Pentagate Corruption Scandal Rocks Chile

According to Transparency International´s Corruption Perceptions Index Chile ranks as one of the least corrupt countries in the world, ahead of the likes of Austria and France and similar to the United States and Ireland. The World Bank’s governance indicators suggest corruption in 2013 was under better control in Chile than in the U.S. and neared that of the United Kingdom and Canada. Quite the achievement on a continent whose governments are not exactly known for their incorruptible politicians, which Chileans have consistent free-market policies to thank for. However, a major political scandal that broke last week represents a blow to the country’s status. Known as Pentagate, the campaign finance scandal currently making headlines in Chile allegedly involved dozens of politicians from across the political spectrum, although the majority are said to be members of the Independent Democratic Union (UDI) party. Some of the more prominent individuals being investigated include former Finance Minister Andrés Velasco, who served one term under current president Michelle Bachelet during her first four years in office, officials of the previous Sebastián Piñera administration, as well as several former presidential candidates. The privatization of state corporations after the fall of the Pinochet military dictatorship in 1989 gave birth to the Penta Group. Formerly known as the Instituto de Seguros del Estado the insurance company was acquired by two investors – Carlos Alberto Délano y Carlos Eugenio Lavín – who incidentally both used to work for the government during the regime. The former is known as a big political donor and a friend of former president Piñera, while the latter tends to keep a lower profile. Last August their holding company came under investigation by Chilean authorities for tax fraud, which besides several arrests lead to the laying off of the Group’s director. And while many a …

The Private Security Industry In Brazil

Walking down the street here in Brazil one can spot many signs on homes and businesses warning criminals that the property is protected by company X. For a free market proponent like myself this was a particularly interesting observation which prompted me to do some research. One problem many Brazilians complain about is corruption. Transparency International’s Corruption Perceptions Index has Brazil consistently hovering around 70th place in the world in recent years. Considering that any score below 50 indicates a serious corruption problem, Brazil’s public sector corruption level is given the thumbs down with a score of 42. It should be no surprise, therefore, that over 60 percent of Brazilians distrust the police. The problem is particularly serious in the state of Rio de Janeiro, where extortion by police is the most common. While a 2012 crackdown resulted in the arrests of 63 Rio police officers, the Mensalão (Big Monthly Payment) scandal exemplifies the pervasiveness of corruption in many if not all layers of government. In 2010 an industry trade association in the state of São Paolo estimated the average annual cost of corruption as roughly between $32 billion and $53 billion. While the Mensalão scandal had a big impact on then-president Lula’s administration, for most Brazilians corrupt police comes at a much greater cost. According to Human Rights Watch “police officers in Rio de Janeiro and São Paolo routinely resort to lethal force”, killing more than a thousand people every year in those two cities alone. Since 2003 more than 11,000 residents of Brazil’s two major cities have lost their lives at the hands of police. Though police reports often claim the victim(s) resisted arrest, Human Rights Watch reports that forensic evidence contradicted the official version of events in many cases. Such abuse of power is pervasive and in …