Corruption and Transparency: ICEFI’s plan

Commentary by the Central American Institute for Fiscal Studies (ICEFI). September, 2015

Corruption in Guatemala limits what the government can do to resolve urgent social problems due to its consequences: it causes public institutions and authorities to lose credibility on a national level as much as the municipal or regional level; it interferes with the mechanisms that should guarantee the appropriate use and administration of public funds; and it exacerbates poverty and inequality as it nullifies government policies designed to combat chronic underdevelopment.

When public funds don’t reach their objectives because of corruption, this creates a social cost, since the public won’t receive basic services in sectors like health, education, nutrition, and law enforcement, among others. This last point was underscored in the report, “Corruption: Its sources, its social impacts, and a plan for its elimination,” recently released by ICEFI and Oxfam Guatemala.

The document identified three types of public sector spending especially vulnerable to corruption. These are: public works spending, procurement spending, and the use of public trusts managed by the central government. Together, these sectors account for 29% of the government’s total budget for 2015, approximately Q20.8 billion (around $2.77 billion). ICEFI estimated in the report that at least 20% of these kinds of spending could be involved in acts of corruption, based on an analysis of most of Guatemala’s reported cases of corruption. If this figure is correct, this year approximately Q4.16 billion (around $555 million) will be lost. That comes to 6% of the government’s total budget.

To explain the magnitude of the problem, the report details how if in 2015 20% of the funding for public works (Q2.3 billion, around $307 million) managed by the Ministry of Communications, Infrastructure, and Housing (CIV), the country’s municipalities, and the Regional Councils of Development is diverted from its objectives by corruption, the following social consequences will result:

• 6 million children in kindergarten and elementary school won’t receive school meals or basic school supplies
• Over 400,000 children from one to five years old won’t receive vaccine booster shots
• 4 million children under five won’t participate in growth monitoring programs
• 2 million children under five won’t receive medical attention for acute respiratory infections
• 2 million people won’t receive medical attention for accidents or assaults
• 2 million economic assistance packages won’t get to senior citizens
• 9 million public health economic assistance packages won’t get to families with children under five, pregnant women, and nursing women

These examples from the report show that corruption impacts the lives of the vulnerable and disadvantaged, endangering their human rights because they could lose access to essential public services. ICEFI’s analysis shows that the problem in Guatemala can be explained and understood through six paths that lead to corruption: outdated legislation, weak institutions, inadequate access to public information, little civic participation, conflicts of interest, and impunity. These factors have been decisive in creating a culture of opacity that delivers illicit profits to a handful of public servants and private sector interests and harms the majority of the population.

The effort to dismantle the inertia of tolerance toward corruption faces several challenges. First, the need to define a minimal agenda that prioritizes action to promote transparency and combat corruption; second, the need for political will from those in power and the political class to implement this agenda and dismantle the social, political, institutional, and economic networks that encourage corruption; and third, the need for a population that is active, demanding, and vigilant, that crafts proposals for change, and that doesn’t limit its political participation simply to the vote.

To confront the first challenge, ICEFI believes that the authorities elected this year should consider the following objectives a minimum to move toward transparency and fight corruption:

1. Guarantee the efficient and transparent use of public funds with concrete measures to make public budget management and procurement systems. Further, electronic tools that provide information about management of public funds (the Integrated Financial Administration System (SIAF)) should be strengthened.
2. Ensure the integrity of public employees and civil servants through the modernization of the civil service system, the strengthening of the financial disclosure system, the promotion conflict of interest management mechanisms, and the enforcement of accountability laws.
3. Guarantee access to public information, including policies of free information and the protection of personal information, with strict oversight to ensure compliance with the Law of Access to Public Information, and an emphasis on technology that facilitates the exercise of this human right.
4. Facilitate civic participation through collaboration between public administrators and civil society, and the redoubling of efforts to make Rural and Urban Development Councils system functional again.
5. Create an updated legal framework that accords with best practices and international standards of transparency, complemented by actions to generate social awareness of the importance of a law-abiding culture and the shared responsibilities of ensuring the rule of law.
6. A modern public institution charged to promote transparency and fight corruption that ensures best practices, develops interagency coordination, and supports the work of the International Commission against Impunity in Guatemala (CICIG) and the Public Ministry (MP).
7. Incorporate analysis of the private sector’s responsibilities in the fight against corruption, including the need to promote of business ethics as part of corporate social responsibility.
8. Promote the creation, discussion, approval, and implementation of national transparency, anti-corruption, and open government policies that allow the public to stay abreast of the objectives of the newly elected authorities and to evaluate their implementation.

In 2015, Guatemalan society expressed their energetic rejection of corruption and demanded far-reaching change to guarantee transparent public administration. The gains made through the intervention of CICIG and the MP should be considered a point of departure for the creation of a historic social sea change to confront a social cancer. Citizens have a responsibility to cast an informed and conscious vote, favoring candidates who make consistent commitments to transparency.

As stated above, the current social situation demands reforms that will permit Guatemala to move toward transparency, access to information, accountability, and citizen participation that will ensure not only integrity in the management of public funds, but also efficiency and administration that acts in interest of all Guatemalans.