Is Corruption in Latin America Rampant? Part 2 of 3 14:44, December 22, 2016

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Is Corruption in Latin America Rampant? Part 2 of 3

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In our previous post in our Corruption in Latin America series we examined what corruption looks like. We looked at data from Foreign Corrupt Practices Act (FCPA) enforcement actions and international surveys reflecting perceptions of corruption. The data can be helpful when identifying possible risks and red flags, but there’s more to consider. Understanding the human experience with corruption provides another way to promote anti-bribery and anti-corruption initiatives at home and abroad.

Perception vs. Participation

As mentioned, Transparency International utilizes “perception” when evaluating how corrupt a particular country is on their Corruption Perceptions Index. Perception includes “general beliefs” of citizens about the corruption of the system they live in, and people they interact with, according to Stephen D. Morris in his article, Disaggregating Corruption: A Comparison of Participation and Perceptions in Latin America with a Focus on Mexico. To Morris, perception should not be confused with participation, which “centres on actual behaviour, or at least direct observation” of corruption. One is a subjective assessment, the other is action.

To provide an example of why this distinction is important, look at specific countries. Paraguay and Argentina are perceived to be some of the most corrupt countries in Latin America, yet actual participation in corrupt acts was statistically lower than Costa Rica, a country perceived to be one of the cleanest, according to Bruce A. Stanfill, et al, in their 2016 conference paper Beyond the Culture of Corruption: Staying Ethical While Doing Business in Latin America. “Overall, the perception of corruption is higher than actual instances of victimization,” after their review of the available corruption studies. Both perception and participation are current approaches in measuring corruption in Latin America.

FCPA enforcement data reflects individual participation in corruption. Such data helps to perform due diligence on third party agents and know which actions run afoul of the FCPA. FCPA data, like data on perception, is important but not sufficient for companies to evaluate their ethics and compliance programs. FCPA enforcement comes from a purely legal framework that may not pick up personal, cultural, and ethical dilemmas at play.

People More Likely to Engage in Questionable Behavior

Generalizations about demographics and culture can be dangerous, but they give us more context into risk factors that lead employees to engage in corruption above and beyond perceptions and government enforcement data. Academic studies and surveys focusing on Latin America provide that certain groups of people are more likely to engage in or be exposed to corruption.

  • Gender. Men, particularly young men, are more likely to justify ethically suspect behaviors, like participating in or observing the payment of bribes. This was found among managers and non-managers. The research on this assertion is plentiful, according to Stanfill.
  • Managers. Stanfill also reviewed evidence that managers who do not follow cultural or social norms are more likely to justify unethical behavior. An example is a manager who does not follow a company’s code of conduct or share his organization’s values, yet is not held accountable. Accountability can also be self-directed. Managers who are more religious and attend religious services are less likely to justify unethical behavior–this may potentially be due to accountability to an external standard, even if not related to the workplace.
  • Education and Wealth. Higher education levels make individuals more likely to engage in “behaviors of questionable legality.” Additionally, multiple “results clearly show that more affluent individuals, who have more opportunities and resources to resort to corruption, do make extensive use of those advantages in the context of Latin America and the Caribbean,” according to professor Simone Bohn in her article Corruption in Latin America: Understanding the Perception–Exposure Gap.
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Demographics alone cannot describe the propensity to engage in corrupt acts. Other factors  increase the likelihood of engaging in corruption, such as beliefs that bribery is OK as long as it’s justified, according to Bohn. Bohn calls individuals holding these beliefs “rational-choice corruptors,” who justify their actions with statements like “other people are doing it” and “it’s how you get things done.” Bohn found “rational-choice corruptors,” to be a major factor in the decision to commit corrupt acts as well as being male.

Factors informing corrupt acts can also be institutional. If citizens do not trust their government, particularly the ability of judicial bodies to uphold the law, then they tend to “look for alternative ways of proceeding, and the latter are usually of questionable legality,” according to Bohn.  Culture plays a role as well, as Stanfill summarizes

Latin American countries tend to be very collectivistic . . . which is reflected in the role that family and close friends play in daily life; therefore, taking care of the family in-group may justify actions at the expense of the larger out-group.

Demographics, beliefs, culture and familial obligations all appear to affect the propensity for people in Latin American countries to engage in corruption. But these factors are often related to social trends regardless of nationality. Sex stereotyping in the workplace is linked to demographics involving gender and sexuality. Ethical cultures of compliance can support and guide employees to refrain from bribery, while high-pressure incentive structures can push them to engage in unethical practices. Human qualities are the ones that count for effective ethics and compliance programs. In the next, and final, post in this series we will find out how to prevent potential corruption in the workplace.

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Douglas Kelly
Douglas Kelly is EverFi's lead legal editor. He writes on corporate compliance and culture, analyzing new case law, legislation and regulations affecting US companies. Before joining EverFi, he litigated federal and state employment cases and wrote about legal trends. He earned his JD from Berkeley Law and BBA from Emory University.

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