Ecuador - Corruption
Corruption is a serious problem in Ecuador. Transparency International consistently ranks Ecuador near the bottom among countries it surveys in the region. Ecuador ranked 146 out of 180 countries surveyed for Transparency International's Corruption Perceptions Index 2009 and received a score of 2.2 out of 10 (10-highly clean, 0-highly corrupt). In the Western Hemisphere, only Paraguay, Venezuela and Haiti received lower scores than Ecuador.
Ecuador had for decades been a center of organized contraband trade. The system was so entrenched that it was the exceptional member of the police or customs service who was not in some way receiving payment from a smuggler. The borders with Colombia and Peru were poorly patrolled, so that in some cases ingenuity rather than corruption was all that is needed to move contraband. Ecuadorean drug officials had been slow to get together with their counterparts in Peru and Colombia to discuss border controls. Ecuador, like most other countries in Latin America, was plagued by narcotics~related corruption. Some government and police of?cials reportedly used their influence to release traffickers from prison, accepted bribes to free them, or blackmailed them for their freedom.
Historians and political analysts rated exiled former President Abdala Bucaram Ecuador's most corrupt leader, an impressive achievement in a country that Transparency International consistently ranks amongst the hemisphere's worst kleptocracies. A self-proclaimed "loco" (he recorded a song titled "A Madman in Love"), Bucaram campaigned as a leader for the poor. His raiding of the public till, combined with widescale fraud perpetrated by cabinet officials, worsened his constituents' poverty. Public demonstrations calling for his ouster reached such levels in February 1997 that Ecuador's Congress, itself not lilly-white, impeached Bucaram on grounds of mental incapacity. The president lost the subsequent vote, 44-34, and eventually fled for Panama and political asylum. Embassy contacts and media speculate he bought his status.
Ecuador has laws and regulations to combat official corruption, but they appear to be inadequately enforced. Illicit payments for official favors and theft of public funds take place frequently. Dispute settlement procedures are complicated by the lack of transparency and inefficiency in the judicial system. In addition, there are frequent allegations by the private sector that local authorities may demand "gratuities" to issue necessary permits.
Offering or accepting bribes is illegal and punishable by imprisonment for up to five years. The Controller General of the Nation is responsible for the oversight of public funds and there are frequent investigations and occasional prosecutions for irregularities. These investigations can be politically motivated. Autonomous agencies are subject to little effective oversight. Government officials and candidates for office often make an issue of corruption, but there is little follow-through once in office. Politically motivated corruption scandals are a feature of Ecuadorian political life, but even high-profile cases often become stalled after they are remanded to lengthy and often inconclusive judicial proceedings.
Ecuador is not a signatory to the OECD Convention on Combating Bribery, nor has Ecuador complied with the main requirements of the OAS Inter-American Convention Against Corruption. The 2008 Constitution created the Transparency and Social Control branch of government, tasked with preventing and combating corruption, among other things. In December 2008, President Correa issued a decree that created the National Secretary for Transparency to investigate and denounce acts of corruption in the public sector. Both entities can conduct investigations into alleged acts of corruption but responsibility for prosecution remains with the Office of the Prosecutor General (the Fiscalia).
The most recent Latin American Public Opinion Project (LAPOP), conducted in 2008, found that Ecuadorians ranked 6th in Latin America in both the frequency with which they were victimized by corruption, and their perception of the prevalence of corruption.
In June 2009 the media reported that companies allegedly associated with businessman Fabricio Correa, the brother of the president, had signed large public-sector contracts during the Correa administration. In September 2009 President Correa announced he would nullify all government contracts connected to companies with which his brother was allegedly involved. These companies were registered as unfulfilled contractors in the State's Public Procurement Web site; this action impedes them from receiving contracts with the state from September through November 2014, depending on the company.
In July 2010 the Prosecutor General's Office rejected the accusations against Fabricio Correa in the following cases: the bidding process for the construction of the bridge over the River Paute (July 7), the signing of the contract for the construction of the road Milagro-Indanza-Gualaquiza (July 7), and the Ivanhoe case (July 28). At year's end, the Office of the Comptroller General and the National Secretariat for Management Transparency continued to investigate other cases, and citizen oversight committees examined contracts linked to companies with which Fabricio Correa is alleged to have a relationship. In response to the nullification of his contracts, Fabricio Correa leveled his own accusations of corruption against his brother's administration and maintained demands against the state for an estimated $60 million and five criminal procedures against two government officers.
On 12 April 2014, Juan Salazar Lopez, the mayor of Riobamba, reported the theft of $13.3 million from the municipality account at the Central Bank of Ecuador, of which only $10 million had been recovered. Initially, Salazar claimed that hackers had infiltrated the account and stolen the money, but investigations ultimately found that Salazar disclosed the account password to several unauthorized persons. On April 24, the city council approved the removal of the mayor from office. The Prosecutor’s Office charged Salazar with embezzlement.
As of late 2014 no resolution had been reached in the investigations into former Central Bank president Pedro Delgado, who left the country in December 2012 after announcing he had falsified his academic credentials and refused to return for questioning. The government investigated irregular loans authorized by Delgado. Delgado is the cousin of Ecuador's President Rafael Correa, and the person allegedly in charge of conducting the covert relations between Ecuador and Iran. Ecuador had become a hub for Iran to launder its sanctioned funds and evade international scrutiny. Delgado never returned to Ecuador and was still in Miami as of late 2014.
The Transparency and Social Control branch of government (CPCCS) is in charge of policy development for the promotion of transparency, control, and accountability in the public and private sectors and heads the National Plan against Corruption. Within the Transparency Branch, the Office of the Comptroller General investigates reports of corruption in the public sector. When there are grounds for a criminal investigation, the comptroller refers the case to the Office of the Public Prosecutor.
Observers noted that the CPCCS did not effectively engage a broad segment of civil society and that its leadership had close ties to the ruling party. The National Secretariat for Management Transparency, part of the National Secretariat of Public Administration, also has responsibility for investigating and reporting complaints of corruption in the public sector.
In 2016 the issue of tax havens came to the global spotlight following the so-called Panama Papers leak which revealed the intricate methods whereby the wealthy keep there money in tax free restrictions. For Ecuador tax evasion through the use of these havens is not only a major concern because it is a developing nation in the need of resources to service the needs of the country and its people, but also because these can also be used to facilitate money laundering and corruption.
According to the country’s tax agency, from January 2014 to October 2016, $4.52 billion left the country destined for tax havens. President Correa proposed that politicians and public officials should be barred from using tax havens, as a means of demonstrating their commitment to transparency and the public good.
As a result, there was a referendum to accompany the 19 February 2017 General Elections that asked Ecuadoreans: “Do you agree that, in order to fulfill a dignity of popular election or to be a public servant, it is established as a prohibition to have assets or capital, of any nature, in tax havens?” This proposition was approved 55% yes to 45% no.
There are outstanding issues about problems that persisted within the decade of left-wing government, especially the issue of corruption. Despite important initiatives, cases such as that of former oil minister Carlos Pareja Yanuzzelli and others who fled the country accused of corruption, raised concerns even among government supporters.
Allegations continued that Brazilian construction conglomerate Odebrecht paid bribes to 18 Ecuadorian politicians who were identified by codenames such as "Grosso," "Lights" and "Chanceller" according to the physical characteristics, personality traits or professional status of those receiving bribes. The names were published in the "Expreso" newspaper in January 2017, which alleged Odebrecht won contracts worth $1.6 billion (1.5 billion euros) during the Correa governments.
The increasingly right-wing administration of Lenin Moreno supported the corruption allegations regarding now-dismissed Vice-President Jorge Glas, seen by many as a staunch loyalist of Correa. Despite an almost complete lack of evidence, Glas was accused of receiving bribes from Brazilian construction company Odebrecht and put in preventive detention in December 2017, pending an appeal. Moreno previously stripped him of all the official duties and posts of vice-president in August 2017, before Maria Alejandra Vicuña officially replaced Glas in January 2018. The entire scandal was reminiscent of the "parliamentary coup" that previously brought down President Dilma Rousseff of Brazil, and was a way of purging the cabinet of any dissent to Moreno's policy turn.
Ecuador's National Assembly President Jose Serrano waas been dismissed from office 09 march 2018, with 103 members of the assembly voting in support of the motion. With only three participants abstaining, the National Assembly voted to dismiss Serrano and initiated an impeachment trial against Attorney General Carlos Baca following a leaked audio recording which implicates Serrano in alleged corruption. The motion to remove Serrano was brought by Henry Cucalon, a member of the Social Christian Party. Cucalon believes many more people may be connected. Serrano's dismissal follows several allegations of conspiracy after Baca released an audio recording of a conversation between Serrano and former Auditor General Carlos Polit, a fugitive who is currently being investigated for corruption.
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