaluate the quality of the budgetary execution Institutions responsible for the Quality Expenditure Systems in Central America Guatemala: • The General Comptroller’s Offices is the entity with the greater hierarchy that oversees the quality of the public expenditure in Guatemala; the Under-Comptroller is responsible of the Quality Public Expenditure. This entity is in charge of the general audit of the public expenditure execution. The General Comptroller’s Office is a technical and decentralized institution. In accordance with the Law, it has functional, technical and administrative Independence and its jurisdiction covers the whole country. El Salvador: • Based on our review of the current legal system, we cannot identify a single institution that is specifically responsible for the quality of the public expenditure. However, from an interpretation of the current legislation, we can state that the Ministry of Finance, the Salvadorian Court of Audit, as well as the National Public Investment Commission (CONIP) are jointly but partially responsible of such attribution. Honduras:
• There is an inter-institutional agency denominated Economic Cabinet composed by the Secretariat of Finance, Secretariat for Planning, Central Bank of Honduras, National Congress, and the Superior Audit Office. There is also the Inter-institutional Commission, denominated Plan for Improving Public Management 2012, under the coordination of the Secretariat of the Presidency/Presidential Technical Support Unit (SDP-UATP).
Costa Rica:
• Despite the fact that the General Comptroller’s Office of the Republic (CGR) is the entity responsible for the approval or rejection of the budgets from the central government, municipalities, and autonomous institutions, there is not a specific attribution for the supervision on the quality of the budgetary quality execution within its current mandate, even though the CGR monitors the budgets organization, formulation and presentation in every fiscal year, and is responsible of the objectives and goals of the annual operation plan for every institution.
Source: own preparation from the information provided by the collaborators in each country.
The research carried out did not discover a specific institution responsible of the issue; on the contrary, the only things identified were the institutional entities that were assigned the task of evaluating the quality of the expenditure, but lacked binding to the directors’ decision-making in the budget executing units, and did not have the ability to establish financial or other penalties, similar to the operations of a specific Tribunal or Court. Thus, none of the four countries identified an institution responsible for the supervision and evaluation of the operations of the Comptrolling offices and entities that evaluate the execution of the budget; this task remains for the specific commissions in the national Congresses, even if they have the legal support to do so. With the purpose of identifying how the public information integrated systems help reduce corruption and improve the control mechanisms, we realize that it is necessary to work on the institutional strengthening to improve the evaluation of the quality expenditure, a pending task more for the Governments than for civil society.
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3. Proper Operation of the Public Information Integrated Systems
This task has become a routine practice in the civil society organizations and/or think tanks in Central America, which have been in a focused way controlling specific projects and programs in the administration of each Government. On this manner, it is recognized that the national chapters of Transparency International have performed a continuous work on the use of public information integrated systems, developing ad hoc methodologies to evaluate the public expenditure; nevertheless, its scope has been limited due to the lack of capacity of the Audit Courts for follow-up the accusations made. For these reasons, there are three specific suggestions on the matter: (1) comprehensively define the concept “quality expenditure”, developing the necessary instances to improve its use and follow-up; (2) institutionalize the use of the quality expenditure supervision systems, whether as specific units in the Audit Courts or as a multisectoral cooperation and public-private coordination institution that guarantees impartiality when certifying the execution of the state budget, without damaging the state’s institutional system; and (3) strengthen the accountability and control mechanisms of the Audit Courts and, most importantly, depolitize the operations of the institution, which has become a pending task in controlling the proper use of the public funds. All this directs the discussion to the following theme included in this study, which is directly linked to the need of strengthening the institutions responsible of preventing and combating corruption, especially on the execution of public funds established on the national budgets for each fiscal year.
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Strengthening the Institutions that Audit the Budget
A
s previously mentioned, all the countries in the region have different institutions responsible for the prevention, detection, accusation, and sanction of corruption. These institutions have in some cases complementary powers, and in other cases overlap; however, we do not notice a coordinated effort to fulfill their obligations, much less coordinated efforts in the region. Given their different powers, each one acts independently from the others, without any coordination that could strengthen transparency in each country. Below are listed the institutions that prevent and combat corruption: Chart 10: Fight against corruption: Institutions that monitor the budget in Central America
Institution
El Salvador
Guatemala
Presidential Commission for Transparency 1 –COPRET–
Prevention
4
Public Prosecutor’s Office against Corruption
5
Special Verification Intendance of the SIB (Superintendence of Banks)
1 Legislative Assembly
ü ü
3 Attorney General’s Office of the Republic 5
Supreme Court of Justice: sections on probity and investigation
6
Under secretariat for Transparency and Anti-corruption
7 Tribunal on Government Ethics
Sanction
ü
ü
ü
ü
ü
ü
2 Salvadorian Court of Audit 4 Institute for Access to Public Information
Accusation
ü
2 General Comptroller’s Office 3 Congress of the Republic
Detection
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü ü
ü ü
ü
ü Continue…
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Strengthening Transparency in Central America
Institution
Prevention
Detection
Accusation
1 National Commissioner for Human Rights
Honduras
2
National Commission of Banks and Securities
3 National Congress of the Republic
ü
4 National Anti-corruption Board
ü
5
Office of the Attorney General of the Republic
ü
ü
ü
ü
6 Institute for Access to Public Information
ü
7 Tribunal on Government Ethics
ü
ü
ü
1 Ethics Committee
ü
ü
ü
ü
ü
ü
ü
ü
2 Legislative Assembly Committees Costa Rica
3 General Comptroller’s Office
ü
ü
ü
4 Ombudsman Assistant Prosecutor’s Office for Integrity, 5 Transparency and Corruption 6
Sanction
ü
ü
Criminal Taxation and Public Administration (CSJ)
ü
ü ü
7 Office for Ethics in the Public Service
ü
ü
ü
8 Attorney General’s Office of the Republic
ü
ü
ü
ü
Source: own preparation from the information provided by the collaborators in each country.
The list highlights some interesting points in common for the four countries. All of them have constitutional institutions such as the Tribunal or Comptroller’s Office14, which fulfill with almost all the duties of the combat to corruption (detection, accusation, and sanction). These tribunals have as a main duty to practice audits a posteriori of the funds, goods, and resources managed by the Government Powers, decentralized and de-concentrated institutions. In the case of El Salvador, the Court of Audits also has the preventative duty when performing the functions of technical support and training to the entities and bodies of the public sector, aside from dictating policies and regulations for government audits; the General Comptroller’s Office in Guatemala has the same duties. In Costa Rica, the General Comptroller’s Office of the Republic has the particularity of controlling the budgetary execution before it takes place, since the law foresees that no payment order can be issued against the Government funds until the respective expense has been endorsed by the Comptroller’s Office, the Government will not even have the obligation to make a payment if it has not been countersigned by such Office. Thus, there are offices in the Attorney General’s Office as the Offices against Corruption that investigate the crime and promote penal prosecution before the tribunals emphasizing those crimes related with corruption. Support 14 Although there are marked and important differences between the Court of Audits and the General Comptroller’s Offices, this document groups them under the same category, depending on the name used in each one of the countries.
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4. Strengthening the Institutions that Audit the Budget
instances that depend on the Executive Body have also been created such as the Presidential Commission for Transparency in Guatemala, the Under-secretariat for Transparency in El Salvador, and the National Anti-Corruption Board in Honduras. In the four countries, the National Congress15 has auditing and control duties that aim to avoid abuses of office as well as acts of corruption; it also has the duty to approve or reject the National Budgets for each country. It is interesting to note that in El Salvador and Honduras there are also specific institutions that seek to comply with what is regulated in the laws on access to information, such as the Institutes for Access to Public Information, fulfilling purely precautionary duties. In Guatemala, although there is a specific law on the matter, there is not an institution on the national level, only on specific units in the different bodies that functions in the Government, even though there is a Specific Unit in the Office for Human Rights that is responsible for verifying the enforcement of the law. On an individual level, certain institutions that constitute a differentiating element and stand out for their importance on the combat to corruption are worthy of mentioning: u
Guatemala has the Special Verification Intendance that is a specialized unit in the Superintendence of Banks to enforce the Law on the Laundering of Money and Other Assets, and fulfills an important function in detecting and exposing corruption. It is important to distinguish that the laundering of money or other assets results from different activities such as drug trafficking, vehicle theft, kidnappings, extortions, bank robberies, frauds, scams, and fiscal crimes16. Notwithstanding, public corruption, on every level, also generates an important amount of funds to its authors, and for this reason, it also enters into its control scope. In the Attorney General’s Office exists, additionally and complementary, a specialized seizures unit that already has several corruption cases in process.
u
El Salvador has Tribunal on Ethics, a public-law entity with legal personality and autonomy, with an administrative nature, created to regulate and promote the ethical performance in the public service, to safeguard the State assets, and to prevent, detect, sanction, and to eradicate corrupt practices from the public servants. To fulfill its obligations, it foresees the operation of Government Ethics Committees in the different bodies of the public administration.
u
Honduras has the National Commissioner for Human Rights specifically for the accumulated experience in performing social audits, as well as for its capability of investigating the accusations of crimes or other
15 Or Legislative Assembly, depending on the country. 16 LaRED (2012). “Siguiendo la ruta del Dinero en Centroamérica: lavado de dinero y sus implicaciones en la seguridad regional”. La Red Centroamericana de Centros de Pensamiento e Incidencia.
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Strengthening Transparency in Central America
criminal offenses in corruption. The citizens have organized other claiming and accusation groups and an extensive network of Local Committees for Transparency, under the figure of the Municipal Commissioner. This experience stimulated the initiative to continue with the process of social audit, that allows society exercise its information and petition rights. u
Costa Rica has the Office for Ethics in the Public Service, which was created on 2002 with the main focus of combating corruption, although some of its duties may present duplicity with similar activities executed by the General Comptroller’s Office. Its competence is confined to the public service environment, and therefore it does not include actions with the same purpose in public funds, which correspond to the General Comptroller’s Office. The entity now performs its work in two main areas: prevention and investigation.
This institution works with the Ethics Committee, which is composed by three members of the highest levels. This committee aims to enforce a series of ethical principles in public servants, among which are eagerness to serve, integrity, objectivity, accountability, transparency, honesty, rationality, and leadership. It is provided that the Committee issues its reports to the President of the Republic and transfers its claim, when relevant, to the Office for Ethics in the Public Service.
u
Processes to appoint and remove Authorities
Another of the important objectives of this chapter is to know the election or designation and removal of the authorities in each one of the institutions in charge of monitoring the public expenditure. On this matter, we aim to identify those obstacles in each country that hinder the fight against corruption. Now, given that the main entity in the countries of the region that deals with corruption is the Comptroller’s Office or Court of Audit, we describe below the processes followed to the appointment or removal of its authorities. Processes are similar in the four countries; their highest authorities are elected by the Legislative Body (e. g. Congress or National Assembly). Below is an outline of the processes followed in each country:
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4. Strengthening the Institutions that Audit the Budget
Chart 11: Control Institutions: appointment and removal processes of authorities in Central America Regulation Order
Guatemala
Constitutional: General Comptroller’s Office: decentralized technical entity
Appointment •
•
Costa Rica
Honduras
El Salvador
• Constitutional: Supreme Audit Control for the Government Office, independent from the Executive Body
•
•
Constitutional: since 1839, National system of the public resource control with operational and administrative autonomy only subject to the Constitution
Constitutional: General Comptroller’s Office, Auxiliary Institution to the Legislative Assembly, absolute operational and administrative independence
•
•
•
Removal
The Comptroller (in the capacity of Magistrate) is elected by the Congress for a four-year period, from a list of 6 candidates proposed by the Appointments Committee Appointments Committee: - Rectors of Universities - Deans of the schools - Professional Associations (CPA) Elected by simple majority by the members of the Congress
•
President and Magistrates elected by the Legislative Agenda for a three-year period (process set out in its internal regulations) Elected by simple majority in the Assembly.
•
•
•
Directed by collegiate by • 3 members elected by the National Congress for a seven- • year period Elected by qualified majority by the Congress
The Comptroller and the under-comptroller are appointed by the Legislative Assembly for an eight-year period, two years after the presidential period has begun.
A procedure cannot be identified, but the competent authority is the Congress of the Republic Causes for removal: - Neglect - Crime - Unsuitability
A procedure cannot be identified, but the competent authority is the Legislative Assembly Causes for removal: - Due cause - Annual report is not submitted A procedure cannot be identified Causes for removal: - Final judgment against him/her in a criminal trial - Noncompliance or serious misconduct during the period, by Decree of the Congress
The Comptroller and the UnderComptroller can be removed by the Legislative Assembly by the votes of at least two thirds of the total voters, if in the files created for the purpose they are found inadequate or with incorrect behaviors.
Source: own preparation from the information provided by the collaborators in each country.
The lack of existence of transparent procedures is a failure detected in almost all the countries; such procedures are previous technical and experience requirements for the appointment of the heads of the control institutions. To the institutional weaknesses indicated before, we add juridical breaches as the lack of legal frameworks to protect witnesses to corruption actions, although in some countries there are advances with the approval of laws against corruption and illicit enrichment.
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Strengthening Transparency in Central America
To this, we must add the lack of coordination mentioned at the beginning; however, the positive experience of Costa Rica must be highlighted, where the General Comptroller’s Office of the Republic (CGR), the Attorney General’s Office of the Republic, the Costa Rican Narcotics Institute (ICD) and the Public Prosecutor’s Office signed on June, 2010, a letter of intent to establish a strategic alliance for the investigation, analysis, monitoring, and control in the fight against corruption. Finally, it is necessary that most of the countries reflect about the lack of plans on the emergence of control institutions, which at the same time generates difficulties in assigning them financial and human resources in the middle of a tendency to reduce the bureaucracy, duplication of functions, or a generation or greater demands to the existing organisms. Resources constraints are important, but even if these entities had larger budgets, there are other structural problems that hinder their autonomy on the subjects they must control.
u Independence in the Performance of their Duties This section seeks to establish de degree of Independence of the institutions that fight against corruption in each one of the countries of the region. We refer to independence of the institutions from the powers of the Government, but in a broader scope, we refer to independence from the influence of external pressure. After the analysis was performed, we found that the degree of independence in the institutions varies. The most extreme case is in Honduras, where the public institutions are found in a state of crisis, which has society demanding deep reforms and has forced the Government to frequently intervene these institutions, even with actions that would not necessarily be considered under a strong framework of Rule of Law. Even the national sources question a double institutional structure, the formal institutional structure and a parallel structure, controlled by powerful groups with a high degree of impunity. The main reasons mentioned as causes are: high partisan politization, the control that the organized crime has over corrupt public servants, the lack of independence, and in some cases the loss of legitimacy from the coup d’etat. A clear example of this was the intervention of the Attorney General’s Office. On April this year, the National Congress questioned the General Attorney. The popular demand and the results of the arraignment of this public servant caused its immediate intervention through a Controlling Commission for its restructuring. During the questioning, the officer admitted that “80% of the crimes remain unpunished, since the security forces barely have the capacity to investigate 20% of the crimes” 17. 17 Digital Process (April 10, Escalofriante.A.Fiscal/66919.html
56
2013):
http://proceso.hn/2013/04/10/Nacionales/
4. Strengthening the Institutions that Audit the Budget
In Guatemala, public institutions generally have low confidence levels from society. One of the reasons is the lack of independence from external pressure. According to the results of the Global Competitiveness Index 2012 (Executive Opinion Survey, World Economic Forum), the Congress of the Republic and the Judicial System are two of the institutions that have the lowest level of confidence from society. On 2012, Guatemala was on the position 103 from 144 countries on the issue of independence of the judicial system, with a score of 2.9 over 7, being 7 the highest independence score and 1 the lowest. This numbers are confirmed with those from the Political Culture of Democracy Survey (LAPOP, 2012), in which the surveyed were asked about the degree of confidence they had on the institutions of the justice segment, also measuring the legitimacy of several institutions. On the 0-100 scale used, the only institution that people showed more confidence in was the Office of the Human Rights, with a score of 51.2. The majority of the justice institutions received similar scores in the 40-point range (the Public Prosecutor’s Office scored 45.8, the Supreme Court of Justice, 44.9). Again, the National Civil Police received the lowest score, 34 points. In El Salvador, public institutions related with the fight against corruption also have low independence levels. The main reasons mentioned for this, among the most important, are as follows: dependence to the political parties, discretionary exercise of their functions, little accountability and opacity in management, and dependence to the Executive Body or superior authorities. From the institutions analyzed in El Salvador, only the Institute of Access to Public Information (IAIP), recently created, has a certain degree of independence. Unlike other entities, this one has a clear legal framework that will allow it to exercise important prevention and sanctioning functions. However, it is probable that it faces the same budgetary restrictions that other control entities have, excepting the Court of Audit. On the other hand, the Tribunal on Government Ethics, since its origins in 2006, has been limited, either for budgetary reasons or because its organizational regulatory framework make difficult the full performance of its functions. In the case of the General Attorney’s Office, it is specifically stated that the Unit for Corruption Crimes does not have enough personnel nor does it have technical support for financial analyses, for which it has to request the support from other institutions and other areas of the Office. It was also stated that the Office distributes the corruption cases in a discretionary form, without taking into account the mandate of the Unit. All this is added to the fact that the decisions made by the General Attorney come from one person, from this depends in last instance whether or not the investigated cases go to the judicial stage, thus it has a wide discretion for processing cases. Finally, in Costa Rica, the juridical order has established and given life to different institutions that are responsible to apply a set of prevention and sanctioning regulations related with transparency and corruption cases in the
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Strengthening Transparency in Central America
public service. Among them, there are rank regulations, such as International Agreements, Political Constitution, Laws and Regulations, and resolutions of different natures and ranks. The mentioned legislation is implemented in the practice through a complex network of institutions and bodies responsible of executing the different controls that the ordinance has been adding to the administrative work. As a summary, we highlight the importance of an institutional structure among powers as a foundation to Central American democracies. In spite of the fact that the general regulation recognizes the autonomy of institutions responsible of controlling the budget, common practice has been the intervention in attributions, thus subtracting independence in making decisions; it also causes a struggle for power at the moment of appointing and/or removing authorities from each one of these institutions, which makes necessary to depolitize the designation of people who will work in the key positions in the prevention and combat of corruption in Central America.
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5
Cooperation and Participation Environments for Citizens
T
he final analysis area of this study covers empowerment to citizens in strengthening transparency through more involvement in the cooperation and participation environments that are formally and informally recognized in each country. Not only it is necessary to work in the pending regulations and in the institutional structure for the prevention and combat against corruption, but also it becomes crucial to address the issue of achieving more citizen participation in the decision-making process on budget allocation and its subsequent evaluation. Citizen involvement is an essential tool to strengthen transparency in Central America, since the controlling eye of the citizens will complement the efforts made from the Government to control corruption. However, it is necessary to modify the legal framework to remove the obstacles to the public duty of preventing, detecting, accusing, and sanctioning corruption in the public service.
The establishment and development of the audit capacities of the public on the management of public interest issues are important, since they reduce corrupt practices in public servants and private persons and companies, notwithstanding other measures that can be taken in the future. Thus, all this should be complemented with actions that let the public ensure that those who hold and office are honest and capable people for the performance of their responsibilities. More citizen involvement means that people get involved in the scrutiny of the available information and research, while at the same time, public servants provide complete and timely information on the initiatives related with the performance of their duties, the compliance of the country goals and to the contracting suppliers and the acquisition of goods, services and assets. Direct communication with the representatives becomes crucial, as well as indirect communication, through the media, traditional and new. Recent evidence shows that the new media and the social networks have become important instruments for the prevention and fight against corruption.
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Strengthening Transparency in Central America
The concept of Citizen Involvement, according to Rodrigo Baño18 consists in “the intervention of particulars in public activities as bearers of social interests”. Participation is a civic action, is the way of acting in a democracy from a private constituency of the citizen, considered as an action that has value and object in it. Thus, citizen participation becomes a practice that improves the quality of the political system democracy, being a communication channel from the Government and allowing people to access a share of the power granted to the representative. As a consequence, after identifying the improvement areas in the regulations, systems, and institutions in the public segment, we want to contribute to the debate the inclusion of a larger participation of the civil society as a reference point for the combat against corruption in Central America. This participation, however, cannot be sent into the air, only being a practice of citizens’ responsibility or academic interest. The present study aims to link the contributions of the citizens with the taking of necessary measures in promoting transparency. If we go deeper in observing the current regulatory framework in Central America, we identify a series of mechanisms recognized by the regulations that empower citizens to take certain detection and accusation actions against the practices of corruption, together with the value generated from prevention through dissuasion and sanction thanks to the provision of proofs. In our own words, we suggest the following definition: Mechanism for Citizen Involvement: This is a legitimate, formal and legal instrument, through which the citizen can directly or indirectly influence the decision-making in the public environment. This mechanism is a method to strengthen democracy by demand and by expanding the rights and guarantees, social control and accountability, collaboration with the authorities and strengthening the institutional framework and political innovation in every country.
The city of Porto Alegre in Brazil is the paradigmatic case with the application of the Participative Budgets19. Other existing examples in Latin America are 18 Rodrigo Baño (1997) “Consideraciones acerca de la participación ciudadana”. FLACSO – First Conceptual Seminar on Citizen Involvement and Evaluation of the Public Policies. 19 After analyzing the citizen’s involvement mechanisms we cannot avoid mentioning the case of the city of Porto Alegre, capital of the state of Río Grande del Sur in Brazil. Nearly one and a half million of inhabitants live in Porto Alegre, which has been governed for more than fifteen years by the Partido de los Trabajadores (PT, Workers’ Party), from the actual national government. This city is an original case on the methods used to manage politics and how the citizens’ participation mechanisms come to practice. This city is known today as one of the Brazilian capitals with the better indexes of quality of life; the activities from the called Administración Popular (Popular Management) have received many awards: for the quality of the municipal public companies (such as transportation), and for its policies (as the awards received from the policies for the defense of the rights of children and adolescents). Besides the recognition granted to the hard core of its municipal policy for its participative budget, on 1996 by the UN during the International Conference Habitat II, it was designated as one of the best 40 management practices of the world in urban policies.
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5. Cooperation and Participation Environments for Citizens
popular consultations, mandate revocations, referendums, legislative initiatives, citizens’ overseers, open councils, and citizens’ assembly.
u Acknowledgement in the regulatory framework of each country Despite the fact that mechanisms for citizen participation are an innovative concept in the current policy theory, we were not able to obtain sufficient information to generate a homogeneous analysis framework for the countries of this study. Nevertheless, we want to make a brief reference to those mechanisms that were identified in every country, with the intention of proving the enforceability of these tools in fighting against corruption.
•
Guatemala:
Citizen participation in Guatemala can be analyzed from two main events of its recent history: the promulgation of a new Constitution on 1985 and the signature of the Peace Accords on 1996. Meanwhile, despite the advances that the promulgation of a new Constitution meant, there were barely any citizens involved; therefore this was a central issue in the peace negotiations between the Government of Guatemala and the Unidad Revolucionaria Nacional Guatemalteca (URNG, Guatemalan National Revolutionary Unit). The Peace Accords, besides ending the internal armed conflict, established an agenda oriented to overcome the causes of the confrontation20, which entailed opening spaces for the political and citizens’ participation to the population that was historically excluded.
Participation Mechanisms reflected in the Constitution. The participation spaces reflected in the Constitution are limited. They basically refer to the right of petition (articles 28, 30, and 137) and to the consultative process (article 173). Article 277 recognizes the ability of proposing reforms to the Constitution, which can be filed to the Congress of the Republic
This model, denominated Popular Management, does not only require political will to implement these practices, but it also requires the citizens’ commitment to participate. The Participative Budget “is a process of direct, voluntary and universal democracy, where the citizens can discuss and decide on the budget and public policies. The citizens do not limit their participation to voting every four years, but they also make decisions and control the government management”. The characteristic of this kind of mechanisms is that it is developed in the public non-governmental sphere of co-management. This complement to the definition, with a more political character, was coined by Tarse Genro, mayor of the city for the periods of 1993-1996 and 2000-2003. We must also highlight that the Participative Budget is executed by the territorial division of the municipality by regions, through which the participation of the population is structure. Every region selects in the Zonal Assemblies the priority questions and areas of its region (pavement, cleaning and sanitation) to have in mind at the moment of the preparation of the final budget.
20 Peace Accords (1996) “Agreement on a firm and lasting peace”. Guatemala, Guatemala.
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Strengthening Transparency in Central America
“through the petition of at least five thousand citizens duly registered in the Registry of Citizens”. We can mention two citizens’ participation generic aspects present in the Constitution. The first one, on article 98, refers to citizen participation in the public health programs and establishes that “communities have the right and the obligation to actively participate in the planning, execution, and evaluation of the health programs”. The second item considered in the Constitution refers to the Urban and Rural Development Councils (articles 225, 226, and 228) which, however, only considers participation on three levels: National Council, Regional Council, and Departamental Council.
Participation Mechanisms reflected in the Peace Accords. Peace Accords raised a series of constitutional reforms, several of them focused in promoting citizens participation in public matters. However, society rejected the reforms package in a referendum. Thus, to strengthen the juridical safety of the indigenous communities, the government committed to “promote before the legislative body, with the participation of indigenous communities, the development of legal regulations that recognize to the indigenous communities the management of their internal affairs according to their customary regulations, as long as those are compatible with the fundamental rights defined by the national juridical system and the internationally recognized human rights.”21
Another element considered in the Accords was the reform to the System of the Councils of Rural and Urban Development22 that broadens the participation scope of citizens participation to a community level; this was another of the commitments acquired in the Peace Accords that came to life with the issuance of three laws on 2002: Law on Urban and Rural Development Councils, Law of Decentralization, and the new Municipal Code (reformed on 2010 and 2012).
The Municipal Code, on article 18, also recognizes the organization of members in communitarian associations, including the own and traditional forms, resulted in the communities. Such is the case of indigenous municipalities, in which it states that “the municipal government must recognize, respect, and promote indigenous municipalities, when these exist, including its own forms of administrative operation”. However, it does not clearly define to what extent will their decisions be binding, or how will the relationship to the municipal authorities be established.
In some specific areas of citizens’ participation, the Municipal Council can propose a consultation to the citizens, but citizens also have the right to request the Municipal Council consultations when it refers to matters of
21 Peace Accords. (1995) “Agreement on Identity and Rights of the Indigenous Peoples”. Mexico, D.F. Paragraph IV. E. Customary Law. 22 Peace Accords. (2002) “Law on Urban and Rural Development”. Congress of the Republic of Guatemala. Decree Number 11-2002, Article 3.
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5. Cooperation and Participation Environments for Citizens
general character that affect all the neighbors in the municipality. When the nature of an issue particularly affects the rights and interests of indigenous communities or authorities of the municipality, “the Municipal Council will perform consultations at the request of the indigenous communities or authorities, even applying criteria from the customs and traditions of the indigenous communities”. This disposition does not contradict the obligation of the Government to the right of a previous free and informed consultation established in the ILO Convention 169 (with non-binding outcomes); in this study it is also recognized as another space for citizens’ participation.
Other Mechanisms for Citizen Participation. On 1992 comes to light a self-management pilot plan for education called Proyecto Saq’be (“Path of Light” in kaqchikel language), that established the participation of parents in schools as its central operative axis. On 1996, the project was institutionalized as National Self-Management Program for Educational Development (PRONADE). The objectives of the program were: to broaden coverage and improve the quality of the educative services in the rural area, as well as to promote the participation of the communities. It was based on the principles of subsidiarity, solidarity, efficient management, participation, and strengthening of the democracy. 23
Worth to be also mentioned are the Comités Únicos de Barrio – CUB, Single Neighborhood Committees – implemented by the Municipality of Guatemala to associate the neighbors in the making of decisions, and the Juntas Locales de Seguridad – Local Security Committees – implemented by the Ministry of Interior. Finally, it is impossible to forget the different cooperation agencies in the public and private segments, among which the role of the Consejo Económico y Social – CES, Economic and Social Council – (Decree 2-2012), integrated by representatives of entrepreneurs, workers, and cooperative members draws attention, and the Consejo Nacional de Promoción de Exportaciones – CONAPEX, National Export Promotion Council -, responsible of adopting the integrated foreign trade policy between the public and the private segments, including subjects like competitiveness and attracting investments…
•
El Salvador:
There are some citizen’s participation agencies promoted by the Government and others by the civil society organizations. The existence and continuity of all of them depend on the willingness of the government in office, which limits its sustainability. However, as participative dialog mechanisms, they are an important indirect source of accountability of the convening management.
23 Guatemala (2007) “Los avances en la cobertura educativa”. Series of Documents: La educación está en nuestras manos, Asociación Empresarios por la Educación. Guatemala.
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Strengthening Transparency in Central America
64
The organizations in the civil society have promoted citizens’ participation mechanisms that enable the attendance of the national public agenda in different environments that incidentally receives the attention of the government in office or open public-private discussion spaces. Some examples are the Institutional Round Tables promoted by FUSADES on 2005-2008 and the Initiative for Competitiveness promoted at present (these public policies discussion exercises are not binding).
With the recent approval of the Law on Access to Public Information was regulated the right of the citizens to request public information to the different public institutions. This law regulates the process of requesting information and the process that the respective institution has to follow to answer to the request. This is an important advance for the country; before this law there was no procedure to regulate the answers of the Government to a citizen’s request or petition of this nature.
On another hand, the Undersecretariat for Transparency and AntiCorruption began on 2010 a program for the ministries and other institutions of the Executive Body to have them prepare an annual accountability exercise for the citizens. The experience has been positive and every year, since the beginning of this initiative, according to the information provided by the Undersecretariat, the number of institutions accountable has increased. This same Undersecretariat has created a manual to guide all the public institutions in the Accountability Mechanism. Furthermore, available on its governmental webpage is a detailed listing by public institutions of the means with which it contacts the citizens; most of these institutions show their web pages, social networks, and telephone numbers.
On the matter of institutional participation, the current administration of President Mauricio Funes constituted the Economic and Social Council with the objective to facilitate the dialog and compromise around public policies related to the economic and social agenda. It was constituted as a permanent forum with an advisory nature for which their recommendations are not binding.
Additionally, during the current administration in different instances of the Executive Body have been constituted workshops or study panels for proposals on public policies and new regulations. These mechanisms benefit the citizens’ participation and provide technical support to the government in the formulation of proposals although the exercises are clearly not binding. On the other hand, in the local environment, the Municipal Code in force foresees mechanisms to promote the citizens’ participation; (a) Public Meetings of the Municipal Council, (b) Open Councils, (c) Referendums, (d) Neighborhood and Sectoral Consultation, (e) Participative Expenditure Plan, (f) Local Development Committees, (g) Citizen Security Councils, (h) Participatory Investment Budget, and others considered by the Municipal Council.
5. Cooperation and Participation Environments for Citizens
•
Honduras:
It has been documented in the subject of citizens’ participation that the Executive Body as well as the Legislative Body have opened channels to citizens’ participation. On the case of the approval of the 2011 Budget, the sixteen territorial areas of the country were consulted for governmental activities purposes. Regional budgets were presented on these areas; the related observations were recorded. On the 2012 budget the discussion modality was modified and the National Congress requested the different secretariats of the Government to proceed with the promotion of public hearings, in which representatives of the different segments of the civil society would participate.
The decentralization policy demands the formulation and integration of the local government plans, on the transparency mechanisms, and on the activities directed to fight corruption, as a necessary imperative in the pursuit of transparency in this governmental sphere. At the end of the governmental period, presided by Ing. Carlos Flores, the incorporation of these activities to a general program was initiated, coordinated by the Asociación de Municipios de Honduras (AMHON, Honduran Association of Municipalities) / and the Fundación para el Desarrollo Municipal (FUNDEMUN, Foundation for the Municipal Development).
The national institutionalizing of the Municipal Transparency Commissions was recommended in the initial proposals; such commissions are integrated in more than 22 municipalities in the country, many of them are coordinated by a municipal commissioner, elected by open council. This mechanism enables the participation of civil society in the controlling and follow-up activities to ensure transparency in the municipal management and, as a consequence, foresees the improvement in the citizens’ confidence, particularly in the management of tax collection. The National AntiCorruption Council is designing a project to institutionalize the social audit and other citizens’ participation mechanisms on a local level with strong components for training and systematization of the accumulated experience in several municipalities to support the national implementation of the measures previously described.
Social Audits. There is a lack of coordination and cooperation mechanisms between the initiatives and the current social audit institutions. For this reason, it is necessary an effective and horizontal coordination between the Government and the Civil Society in these activities. It has also become necessary to ensure the sustainability of the governmental initiatives beyond the period of force, and perform periodical evaluations on the advances and lags.
Participation Mechanisms provided in the Constitution. The citizens’ participation spaces provided in the Constitution of the Republic of Honduras propose that the government must rest on the principle of
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Strengthening Transparency in Central America
participative democracy from which derives national integration. In order to strengthen the participative democracy, the mechanisms of referendum and plebiscite are instituted, along with a law that regulates the Popular Consultation process. On the generic aspects of citizens’ participation, we could mention the regulation of citizens’ participation in governmental health projects, which establishes that “the communities have the right and the obligation to actively participate in the planning, execution, and evaluation of the health and education programs, compulsory schooling IS established”.
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As a last point, the Law of Municipalities develops deeper and strengthens the citizen’s participation mechanisms, promoting in several municipalities and associations the practice of Open Councils, Consultation Assemblies, accountability, and plebiscite, among others. The intensity of these local citizens’ participation policies is frequent and depends on the democratic leadership from mayors and community leaders. There are emblematic cases that are milestones for tradition and examples, such as the famous Comisión de Transparencia de Santa Rosa de Copán (COTRSAR, Transparency Commission of Santa Rosa de Copán).
•
Costa Rica:
The roles of the organizations in civil society on the matter of transparency and accountability have mainly focused on public accusations on the infringement of rights (human, constitutional), international conventions, corruption actions, public declarations on political, social and economic agendas that affect the citizens’ quality of life, and citizens’ audits on the Government and its institutions fulfillment of their responsibilities and commitments.
Additionally, citizens’ participation on the control of the public management is made through the social audit mechanisms of by using the recently-created institutional channels, such as the service control offices, the complaints windows, and approaches to the Ombudsman Office. It is appropriate to mention that media is a privileged channel to expose corruption; however, the control media makes is limited due to the concentration of media ownership, persistent legal obstacles for the freedom of expression and even threats to the physical integrity to reporters.
We must acknowledge that legal advances and more citizen activism in the combat against corruption do not find their counterpart in the institutional control structure, for this, the exposure of corruption cases find multiple obstacles that slow their resolution and do not promote an improvement on accountability and transparency, according to the Programa Estado de la Nación 2008 (State of the Nation Program). It is worth mentioning that this program performed between 2004 and 2006 as a facilitator in the Forum for Social Dialog - in which different social actors participated, such as
5. Cooperation and Participation Environments for Citizens
the Asociación Nacional de Empleados Públicos y Privados (ANEP, National Association of Public and Private Employees), Central del Movimiento de Trabajadores Costarricenses (CMTC, Costa Rican Workers Central Movement). Confederación de Trabajadores Rerum Novarum (CTRN, Confederation of Workers Rerum Novarum), Confederación Nacional de Desarrollo Comunal (CONADECO, National Confederation of Community Development), Movimiento Solidarista Costarricense (Costa Rican Solidarity Movement) and the Unión de Cámaras y Asociaciones de la Empresa Privada (UCCAEP, Costa Rican Union of Chambers and Private Enterprise Associations).
The Forum for Social Dialog produced in a consensual way, a draft law to create in the country the Economic and Social Council that operates as a consulting mechanism for society from the Executive and Legislative Bodies in public policy. This space was coordinated between the Ministry for the Presidency and the State of the Nation Program, and had the goal to know, reflect, and search agreements on how to pinpoint an institutionalized social dialog space in Costa Rica, with the participation of important social actors of the country and the collaboration of the Presidency of the Republic.
As a last point, we must highlight that the opening in certain areas of the Government to the citizens’ participation has been haphazard and partial, for three specific reasons: (1) The new Municipal Code, approved on 1998, establishes as a principle the promotion of the citizens’ participation, the strengthening of popular consultations and District Councils; however, the practical application to these dispositions is low. (2) Some public institutions have created local participation institutions. For example, the Costa Rican Social Security Fund, along with the Health Boards, and the Ministry of Public Works and Transport in the programs for rural roads; nevertheless, these are isolated actions in the operations of these institutions. (3) The Central Government experimented with initiatives that incorporated citizens’ participation mechanisms, like the Triangle of Solidarity, and with dialog and conciliation processes with the civil society, for example the National Conciliation Forum, but the continuity perspectives are scarce.
u Application of the Citizen Participation Mechanisms The mechanisms listed above are a relatively extensive sample of the powers provided to citizens at the moment of exercising their participation in public activities; one of them is accountability on the budgetary use. However, if these mechanisms are not put into practice, they lack instrumental validity, that is, they will not have the trust from the citizens or they will not be known.
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Strengthening Transparency in Central America
Greater citizen participation needs communication channels with the authorities to know objections or complaints on the approval and execution of the budget, without having the objective of minimizing or devaluating the operation of the representatives, but as a form of providing additional support to the relationship between the citizens and the governmental institutions. The citizens have the right to request the accounting on the use of the governmental resources; however, citizen participation goes beyond, involving the actors in the decision-making and result evaluation processes. (d) Evidence shows that the little legal recognition given to the cooperation and participation institutions has damaged Central American democracies, thus preventing the weaving of strong social fabrics that favor public actions to make an optimal use of the resources available and to strengthen transparency in the execution of the national budgets. For this, we complement the present analysis with a chart that shows the mechanisms used during the past years, which will provide an idea on the mechanisms used by the population, and if these are related to the decisions of the Government, accountability to the citizens, prioritization of policies, support to the institutional system or validation to the current legislation.
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5. Cooperation and Participation Environments for Citizens
Chart 12: Citizen Participation: mechanisms recently used in Central America to strengthen Transparency
Are there some Citizen Participation Methods established in the Constitution?
What are these Citizen Participation Methods?
Other Citizen Participation mechanisms used in the country
Which of these mechanisms have been used during the last years?
Guatemala
El Salvador
Honduras
Costa Rica
YES
YES
YES
YES
• Referendum • Popular Consultation • Legislative Initiative • Popular Initiative
• There is not a clear disposition on the Constitution that explicitly foresees the citizen participation. The only case established in the direct popular consultation or plebiscite
• Referendum • Plebiscite • Popular Consultation • Legislative Initiative • Popular Initiative • Auxiliary Municipalities • Development Councils • Transparency Commissions • Municipal Commissioner • Public Assembly • CODEM´s
• Referendum • Popular Consultation • District Councils
• Economic and Social Council • Development Councils • Community Consultations • Local Security Committees • CONAPEX • Single Neighborhood Committees –CUB–
• Economic and Social Council • Municipal Councils • Economic and Social Council • Popular Consultation • Local Development Committees • Citizen Security Councils • Participative Investment Budget
•
• Economic and Social Council • Social Dialog Forum • Health Boards • Triangle of Solidarity • National Conciliation Forum • State of the Nation Program
• Economic and Social Council • Referendum • Popular Consultation • Development Councils • Community Consultations • Local Security Committees
• Economic and Social Council • Intersectoral round tables • Citizen Security Councils • Open Council • Municipal Popular Consultation
• Economic and Social Council • Referendum • Popular Consultation • Development Councils • Open Councils • Community Consultations
• • • •
Economic and Social Council Open Councils Information and accountability assemblies Community Consultations Municipal Transparency Commissions
• Economic and Social Council • Social Dialog Forum • State of the Nation Program • Popular Consultation •
Source: own preparation from the information provided by the collaborators in each country.
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Strengthening Transparency in Central America
The previous table shows the variety of institutions known for citizen participation in Central America, highlighting the mechanisms defined by the constitutions of each country, where direct popular consultation or plebiscite is the only one that has validity in the four countries as a tool to make modifications on electoral or legislative issues. Within the common decisions through this tool are petitions, legislative initiatives and revocation of mandate, common practices in other countries. The citizen participation methods that are not constitutionally recognized divide in two common areas. The first one refers to the municipal entities as a local decision-making area, in which elected mayors and the represented citizens groups cooperate. The second mechanism is composed by the Economic and Social Councils, constituted as a permanent consulting body of the Governments, responsible of the social discussion of the relevant matters in the economic and social spheres for each country. As a conclusion, the most important matter to highlight is the continuous application of these mechanisms in each one of the countries analyzed, which is fertile land for a more active citizen’s involvement in the decision making on the budgetary execution and its further execution based on the expected results. The point that will remain pending on this matter is a greater institutionalization of the mechanisms; the guidelines on how to legitimate the proper representation of the community or citizen leaders are still to be defined.
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6
Discretion in the Public Budget management
A
fter analyzing the mechanisms available to follow up every one of the stages in the fight against corruption, such as those instances that need to be reinforced to promote a greater degree of transparency in each of the four countries, one realizes that legislation, institutions and the cooperation environments are only tools that make the controlling task easier.
One must acknowledge the existence of a fourth factor that induces the corruption practices, the willingness of the public servants in the efficient handling of the public resources, where their ethic behavior comes to the test on the discretionary use of the budgetary execution, motivating the fraudulent practices. The analyzed mechanisms allow a meticulous follow-up of the budgeting process in compliance with the current regulations and the processes defined for the acquisitions and contracts in the Government, but inasmuch as there is a greater discretion in the handling of resources, there is a greater possibility of corruption to exist if the public servant is not controlled by the governmental institutions or by the citizens. Beyond the recommendations provided in the previous chapters of this document, we want to deepen in those budgetary items that to a greater or lesser extent allow arbitrariness in the budgetary execution, a situation that allows the improper use of public funds for a particular benefit when there are not the proper controls and counterweights.
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Strengthening Transparency in Central America
Presupuesto (millones US$)
Graph 2: Budgets in Central America: executed budget at the end of the year (figures in US$ million) $12,500 $10,000 $7,500 $5,000 $2,500 $0
Guatemala El Salvador Honduras Costa Rica
2010 $6,294 $5,124 $3,659 $9,564
2011 $7,121 $4,772 $4,234 $11,116
2012 $7,304 $5,943 $4,707 $12,148
Source: own preparation from the information provided by the collaborators in each country.
On the previous graph we can scale the amount of public funds that the Governments from each one of the countries included in the analysis have undertaken (executed budget for every year). With a greater or lesser degree of availability, we can notice that every one of the analyzed countries handles an annual budget of US$ 3,600 million to USE$ 12,150 million; it is necessary to evaluate the execution and item destinations on which there is a higher or lower level or arbitrariness in the public servants. The main thesis of this study is that, the higher the discretion in the use of funds – explained as the degree of freedom that the public servant has at the moment of deciding the final destination of the public funds without an adherence to current law (on this matter, there is a direct link with the quality of the public expenditure) – the higher is the probability of suspicious practices on the type of good or service contracted, the valuation of the acquired asset, or the objectivity of the personnel contracted for public service.
u Potential Corruption Sources The first item to analyze is the type of expenditure in which the Government incurs. With this classification we group the different programs, subprograms, projects, activities and works performed by institutions, entities and dependencies of the public segment, according to the destination of the expense in accordance with the goods and services to produce and provide,
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6. Discretion in the Public Budget management
respectively, with the purpose of identifying if these have the goal to support the administrative management of the dependencies in the public segment, increase the quality of the human resources, the execution of projects and public works, the financial investment, the service transactions, and payment of public debt. There are three kinds of expenditure in this classification, according to the International Monetary Fund (economic classification of the budget): (1) Operations (group 10): Composed by the assignations destined by the institutions in the public segment for the administrative or technical management to produce goods or provide services, and to qualitatively improve the human resource and the provision of basic services. In this group we include the payment of salaries, the acquisition of materials and supplies and the services that provide support to the management. (2) Investment (group 20): Composed by the different components in investment, gross fixed capital formation programmed as a physical investment, capital transfers and financial investment. In this type of expenditure can be included the fixed assets acquired by the Government, the renovation of public works and the building of infrastructure, whether real estate, road, port or aerial infrastructure. (3) Public Debt (group 30): Includes the expenditures related with the service of the debt contracted by the Government – internal and external –, including the payment of interests, redemption, and reduction of liabilities. After making this distinction, it corresponds to evaluate which items of the classification can have more or less freedom in the execution of the public funds. We must not forget that corruption is more than the noncompliance of the budgeting regulations or the lack of adherence to the accounting procedures in each institution; corruption also includes the omission of the optimal use of the public funds to reach the goals in every country. At the beginning of the table is detailed the executed budget, defined as every expenditure that complies with an assigned and approved budget, an identified beneficiary and a clear payment commitment against the Treasury accounts, with a disbursement of funds during the fiscal year.
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Strengthening Transparency in Central America
Chart 13: Budgets in Central America: executed budgets by Expenditure Group (figures in US$ million) 2010 GUA • Group 10:
3,708.3
ESA 4,117.9
2011 HON 2,915.0
CR
GUA
5,959.8
4,263.1
ESA 3,061.2
2012 HON
3,158.3
CR 6,775.0
GUA
ESA
4,591.7
4,465.2
HON 3,450.0
CR 7,323.2
• Group 20:
1,713.2
709.6
581.5
627.1
1,886.7
776.0
831.2
598.0
1,646.6
1,217.5
902.5
725.2
• Group 30:
872.3
296.6
162.2
2,977.4
970.7
934.9
244.2
3,743.3
1,066.1
259.7
354.9
4,099.1
u TOTAL
6,293.8
5,124.1
3,658.7
9,564.3
7,120.5
4,772.1
4,233.7
11,116.2
7,304.5
5,942.5
4,707.4
12,147.5
Source: own preparation from the information provided by the collaborators in each country.
On the matter of Debt management, we can say that this item probably has no discretion since it obeys to commitments previously undertaken with national or international institutions. On the contrary, we must mention the other two types of expenses in specific items: u
Operation: Two items show a great degree of discretion in the regular operating expenses. The first one is the purchase of Materials and Supplies (Group 2), which includes the purchase of fuel and medicines; this is one of the items that generate great controversy due to the use of open contracts and direct purchase. The second item is related with the Personnel contracting (Group 0). On this matter, the subject discretion in the payment of wages and benefits payments is not discussed, for they are regulated by the Law on Civil Services and Collective Agreements, but for its discretion in selecting the personnel to hire. As an example, with every new administration in Guatemala, there is an 80% of personnel turnover on the leading and management areas of the governmental institutions, especially with the temporary positions and those not included in the payroll.
u
Investment: This may be probably the item with the greatest discretion in the execution of public funds, since it covers the public works and the infrastructure contracts, most of these funds are managed in a decentralized way. The Geographical Listing of Works has a high influence and is negotiated by the congressmen, with a specific budgetary assignation.
We must make a specific mention to the Current and Capital Transfers, which are liabilities in charge of the Treasury to finance Decentralized Entities and other independent organizations. In this item, discretion in the funds management is questioned since autonomous entities and municipalities are not continuously audited, which means a great degree of permissiveness to the criteria of public servants. It is important to mention the condition of the degree, since there will never exist a full discretion in the budgetary execution. Furthermore, we can affirm that the budgets of Guatemala, El Salvador and Honduras lack budgetary rigidity; that is, they have little availability to attend the new demands that may arise from the establishment of a specific destination to the current incomes or from other existing causes in the laws in the country.
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6. Discretion in the Public Budget management
According to CEPAL (2006) in Retos de la política fiscal en Centroamérica (Challenges of the fiscal policy in Central America), “there are at least three sources of rigidity in the Central American Budgets, with differences from country to country: the legal dispositions that establish beforehand the destination of the expenditure, the wages of the public servants and the contingent liabilities”. From the national budgets analyzed, we observe that there are predetermined expenditure assignations in the Constitution and other specific laws, as well as the existence of expenditure commitments more or less permanent composed by the payment of wages and salaries and payment of the debt service. From the disaggregated data, we can observe that the budget required for human resources, property, plant and equipment, and intangibles, is the exclusive responsibility of the heads on each institution, since they have control of the existence of their personnel and inventory, for which, as a principle, there would be a greater margin for discretion in the execution and scope of these items. However, we must keep in mind that the institutional budget is also limited by the ceiling for expenditure that the institution responsible for the public finances sets and assigns to each institution. However, we repeat that corruption does not only happen in the assignation of the destination of funds, but also in the quality of the public expenditure, like we mentioned before. For that reason we insist on the importance of strengthening the use of quality supervision systems for the public expenditure, this being an imperious quality that must accompany in every moment the execution of the public funds. u
Discretion in the Budgetary execution
Despite the restrictions highlighted in the final paragraphs of the previous section, we would like to broaden the analysis with a more detailed description of the budgets. If we focus our attention on the classification according to the object of the expense, we can systematically and homogenously classify the goods and services, the transfers, and the variations on assets and liabilities that the public segment applies in the development of the budgetary cycle. For graphic purposes, we only include on the following table the code for each object of the expense, but to make the analysis more explicit, we list them as follows, mentioning the budgetary classification according to the International Monetary Fund. • Object 0 Personal Services
• Object 4
Current Transfers
• Other Objects:
• Object 1 Non-personal Services
Technical reserves, unexpected expenditures, discounts and allowances, and equity reduction (Objects 8 y 9)
• Object 5
Capital Transfers
• Object 2 Materials and Supplies
• Object 6
Financial Assets
Property, Plant and • Object 3 Equipment
• Object 7
Debt Services
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Strengthening Transparency in Central America
Chart 14: Budgets in Central America: Budget yield by Object of the Expense (figures in US$ million) 2010
2011
2012
GUA
ESA
HON
CR
GUA
ESA
HON
1,574.4
1,723.0
1,611.7
2,474.3
1,807.2
1,449.0
1,743.8
• Object 1:
718.7
699.1
170.4
255.7
730.9
478.3
• Object 2:
435.6
411.8
199.1
91.7
447.6
692.9
• Object 3:
368.5
117.9
314.6
107.2
605.6
• Object 4:
1,355.3
696.0
498.4
2,385.2
• Object 5:
947.0
569.2
251.8
• Object 6:
0.1
27.7
• Object 7:
872.3 21.9 6,293.8
•Object 0:
• Others: TOTAL
CR
GUA
ESA
HON
CR
2,854.1
1,895.7
2,058.6
1,823.9
3,205.4
189.0
266.5
743.1
696.1
278.4
296.4
216.0
109.7
478.5
479.4
229.9
112.1
305.5
385.9
111.3
380.2
278.4
382.3
96.4
1,510.1
618.9
485.5
2,671.8
1,566.7
694.9
569.0
3,080.1
394.6
1,014.6
433.4
346.8
347.3
1,143.2
877.8
428.1
508.2
183.0
---
0.8
17.9
86.5
---
0.3
75.8
80.7
---
296.6
162.2
2,977.4
970.7
272.8
244.2
3,743.3
1,066.1
259.7
354.9
4,099.1
582.9
267.4
878.0
33.1
503.4
536.0
1,012.2
30.6
521.9
560.2
749.8
5,124.1
3,658.7
9,564.3
7,120.5
4,772.1
4,233.7
11,116.2
7,304.5
5,942.5
4,707.4 12,147.5
Source: own preparation from the information provided by the collaborators in each country.
On the quest for a more exhaustive scrutiny of the governmental budgets, we aim to relate the items that allow more arbitrariness in the public servant at the moment of executing the funds, with the amount of the budget yielded during the last year (2012), having the objective of determining if there is a positive relationship between arbitrariness and amount of resources available. We warn that there is not a specific methodology to quantify such arbitrariness with which the public servants dispose of the public funds; however, we have tried, with the support of the consultants in each one of the countries, to assign an ordinal score, based on a scale of three categories: (1) little or no possibility of arbitrariness in executing the budget, (2) some possibility of arbitrariness, and (3) high probability of arbitrariness in the execution of the budget.
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6. Discretion in the Public Budget management
Presupuesto 2012: millones de US$
Graph 3: Budgets in Central America: arbitrariness in the execution of the public funds according to the Object of the Expense $4,500
Objeto 0
$4,000
Objeto 1
$3,500
Objeto 2
$3,000 $2,500
Objeto 3
$2,000
Objeto 4
$1,500
Objeto 5
$1,000
Objeto 6
$500
Objeto 7
$Poca
Alguna Alta
Guatemala
Poca Alguna Alta
El Salvador
Poca Alguna
Alta
Poca Alguna Alta
Honduras
Otros
Costa Rica
Source: own preparation from the information provided by the collaborators in each country.
The previous graph aims to provide an additional dimension to the probability of arbitrariness in the public servants who look to collect public funds for their own benefit, negatively affecting the budget in each country. 24 The information obtained allows us to quantify the amount of the resources that have little, some or high probabilities of being subject to arbitrariness, as well as the objects of the expense that deserve more attention at the moment of being monitored by the citizenship. •
The items that have the least probability of being subject to arbitrariness include the non-personal services (group 1, excepting Guatemala), debt services (object 7), financial assets (group 6), and other expenses (objects 8 and 9). The amount of resources destined to these items in the four countries analyzed is US$ 9,350 million, or the equivalent to 31.1% of the total funds executed on 2012.
•
The largest category includes the items with some probability of arbitrariness in the budgetary execution, with personal services (object 0), excepting Honduras), and the current transfers (object 4) and the capital transfers (object 5) for Honduras and Costa Rica. The amount of resources destined to these items in the four countries analyzed is US$ 13,450 million or the equivalent to 44.6% of the total funds executed on 2012.
24 At this moment, we only refer to the corruption related with the execution of public funds, leaving aside issues as the concession of favors to third parties, the making of decisions favorable to particular interest groups, or receiving funds through briberies.
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•
The last category, the one that calls for more attention, corresponds to those items with high probability of arbitrariness for illicit purposes, among which we find the purchase of materials and supplies (object 2, excepting El Salvador), current transfers (object 4) and capital transfers (object 5) for Guatemala and El Salvador. The amount of resources destined to these items in the four countries analyzed is US$ 7,310 million or the equivalent to 24.3% of the total funds executed on 2012.
To complement this, it is important to point out that the greatest item of the budget for the four countries - Object 0: Personal Services – presents some probability of arbitrariness in three of the four countries (Guatemala, El Salvador, and Costa Rica), having a high probability in the remaining country (Honduras) (T. N., the original document reads Costa Rica, however given that the original document states the “remaining country” it may be Honduras). This is a signal that the item in which more efforts should be made is the one related with the payment of wages and benefits to public servants, making it necessary to work on the possible sources of corruption in the Central American Civil Service. The recommendations on this matter should be directed to a greater transparency in the contracting of personnel, as well as public access to the payroll and additional benefits amounts.
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7
Ethical Dimension of Strengthening Transparency
A
s an additional topic in the discussion of how to strengthen transparency in Central America, this section aims to analyze the ethical dimension of the public service, by mainly answering to the question: Is there tolerance to corruption in the Central American countries? It is necessary to clarify that this focus is limited to the meaning of ethics. On one hand, tolerance to corruption can be considered a cultural trait, but we cannot ignore the fact that relationships in a society are conditioned by the level of institutional development that they have reached (which goes beyond and is more complex than the attitudes of people). On the other hand, the ethical dimension cannot be reduced to tolerating corruption or not, but it has to do with the search and learning better ways to relate, and with leadership, without necessarily some things having to be wrong and others correct. In summary, the ethical dimension represents a wider concept that for reasons of the extent of this study, it cannot be fully covered. Taking into consideration the previous, this study seeks to analyze elements that promote the presence of structures that allow corruption. On this matter, we refer to the fact that corruption needs a “proper environment” in order to prosper. There are societies that tolerate and protect corruption and others that do not allow or tolerate the development of corruption practices. Therefore, it is not strange to find in the second societies political regimes that are relatively stable while on the others the institutional structure of the Governments are more fragile. For these reasons, we question, what are the reasons for which these two societies exist and how can we move from a society that propitiates corruption to one that does not? It is not strange that societies like the Central Americans (excepting Costa Rica), that have been governed by authoritarian regimes which have violated in different ways the rights and legality, adopt forms of corrupt conducts. When the Government resorts to violence and to the violation of the citizens’ human rights, when people who desire to adhere to legality and rights result punished when they cannot reach their objectives because other public conduct criteria prevails, when public servants in the Governmental institutions demand to the citizens briberies to obtain documents, proceedings and services common in
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Strengthening Transparency in Central America
an organized society, when in the citizens prevails the attitude that corrupt behavior is admissible because it is the way that public and private institutions are managed, the development of civil corrupt behavior is encouraged. The phenomenon of corruption as a social trait or accepted conduct becomes apparent in the formal democratic regimes, but which successive governments are reported in corrupt practices, as well as their officers. To this we must add the deficiencies in the management of the public administration, the justice administration, the politic and party systems, and the legal apparatus; under these circumstances, the public servant ends acting under a logic tending to corruption or, at least, a permissive one. On these cases, we must indicate that corruption in the public management feeds from expectations, attitudes, and socially accepted practices, or at least is tolerated, and the problem of corruption is not fought only by paying attention to the official corruption, but by attacking its roots and the social substratum that supports it. Corruption as a social use comes in multiple ways. From the person whose proceedings with the Government sorts from bribery to obtain advantages, privileges, acceleration of those proceedings, to fraud, intimidation and violence in the private relationships and businesses. Citizens used to these treatments will duplicate them and broaden them in their capacity of Governmental employees. A citizenship used to these social uses and that obtains advantages from them, will hardly look to eliminate corruption in the Government without any motivation that makes it redefine these tolerant and propitious social uses to corruption. Those societies that do not tolerate or allow corruption are those in which there is the social trait of righteousness in the handling of the public and private institutions that shape society to guarantee the welfare of everyone.
u What is the situation in the Central American countries? In the study performed, we prepared a reflection exercise to answer the questions supplied below, from which we obtained a series of very interesting answers on the ethical dimension of the public service and its relationship with the fight against corruption. Thus, the study analyzed if there are structures that promote corruption in the countries, if the population is tolerant to these practices, and if they consider feasible that society advances to a greater conscience of how corruption damages the progress of their countries.
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7. Ethical Dimension of Strengthening Transparency
•
GUATEMALA:
Do you believe that in your country exist structures that admit corruption? Few studies addressing this matter have been prepared in Guatemala. One of them25 states that the only variable that statistically associates with a decrease on the support to the political system is the perception or corruption. On this, corruption identifies as one of the evils that endanger democracy and hinder the Rule of Law. This study provides an approximation to evaluate the existence of structures that admit corruption by two indicators. The first shows that, in terms of victimization by corruption, 23.5% of the Guatemalan population has been a victim of a corruption action during the 12 months prior to the survey26, which places Guatemala among the worst seven countries in Latin America and the Caribbean (out of 26 countries). This percentage, of citizens who have reported being victims to corruption acts in different public institutions, has been on the 20% range since 2006, although the tendency has been to increase, from 18.5% on 2004 to a 23.5% on 2012. This is a high percentage, although it is lower than in countries as Mexico, Haiti, Bolivia, and Ecuador, but significantly higher than the majority of countries in the continent. The second indicator shows, on a scale of 0 to 100 points, that the perception of corruption has remained relatively high during the period 2004-2012. The highest year was 2006 with 81.6 points and the lowest with 69 points on 2012. On the other hand, legislation in Guatemala designates the political parties as the only instruments to access the political power, but if such instruments are tainted, there is little or nothing they can do to contribute in strengthening democracy, since corruption finds the doors open in the different public administrations, busy looking after their internal security issues. These great problems caused by corruption have their foundations on the lack of ethics. On this, the public servant is offered any valuable object or other benefits as favors, promises or advantages in exchange for the performance or omission of any activity in the exercise of his public duties, related with a transaction of economical or commercial nature that unfairly benefits him. Here is where the public servant shows his lack of values like responsibility, loyalty, respect, and honesty.
25 Dinorah Azpurú, Juan Pablo Pira, and Mitchell A. Seligson (2012) “Cultura política de la democracia en Guatemala y en las Américas, 2012: Hacia la igualdad de oportunidades”. 26 Dinorah Azpurú, Juan Pablo Pira, and Mitchell A. Seligson (2012). Survey prepared by LAPOP, 2012, as part of the study “Cultura política de la democracia en Guatemala y en las Américas, 2012: Hacia la igualdad de oportunidades”.
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Do you think that society in your country is tolerant with corruption? In the fiscal issues discussion framework (that includes the fiscal revenues as well as the quality public spending) we have reached the conclusion that the country needs a deep reflection on the efficiency of the institutions and the citizens’ attitude towards the governmental operations. Thus, in Guatemala, it seems that as a society we have grown used to the governmental inefficiency and that we are every day more tolerant to corruption. This condescending attitude towards corruption is an evidence of the deterioration of values and principles, something that would not be acceptable or normal in a civilized country. It is necessary to combat this impunity culture, where no institution is responsible for the inefficiency in the public expenditure, where there is no accountability and no one is angered for that.27 These reflections seem to show the reality of the country, which we could say is tolerant with corruption.
Do you consider feasible the transition from a society that tolerates and propitiates corruption into another one that does not allow its progression? The political class suffers the consequences of corruption in the lack of confidence from the people to the parties, which can only be explained from the fact that the civil society notices that politicians have improperly benefited their next-of-kin and their families, and that once they leave the active exercise of the political power, they do it in substantially improved conditions as a product of the illicit enrichment in which they participated and promoted, justifying themselves from the impunity they have surrounded themselves. Perhaps this is the most pernicious effect of corruption, this distortion of the democratic system and a disconcerted environment in the society that observes how its daily operations revolve around scandals, abuses, and, in general, behaviors that are far from an efficient management. From the consequence of the corruption in others, a chaotic situation is generated, where it is very difficult to identify the guilty and properly sanction them. As Denise Dresser, professor of Political Sciences at ITAM, argues: “it is obvious that corruption has its costs and the country pays for them, it is clear that corruption must be combated and punished, but it is a symptom of more complex problems which are more difficult to solve: weak institutions and inexistent accountability, among others”. To ensure progress it will not be enough to combat those who illicitly appropriate wealth, nor is it enough to have an honest leader.
27 Mario A. García Lara (2012). “Corrupción: monumental desafío”. Newspaper Siglo XXI, December, 2012.
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7. Ethical Dimension of Strengthening Transparency
To advance towards a society that does not tolerate corruption, the participation of the civil society is necessary through a constructive and proactive attitude, while governments must adopt ethical regulations in order for the conduct of its officers to be transparent and effective. Furthermore, governors must show their will to exemplary punish those officers involved in corruption activities, which must be punished in accordance with the responsibility their position entails. Another important aspect has to do with the simplification of laws and regulations, since the excess of regulations and laws makes them very difficult to enforce them. For this, simplicity in regulations and a language that is simple and understandable for everyone are essential to make laws an efficient tool against corruption. As a last point, it is required to strengthen education in children and young people, because it is the only way to contribute in the enforcement of moral, civic and spiritual values, as a need to achieve the ambition of a better world, more human where the transparency and honesty culture imposes itself. Within the family, values as honesty and responsibility must be taught and spread.
•
EL SALVADOR:
Do you believe that in your country exist structures that admit corruption? The perception of corruption and the lack of transparency in the public management are problems that, along with crime and violence, affect the attitudes that support the political system and the confidence that citizens have in the public institutions. On this, they are a problem that affects the Rule of Law and democracy28. After reading the main international indexes that measure the performance of El Salvador in matters such as the access to information, accountability, measures against corruption, budgetary transparency and the governmental efficiency, we can conclude that the country has on these matters an intermediate performance compared with other countries in Latin America, although its indicators do not necessarily reflect a positive panorama.29 For example, on one hand, as reported by LAPOP in its latest study of Political Culture for El Salvador on 2010, the perception of governmental corruption fell to 64% during 2010 compared with the previous years (on 2006 and 2008, Salvadoran 28 Ricardo Córdova Macías, José Miguel Cruz Alas and Mitchell Seligson (2010) “Cultura política de la democracia en El Salvador: 2010”. 29 Among the main indexes are the Corruption Perception Index and the Global Corruption Barometer of Transparency International and the Open Budget Index of International Budget Partnership.
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Strengthening Transparency in Central America
population’s perception of corruption in the government was almost 70%).30 For the year 2012, governmental corruption slightly increased to 65.9%; however, considering the error margin of the survey, we could say that the level of perception of corruption remains stable. If we observe the results of the Corruption Perceptions Index from Transparency International during the last 3 years, El Salvador receives an average score of 3.4/10. For 2012, the score was 38/100 since the methodology changed. Independently from this change in the method, data reflects that the country fails in its measurements of corruption perception. Since 2009, El Salvador has been through important institutional changes that strengthen the organic brakes and counterweights. Even if such changes cannot be directly attributed to the fact that the partisan political left is for the first time directing the Executive Body, we can confirm that such change caused a repositioning of the key political actors and this has originated a reformulation of its priorities which in some cases has propitiated institutional improvements. Some of the key advances on this matter, although they may not necessarily be linked with the new administration, are the appointment of the magistrates in the Constitutional Chamber of the Supreme Court of Justice which labor is perceived to be more independent, the change of the partisan control of the Court of Audit of the Republic, the approval of the Law on Access to Public Information on 2011, and the reforms made to the Law on Governmental Ethics also on 2011. The consulted international indicators show the phenomenon of corruption on a small scale, but do not account what is known in literature as grand corruption, which is “the phenomenon that links the decision-making positions of a government and causes abuses of power. In some cases, and for its consequences, it can be defined as a “state capture” that refers to the situations when external interests illegally distort the political systems with private purposes”.31 While there is not documentation of the matter, citizens’ perception shows that even if there is small corruption, the one that prevails and worries the most is the grand corruption in public administration. After analyzing the existing different and weak control mechanisms in public institutions, the lack of relevant public information that allows people to know the phenomenon of corruption in its fair dimension, the little discussion on the Legislative Assembly prior to the approval of the Government Budget, the still existing opportunities of discretion in the public servants in the public purchases processes and the opaque mechanisms far from the citizen participation in the 30 The researchers of the study of LAPOP presented the hypothesis that reduction could be partly caused by the change of government on the year 2009, more than concrete implemented measures.. 31 United Nations (2004).“Handbook on Practical Anti-Corruption Measures for Prosecutors and Investigators”.
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7. Ethical Dimension of Strengthening Transparency
election of important public servants, we can conclude that there are wide opportunities for Grand Corruption to exist. Recent new journalistic researches give us a glimpse of a negative link between public corruption and drug trafficking, which, even if it is disturbing, it still not is a matter to be discussed in the national agenda.32 On the other hand, there is the perception that entrepreneurs in the public purchase and concession granting processes are vulnerable to favoritism and to private negotiations. There is also the high perception in the citizens that entering the public service is more linked to cronyism, patronage, even nepotism than from the results of a selection by merits process. The media coverage on the objections of the purchase processes, illicit enrichments, discussions for the budgetary distribution and the existence of a very little transparent system for the public budget makes difficult its follow-up and understanding. Thus, the main control public institutions, the Legislative Assembly and the political parties, the Supreme Court of Justice and the Court of Audit of the Republic are part of the institutions that have the least citizen confidence33. As a final point, impunity in the judicial processing of crimes is an important element to the perception of tolerance towards the existing corruption.
Do you think that society in your country is tolerant with corruption? Salvadorans do not have in their collective memory the exact dimension of the meaning of corruption acts and, for this, they can be tolerant to certain conducts. The history of the country has a recent authoritarian legacy of military governments followed by a civil war that marked the citizens’ attitudes on participation and denunciation. Many actions and attitudes in the public administration that fit in any definition for corruption acts are not identified as such by the citizens. Among these practices can be found: nepotism, trafficking of influences to obtain an employment or any other benefits, the conflicts of interests in the granting of the government contracts, the purchase of political wills and the illegal payment of 10% of the public contracts to the officers responsible for their allocation. Many of these attitudes can be identified as common practices in the performance of public servants. Despite the previously stated, we highlight that there is a renewed pressure from the citizens to promote a more transparent public management. During the last years, a substantial part of this pressure has focused on the approval and implementing of a Law on Access to the Public Information. However, we 32 See El Faro, El Cártel de Texis. May 16, 2011 and Los extraños negocios del diputado con Ulloa Sibrián. April 6, 2013. (http://www.elfaro.net/es/201105/noticias/4079/y http:// www.elfaro.net/es/201304/noticias/11613/) 33 Evaluation Survey for the year 2012 from the Instituto Universitario de Opinión Pública (IUDOP, University Institute for the Public Opinion). Available on: http://www.uca.edu.sv/ publica/iudop/archivos/informe131.pdf
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Strengthening Transparency in Central America
could affirm that there is not much social pressure to control corrupt practices, which may perhaps explain why there is not enough political willingness in the decision makers to strengthen the control institutions. To date, there is not a national study that systematically informs the perception levels of corruption in the country. However, we can identify it in the literature, mainly on the country diagnoses that donor countries prepare, that attribute the lack of the citizen demand to clarify corruption actions, the scarce political commitment to bring to jail those who have deviated funds (high rates of impunity on the processing of corruption crimes), and the high tolerance levels to certain practices as the main obstacles for the advancement in the fight against corruption in the Salvadoran political agenda.
Do you consider feasible the transition from a society that tolerates and propitiates corruption into another one that does not allow its progression? It is possible for El Salvador to head into a society that does not tolerate corruption; civil society should play an important role in propitiating this change. One of the most interesting data from a research from LAPOP on 2010 is that a little more than 50% of the population would justify a coup d’etat under the conditions of great corruption and an escalation of criminal violence. This answer on 2010 could be a thermometer of the recent discontent in the citizens caused by the management of the public matters on national and international levels34. On 2012, the survey showed that support to the system was higher on those who have not been the victims of corruption, compared with those who have (48.3%) who support the system less. For this reason, it is crucial to strengthen the work of the civil society, to clarify and channel their demands and provoke a greater commitment in the political class for getting involved in this fight. Today, corruption is not costly for the one who practices it since it is still difficult to denounce and even more to be processed for such activities. Personal costs should be increased to those who perform corrupt activities, but the promotion of citizen attitudes and values that reject directly and unequivocally corruption should also be increased. The occasional denouncement is not enough if the rest of the social structure remains indifferent or accommodating in front of corruption.
34 To read about the discontent on the citizens and the anti-corruption movement, real for example: Why the Anti-Corruption Movement Is the New Human Rights Movement. Anne Applebaum. Dec. 13, 2012, Available on: http://www.slate.com/articles/news_and_ politics/foreigners/2012/12/anti_corruption_movement_protests_riots_and_marches_ across_the_globe_are.html
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7. Ethical Dimension of Strengthening Transparency
•
HONDURAS
¿ Do you believe that in your country exist structures that admit corruption? Since the nineties, different researches, regional and national studies, as well as the evaluation from specialized bodies as Transparency International, have exposed the explosive synergy that grand corruption produces when it is linked with the activities of the organized crime and drug trafficking, added to high unemployment rates and a general historical delay better known as the social and historical debt. Many sociological and political science analyses refer to the situation in Honduras in terms of the existence of two governments, one ruled by the legal formality inhibited of fulfilling the constitutional mandate and the other laws, and the other parallel government controlled by de facto powers, with political power and economical interests, closely colluded and associated with the organized crime, including the national and transnational private financial system.
Do you think that society in your country is tolerant with corruption? Surveys and studies on corruption in Honduras show as an example that: in the course of the five years previous to 2001, permanent governmental institutions operated in corruption control and eight new anti-corruption initiatives were created, including the CNA. However, 79% of the public servants think that corruption remains the same or has worsened during the last five years35, 73% of the population thought that corruption was common or very common in Honduras36 and 20% of the population was a direct victim of corruption during the year 2000, compared to 0.7% in Eastern Europe. From a total of 17 of the most important groups in the country, only five were considered as the least corrupt. These five groups obtained a score higher than 5 on a scale of 1 to 10, in which 1 is more corrupt and 10 less corrupt. Finally, as a consolation, it is highlighted that Hondurans are less tolerant to corruption than Nicaraguans.37 Although the available information only allows rescuing the evidence from approximately 10 years ago, perception studies show that these findings from the citizenship remain current.
35 Victor Meza and Others (2002) “Corrupción y Transparencia en Honduras” 36 MitchellSelligson (2001) “Gobernabilidad y Transparencia en Honduras después del Huracán Mitch: Un Estudio de Opinión Pública”. University of Pittsburgh June, 2001. 37 Government of Honduras (2001). “Memoria Reunión de Seguimiento de la Reconstrucción y Transformación Nacional”.
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Do you consider feasible the transition from a society that tolerates and propitiates corruption into another one that does not allow its progression? During an interview performed on 2003 to the Ambassador of the United Kingdom accredited in Honduras, she pointed out: “if my professional future depended on the fight against corruption, under the assumption that I survived the risks, I would ensure a job position for the rest of my life”. In other words, Honduras needs a regional and national strategy against corruption in the short, medium and long term. Many of the documents are already prepared, but at the present the required political willingness in nonexistent. The immediate scenario is pessimistic, for this reason, a creative, exemplary, relentless re-launch is required for those responsible of such corruption acts. It is democratically necessary to create new conditions for governance: combining political willingness, citizens’ participation and the conditioning of the external factors that have conditioned, for better or for worse, the political and economic life in Honduras
•
COSTA RICA:
The increasing perception of the damages that corruption produces on the rights of people and on the legitimacy of the governments, has come accompanied by the claim of the citizenship to the Government to improve its effectiveness in the controls and to promote greater participation from the civil society.
Do you believe that in your country exist structures that admit corruption? On the Second Report on Human Development in Central America and Panama, this matter was explored, and it was concluded that the individuals distinguished corruption scales and expressed different tolerance degrees depending on the seriousness of the matter. The criteria to classify the actions were: (a) its collective implication, (b) the motivation that causes it (it is less serious when it is done for necessity); and (c) the person who commits the crime (depending on the power and authority of the person). Thus, a small corruption act is the one that, even if violating the law, is performed with the means of solving an immediate need and does not affect third parties, while an act of grand corruption affects the population or an important group from it and its motivation is greed. The exploratory study found that people were very tolerant to little corruption, which also was extensive and on a daily basis, but intolerant with intermediate or grand (unduly charges in health services, payment to judges, political donations, etc.).
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7. Ethical Dimension of Strengthening Transparency
Do you think that society in your country is tolerant with corruption? Despite the general perception of corruption in the public matters, there is a tolerance to the acts of corruption closer to the daily life (some years ago, 26.7% of the Costa Ricans thought that bribery can sometimes by justifiable: LAPOP, 2006). The inexistence or inefficiency of the mechanisms to report and denounce cases constitutes a risk factor for corruption. This, together to a certain tolerance from the citizens, generates a breeding ground for the incidence of this phenomenon. There has been legislation in the public operations, surveillance and control organisms, money laundering and fiscal fraud, while the public contracting and the financing to political parties and campaigns – areas with high vulnerability in terms of corruption – has not advanced as much in the preparation of a proper regulation.
Do you consider feasible the transition from a society that tolerates and propitiates corruption into another one that does not allow its progression? On a last instance, the main reason for combating corruption is the pressure that the public opinion creates on the governors, demanding severe measures as a proof of the integrity from the representatives. For the previous, a series of measures that are part of a controlling and continuous evaluation gear would allow the beginning of a process that would allow the passage from a tolerant society to one that is not; among them are: u Guarantee that governmental institutions adopt accountability, on a periodic basis, in order to visualize the proper management of the resources from the public servants, as well as to strengthen and institutionalize the entities responsible for creating policies, transparency and combat to corruption plans, in accordance with the international treaties and accords on these matters. u
Implement juridical regulations on public contracting matters in the countries that have not done it, in search of efficient systems that optimize and turn transparent the governmental acquisition procedures for goods and services. Following this line of ideas, the activities to prevent corruption in the handling of programs and social funds must be prioritized; in order for investment on this item have a greater impact on reducing poverty.
u
Promote the elaboration, approval and implementing of the conduct regulations that control the ethical behavior in the public and private segments, that include measures to prevent and control potential conflicts of interests, and to effectively sanction those who breach such regulations. Work should also be done on the improvement of the regulation, procedures
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and the effective denouncing mechanisms for corruption acts, and the protection measures for witnesses and other persons who intervene in the process, that make the investigation and sanction of illicit conducts easier. u
Destine resources to implement citizen education and awareness programs that promote a culture with ethic values in society, accompanied by a promotion for the application of the regulation and the adoption of procedures to avoid transnational corruption.
u
Strengthening the superior control bodies to be independent with a functional and financial autonomy, as well as the adoption of regulations that establish control system for the electoral and political financing.
u
Continue with the reform process of the civil service in the public management, in order for the States Parties have with public servants that have job stability in accordance with their performance and efficiency, and that they guarantee the fulfillment of the governmental operations and the sustainability of the public policies.
u
Establish denouncement systems and claim mechanisms with a public character, in order for the claims and their responses be known by all the citizens and the controlling entities of the Government.
u
Organize the plea. When there are users’ associations or another type of social organizations that monitor, accompany, and control the provision of public services, whether the Government or the market is responsible for their operation, there are many possibilities that they have equal access and work on a transparent and efficient way.
Finally, it is necessary to insist on the need to build a culture that does not accept corruption, where transparency guides the actions of the citizens in all their activities in life and in the acting inside the ethical and moral frameworks. Building a culture with such values cannot be done by only issuing laws and promoting sanctions. A society of this nature is formed and consolidated if we have prepared it for this, to have good and honest citizens, and this can only be achieved if the educative systems are at the service of this new culture.
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Recommendations
T
he work to strengthen transparency in the Central American countries has a direct relation with the desire to build solid democracies, capable of taking care in a timely and efficient way of the most urgent needs in the population, with a long-term vision and recognizing that an efficient administration of public funds is the first step to start building societies capable of generating more and better development opportunities for the citizens.
On the contrary, when opacity is the standard, citizens become more permissive to the existence of corruption in public servants, in the private segment, and in civil society, and when justice bodies cannot reduce the high impunity rates and the delays in addressing cases related with the issue, we face a society that can do very little in solving the conditions of poverty, inequality, marginalization, and lack of opportunities. The governmental budget is the main tool to implement public policies; however, when weak regulations or their failure to enforce it, the little institutional alignment with the country goals (excessive bureaucracy and the multiple steps to execute the budget) and the lack of citizens’ empowerment do not allow an optimal use of such resources, we must recognize the need of urgent and radical changes. Following this line of ideas, the main recommendations for strengthening transparency in Central America are listed as follows: u
The strengthening of transparency must be addressed as a strategic imperative for each one of the Central American countries, not just for the direct effect it has on the reduction of competitiveness in the region, but for the link it has with the resolution of social problems as marginalization, inequity and poverty. This is an issue that must be included in the national agenda as well as the regional agenda, strengthening local institutions and communications among the countries, working hand by hand with supranational cooperation institutions to address items such as the open government, information systems, money laundering, illicit enrichment, and the generation of information.
u
Work through regional institutions must be based on the principles of transparency in resources management and accountability on the goals. This is an opportunity for Central America to address the fight against corruption in an integrated and coordinated form; thus the role of supranational
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institutions will be the insignia of the work to provide information to the population and the entities who request it.
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u
We recommend in the budgetary cycle, on first instance, the promotion of the participation of independent experts in reviewing the assumptions that are the foundation to the budgetary project presented by the Executive to the Congress. An opportune opinion on the macroeconomic projections for the country in the fiscal year, as well as the definition of attributions at the moment of modifying the original budgetary allocation, will allow the reduction to the maximum the options that public servants have, to deviate the use of public funds. If a proposal with this compulsory nature is accepted, the current legislation must be modified to turn this practice obligatory and is valid at the moment of suggesting modifications to the general budgets of each country. This does not aim to weaken the governmental institutional structure nor widen the citizens’ participation beyond the limits established by law; on the contrary, it is an opportunity for cooperation between the public segment and the civil society.
u
Second, we suggest the creation of favorable spaces for the participation of the civil society in the conditioning of the possible destination for the resources, empowering the organized civil society (e. g. Development Councils in Guatemala) to perform a more detailed scrutiny on the possible debt sources, investment priorities, and results in regard to the current development policies in each country. These spaces would greatly ease the further supervision in the budget execution, since there would be control from the early stages, alerting on possible irregularities on the disbursement of resources. In Guatemala, this is already envisaged in the public debate of the budgetary law. On the other hand, it is important to highlight that, even in participative processes, a supervision process is essential to guarantee a transparent execution of the resources, as well as its effective and efficient allocation in accordance with the real development priorities.
u
The national discussion of the governmental goals will help define the necessary resources on which is necessary to work on, this being a continuous participation and evaluation process of the results obtained, comparing the information available with the international standards on transparency in the execution and compliance of the regulation related to the bidding and contracting processes. Within the most notable findings in the study we find the absence of budgeting mechanisms based on local priorities, lacking the decentralized participation in accordance with the reality of each one of the territories in the country. Nowadays, budgets do not take into account the discussion of the authorities that are closer to the citizens, making their follow-up and compliance difficult.
u
On the matter of elements that strengthen transparency in Central America, the first refers to the current legislation that empowers public employees and citizens to denounce any anomaly in the budgetary execution, including
Recommendations
corruption acts (e. g. bribery attempts) that public servants detect from the suppliers of goods and services to the Government. On this, it is important the acknowledgement of a specific law against the illicit enrichment and for the Governmental contracts and acquisitions, although the still pending task is the application of the law and the evaluation of results. Thus, it is valuable that the four countries recognize the regulation of the civil service as a crucial matter to promote transparency inside the Government, which is why the offices responsible for the civil services must be strengthened in each one of the countries, not only to provide access to information on competences, results, and payments, but also to identify risks associated with nepotism and the favor negotiation between peer groups and/or relatives in the institutions. u
The existence of Courts of Audit, an institution responsible of auditing the Government, and of specific Offices against corruption is a great advance in the fight against corruption in its different stages; however, the inexistence of entities to supervise and evaluate them hinders the possibility of giving a positive or negative score on its performance. A good practice would be that probity commissions constituted in the Congress of each country, demanded results although it is still needed to have an evaluation mechanism on the detection of corruption acts, the follow-up of accusations, and the sanction to those responsible.
u
Ratification of international agreements against corruption (e. g. United Nations Convention against Corruption and the Inter-American Convention against Corruption) becomes more important every day, as well as the follow-up to the implementation mechanisms and the cooperation accords between Governments on the region.
u
The four countries lack an appropriate regulatory framework to promote the prevention of corruption, when the promotion of an ethics code and greater controls on the performance of the public servants, from their financial disclosure to reviewing their functions and quality of the results. It is very interesting too that the four countries also identify as a characteristic of this stage the lack of cooperation and participation environments that allow the civil society be updated on the execution of resources, thus needing an open government national policy, which can be better implemented through participative budgets, open councils, and citizen overseers.
u
On the matter of timely detection of corruption practices, there are obstacles to overcome in the application of the supervision and control systems, which provide access to the information on the bidding, selection, execution, liquidation and quality control processes of the goods acquired by the Government. It will be crucial to work on a more rigorous regulation that links the different government information systems, by establishing crossed requirements that condition the allocation of contracts, payment against products and appraising the quality of the results obtained
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u
The definition of non-extinguishment of corruption crimes against the Governmental assets and funds will be important, providing the necessary time for the institutions responsible perform an adequate investigation. The analysis of the particular cases for each country shows that a common point is the lack of follow-up the accusations from citizens against public servants and/or institutions, which can be another indication of corruption.
u
In those cases of civil society denouncing corruption against public servant or particulars that have been suppliers for the Government, it will be necessary to establish a specific regulation to protect those individuals; such regulation does not exist in the countries of the region, nor is it regulated in special dispositions in the current regulations.
u
It is necessary to work in a specific definition of crimes related to embezzlement of resources, trading in influence, and illicit enrichment on the matter of punishing corruption crimes. Experts point out the importance of reviewing the regulations in the Criminal Code, Procedural Code and the Law on Probity and Ethics. Additionally, there is a need to speed up the processing of the corruption cases, given that there is a very small rate of solved cases compared with the number of accusations. As a last item, the analysis points out the need to prioritize the support and protection for the prosecutors in charge of such cases as well as the regionalization of the Assets Forfeiture Law.
u
It is necessary to deepen on the matter of quality of the public expenditure, for this it is necessary to have a procedures guideline that allows the standardization of the acquisitions of goods and services in the Governments. Within the certification criteria, beyond the fact of the fulfillment of the clauses defined in the contracts between the Government and its suppliers, must be included a qualified opinion on the durability of the goods, the relevance of contracting in the area where works are done, the relevance of the projects to the country’s goals, the usefulness of such contracting in relation with the priorities of the area, and the assessment made to the good or service delivered. Work must be done on the creation of catalogs containing information on the price and standards that a particular good and/or service must fulfill.
u
Continuing with the matter of public quality expenditure, it will also be necessary to regulate the decentralization of the contracting and acquisition of goods, the appropriateness of every one of the suppliers to the Government and their certification from fiscal entities as well as justice authorities, and the cost/benefit assessment for long-term investments and programs destined to settle social demands.
u
There are international entities that allow standardization in certificating transparency in Governmental activities. Adhesion to initiatives as STAR, CoST and EITI would be a good practice in the Central American countries,
Recommendations
which would help solve conflicts related to assets laundering and the payment of contributions from the exploitation of natural resources. There are negotiations on the individual setting in every country; however, a regional participation would potentiate the results that could be obtained in the short and medium term. u
From this analysis, comes to light the importance of evaluating the Investment item in the budgets, this being the area that has greater discretion in the assignation of contracts related with the amount of funds destined for such end. Continuous denounces on the deficiencies in infrastructure and on the acquisitions of tangible goods evidence the fact that a greater control of the bidding processes will be necessary, which is very important to strengthen the information systems on investments made in each country.
u
The four countries analyzed have a variety of institutions responsible on the corruption matters. This point emphasizes that it will probably not be necessary to increase the number of institutions but to strengthen their regulatory frameworks and demand the fulfillment of clear objectives. An example of this is the appearance of the Economic and Social Councils as entities responsible for the discussion of priority items for each country, generating a multisectoral consensus on how to improve the performance of the governmental machinery.
u
The investigative work from the media has become a recurring source for complaints of corruption in the Central American countries, providing proof and information on those involved and the illicit participation networks in the management of public funds and in the Governmental acquisition of goods and services. For this reason, it is advisable to promote open forums in which this task can make more extensively public, promoting participation of students and scholars in these activities to generate a citizens’ culture of investigation and denunciation of corruption practices.
u
Recognizing that an improvement on the international indexes on the perception for corruption will be a difficult task that will have to be originated on a greater confidence level of the population in its institutions. To achieve this, it will be necessary to work on the results shown by the Governments according to the objectives set out in every area on the budgetary execution. Budgets by results, with a continuous evaluation of the quality expenditure, will be a necessary tool to start measuring corruption in the country, not only for the qualification given based on the confidence on the use of resources by the Governments, but also for the scattering of doubts on the destination of the resources.
u
From the efforts of laRED to address topics and phenomena that concern the region, it is important to rescue some recommendations from previous studies on money laundering, security, and transnational organized crime, related with the results of the present study, such as strengthening
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policies and programs against money laundering, reassessing the scopes and operation of the controlling entities to strengthen the transparency processes in the public purchases systems, having an institutional system with the capabilities and skills, financing, efficiency, supervision, and transparency in the public and private operations in a clear combat against corruption. When corruption intends to stop transparency policies, it becomes a predecessor in crime to money laundering, both of which are not only technical problems for the specialized entities, but they can also be linked to transnational criminal organizations, which can also be a concern for democratic security, democratic coexistence in a Rule of Law, and finally a governance concern in our countries.
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