Paraguay - Corruption
Paraguay has been named a threshold country for Millennium Challenge Account funding; its poor historical record on corruption was the major reason it did not qualify for full participation in the program. The legacies and practices of the dictatorship and of the Colorado Party continue to affect the rule of law in Paraguay. Despite significant advances in terms of the constitutional and legal framework that guarantee fundamental rights, access to justice, and equality in the adjudication of law, structural weaknesses in the rule of law remain at the center of the democratic deficit in Paraguay. One of the greatest obstacles to reform in this sector is the widespread corruption and state-sponsored patronage that is exercised by political parties as a mechanism to stay in power and to advance partisan and personal agendas.
Under Stroessner the state sector became a source of patronage, clientelism, and electoral support, expanding massively to become the largest national employer by 1989. Loyalty to the regime was also strengthened through officially tolerated corruption — “the price of peace” as Stroessner reportedly described it. Indeed, institutionalized corruption became the cohesive factor linking the party, the army and the state, the elites, and the masses. Contraband became the most active informal activity in the country, with Stroessner assigning portions of the illegal trade to key officials in the armed forces and the party in exchange for their continued support. By the 1980s, this included the illegal income from an arms trade that was available to party officials and military leaders.
Drug trafficking in Paraguay reportedly was facilitated by widespread corruption among highranking officials and politicians. After the downfall oflongtime President Alfredo Stroessner in 1988, several leading U.S. newspapers linked coup leader and former president General Andres Rodriguez to South American drug traffickers. President Rodriguez, however, repeatedly denied all accusations made against him and during his tenure made several modest attempts to counter drug trafficking.
Pervasive corruption and weak government institutions left ample room for the Colorados -- and, to a lesser extent, power brokers from other parties -- to wield influence by doling out jobs, favors and money in exchange for loyalty and votes. Low respect for the rule of law permits corrupt officials to act with impunity. Such impunity naturally favors those in charge. The country's civil society is still nascent; its electorate remains complacent. Many Paraguayans view political corruption as inevitable, and patronage as the only way to secure benefits in an intrinsically corrupt system. Although the press is independent and critical, its reporting is unprofessional and biased, diminishing its credibility. As a result, many Paraguayans routinely discount press reports of officials' corrupt or illicit acts as nothing more than politically motivated attacks.
Corruption is often held up as the greatest obstacle to the rule of law. Widely believed to have increased during the transition, it reached a peak in 2002, when Paraguay was rated 129th out of 133 countries in the Transparency International Corruption Perceptions Index. Corruption pervaded all levels of society, from the executive downward, while low-level corruption and bribery of state officials (police, judges, ministries, and civil service) is routine throughout society.
By 2007 Paraguay was the third most corrupt country in the hemisphere after Haiti and Venezuela, and it had an antiquated and weak legislative framework. A 2007 Transparency Paraguay corruption survey further found that the Paraguayan public considers the Duarte administration the most corrupt since 1997. Paraguay's judicial system (including its public ministry) was routinely subject to corruption and political influence. Paraguay lagged behind many of its neighbors in terms of its judicial reform and its efforts to adopt an accusatory criminal justice system. Paraguay's penal code dated to 1999 (with the last major overhaul done in 1914), it did not have terrorist finance legislation, and its money laundering legislation and asset forfeiture laws were weak. Those caveats aside, many Paraguayan government officials demonstrated their commitment to eradicating corruption and strengthening Paraguay's legal framework, and made significant progress toward those goals.
Paraguayan law provides criminal penalties for official corruption; however, impunity impedes effective implementation. Historically, officials in all branches and at all levels of government have engaged in corrupt practices. Judicial insecurity and corruption in the judicial system mar Paraguay’s investment climate. Many investors find it difficult to enforce adequately contracts and are frustrated by lengthy bureaucratic procedures, limited transparency and accountability, and impunity.
The Government of Paraguay has taken several steps in recent years to increase transparency and accountability, including the passage of an Access to Information Law, the creation of a transparent, internet-based government procurement system, the disclosure of government payroll information, the appointment of respected apolitical officials to key posts; and increased civil society input and oversight. In 2013, the National Procurement Agency, the Civil Service Secretariat, the Auditor General, the Anticorruption Secretariat, and the Solicitor General signed an MOU to strengthen coordination among key players in the fight against corruption and collaborate on a National Anticorruption Plan. Notwithstanding, corruption and impunity continue to affect the investment climate.
The constitution requires all public employees, including elected officials and employees of independent government entities, to disclose their income and assets at least 15 days after taking office or being appointed and again within 15 days after finishing their term or assignment. Starting in 2014, employees are required to include information on the assets and income of spouses and dependent children. Officials are not required to file periodically when changes occur in their holdings.
On 28 November 2012, the government created the National Anticorruption Secretariat, responsible for coordinating and monitoring the application of public policies in matters of transparency and the fight against corruption. It also is responsible for formulating strategies to prevent, investigate, and denounce acts of corruption, in coordination with other government entities. The institution is a part of the Executive Office. On November 28, the Public Service Secretariat announced the entry into force of an ethics code for the executive branch. A Commission of Public Ethics will receive and judge ethics complaints. All public servants, including senior employees, are required to adhere to this code.
In November 2012 a lower court convicted former council member Francisco Yore to 30 months in prison for bribery. Prosecutor Arnaldo Giuzzio had charged Yore for soliciting a $34,000 bribe to favor an investment bank as the prime broker in a bond issuance in 2008. On November 15, Deputy Sebastian Acha, of the Partido Patria Querida (Beloved Fatherland Party), denounced Governor Oscar Nunez (Colorado Party) and others, for the disappearance of $340,000 dollars to have been spent on the One Laptop Per Child educational program in the department of President Hayes. On November 23, a GAO audit confirmed the amount was missing and advised the General Prosecutor’s Office to open a criminal investigation.
As of October 2013 the Judicial Disciplinary Board (JEM) had removed seven judges and prosecutors, reprimanded four others, and cancelled three proceedings due to magistrate resignations. In 2012 the JEM removed 12 judges and prosecutors and sanctioned six others, and one judge resigned before the completion of proceedings against him.
As of 19 September 2013, the General Auditor’s Office (GAO), issued 24 reports of crimes against state assets in 2013, totaling Gs. 6.67 million ($1,480). The largest corruption cases involved Gs. 1.3 billion ($289,000) in the National Industry of Cement for the acquisition of 25,000 tons of imported plaster; Gs. 1.17 billion ($260,400) in the National Secretariat for Animal Health and Quality for the construction of offices; Gs. 1 billion ($222,200) in the National Secretariat of Social Assistance regarding social funds programmed for construction of homes and land titling; and Gs. 700 million ($155,500) in the National Secretariat for Homes regarding its audit of the secretariat’s annual budget. The GAO delivered its findings to the Prosecutor’s Office, Senate, Chamber of Deputies, Presidency, and Solicitor General’s Office. The Prosecutor’s Office opened investigations in some cases, and the investigations were pending.
In early September 2013 media reports disclosed that 62 government entities, including the General Prosecutor’s Office, Supreme Court, Chamber of Deputies, JEM, municipalities of Asuncion and Ciudad del Este, and a dozen other national and local agencies filed lawsuits questioning the GAO’s authority to audit their balances. The constitution mandates that the GAO audit all the balances of government institutions, including local government entities, and the legislative and judicial branches. The GAO had not audited the Supreme Court since 2004. These government entities did not comply with legal requirements to submit audit information to the GAO. Instead, the Supreme Court provided the required information to its Administrative Court or to the General Prosecutor’s Office’s Administrative Court, both of which were understaffed and not trained to perform GAO perform audits.
During the year 2015 several high-profile public-sector corruption cases resulted in both voluntary and forced resignations. In some instances the Attorney General’s Office indicted individuals for corruption and convicted at least three former ministerial level officials for acts committed under previous administrations. Nevertheless, impunity continued to be pervasive. On May 19, the Attorney General’s Office indicted former national police commander Francisco Alvarenga and remanded him to house arrest for illicit enrichment. President Cartes removed Alvarenga from his post on May 18 due to allegations that he and his son had stolen and sold gasoline worth more than Gs. 1.2 billion ($200,000) from police motor pool facilities.
The departments of Alto Parana, Amambay, Canindeyú, San Pedro, and Concepcion continue to suffer from violence associated with narco-trafficking. Paraguay is a transit country for cocaine and the hemisphere’s second largest producer of marijuana. Narcotics traffickers use violence to settle matters between rival groups, and it is believed that members of the Brazilian organized crime gang First Command of the Capital (PCC) are operating in Pedro Juan Caballero (Amambay), Salto de Guairá (Canindeyú), and Ciudad del Este (Alto Parana). The Department of Amambay (capital city is Pedro Juan Caballero) is the most violent area of the country with the highest rate of homicides. The vast majority of the homicides in Amambay are believed to be drug-related.
Rule of law is also related to the presence of the state, which is not constant throughout the country, and is especially low in poorer and more remote areas, and in departments such as San Pedro, Concepción, Caazapá, Amambay, and Canindeyú. This is complicated by the growth of organized crime, especially in terms of production and trafficking of drugs (Paraguay is now the largest producer of marijuana in South America), as well as of arms. There is a widely held perception, and some evidence, that this growth of illegal trade involves the complicity of police, the armed forces, local and national politicians, and judges in a powerful network of influences; and that elites with ties to money laundering, piracy, contraband, and drug trafficking have come to wield a growing influence in such areas.
However, despite U.S. fears of the Tri-Border Area being used as a base for international terrorism, investigations by representatives from Paraguay, Brazil, Argentina, and the U.S. led to a joint declaration in December 2006 that “no terrorism activities” had been detected.
State presence does not, however, always guarantee the rule of law. The police have historically been a force designed to enforce political power rather than uphold the law or protect the personal security of citizens and, as such, have long been seen as a repressive instrument of the state. Although human rights violations are no longer part of state-sponsored practices, there is evidence of the use of abuse of human rights by the police, which go largely uninvestigated.41 The police are widely perceived as not only inefficient and ineffective, but institutionally corrupt, and there is evidence of high levels of infiltration by criminal mafias related to the trafficking of arms, drugs, and vehicles. Involvement in petty and organized crime has grown, to the extent that the term “polibandi” (policía/bandido) is widely used and understood.
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