“La Plata Llega Sola” [The Money Arrives on it
Own]: Reflections on Corruption Trends in Peru
Antonio A. R. Ioris
Abstrac
Corruption is a global problem that feeds on national and local
opportunities. Instead of the prevailing attempts to reduce anti-corruption
strategies to the protection of business interests, corruption needs to be seen
as a sociopolitical relation that emanates from the convergence between
more immediate circumstances and long-term institutional tendencies.
Corruption is, therefore, a phenomenon with synchronic and diachronic
dimensions. The complexity of corruption is examined in relation to the
organization of Peruvian state and society, in particular considering the
recent liberalization reforms and investments in the water industry of Lima.
The Peruvian case study shows how corruption becomes a productive force
from the perspective of conservative elites and the maintenance of political
hegemony.
Keywords: corruption, social exclusion, public services, development,
Fujimori, Latin America
Introduction
In the last months of 2000, after ten years in the command of the
country, the government of Alberto Fujimori suddenly collapsed.
The president and other authorities managed to leave Peru using
various strategies, but their departure exposed a vast scheme of
organized corruption in an industrial scale. The evidences were
astonishing and involved a large number of politicians, generals and
TV entertainers. Apart from the president, the other key accomplice
was his closest and sinister advisor, Montesinos, a former army
officer with extravagant habits, zero scruples and a notorious ability
to command illegal activities and bribe extensively and
systematically (Carey, 2003). The whole story is now well known
and contributes a great deal to the negative image of Latin American
leaders and the persistent stigma of the regional political system
(Matossian, 2010; Meléndez and León, 2010). If we fast forward a bit
more than a decade, we find the national government in the hands of
lieutenant-colonel Ollanta Humala, the winner of the 2011 election
and guarantor of neoliberal policies that have largely depended on the
export of primary commodities. Fujimori ended up in jail in April
2009, after being found guilty of a series of murder crimes and the
illegal payment of US$ 15 million to Montesinos (to keep the mouth
shut after his downfall). The imprisonment and public deprecation of
Fujimori did not prevent his daughter (and former first-lady of the
divorced president) to become a central presidential candidate in the
2011 election and in other future campaigns. Alan García, the
controversial president who preceded both Humala and Fujimori, in
his two mandates so far, has also had a career marked by corruption
scandals, but nonetheless remains a chief political figure.
The resilience of corruption practices in Peru provides the context
and the motivation of the present, qualitative analysis. The aim here
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is to provide a critical reflection and comment upon the meaning and
consequences of the non-linear metabolism of corruption in Latin
America, using Peru as an emblematic entry point. Other notorious
cases have attracted international attention in recent years, such as
the mensalão in Brazil and the strange relation between the Kirchner
presidential couple and construction companies in Argentina. This
prompted some high-level reactions, as the grand plan against
corruption drew up by the leaders in the first Summit of the Americas
in 1994, leading to the Inter-American Convention against
Corruption (approved in 1996). However, instead of containing it, the
main consequence of extensive media attention is rather the
banalization of corruption as a problem deeply consolidated in
political traditions and the presence of corrupted circles as an
inevitable landmark of most regional governments. The existing
literature on corruption – advanced by the mainstream academics and
agencies such as the World Bank, Transparency International and the
OECD – is normally unable to explain the more integral and
multidimensional basis of corruption. Corruption remains an active
driving force and represents a robust, intergenerational social
institution that is effectively non-negotiable.
The current article is based on fieldwork in Lima that included 24
semi-structured interviews, the attendance of public events and
critical discourse analysis of media articles, documents and policies
between 2013-2014. The analysis of recent developments was
extremely important to inform the examination of lasting patterns of
corruption. The methodological approach had to overcome the
intrinsic difficulty of any study of corruption or illegal activities that
are, by their own nature, slippery and unaccountable. As Lazar
(2005: 212) puts it, corruption is everywhere and nowhere, “it is
always somewhere else perpetrated by someone else.” Perhaps a little
ironically – but certainly fortunate from a research standpoint – the
bulk of the fieldwork (in the first half of 2013) coincided with the
surfacing of a major scandal regarding the water services of Lima
during the previous García administration. In particular, the
management of the water utility SEDAPAL and the investment
programme Water For All (APT), which combined public funds and
private companies (Ioris, 2012), proved to be fraught with
negligence, populism and corruption. It was evident that corruption
scandals helped to sell newspapers and amused the audience of TV
programmes, but did not affect the defence of the economic model
adopted in Peru in recent decades. The connection between the
mainstream economic argument and the treatment of corruption as a
public spectacle (that rarely has any serious consequences for those
who practice it) is, ultimately, highly revealing of the shortcomings
andimbalances of contemporary Peruvian society.
The present text is justified by the need to investigate the multiple
sources and perennial reinforcement of corruption. That means a
radically different conceptualization of corruption, not as a mere
deformation of public services and policies (as extensively discussed
in the traditional literature, which is too long to review here; see for
example World Bank, 2007), but as an integral feature of the
organization and operation of contemporary mechanisms of social
exclusion and (problematic) political legitimization. It should be
recognized that fraud and corruption incidents are always firmly
grounded on concrete historic-geographical settings and incorporate
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the long trajectory of politico-economic processes and the
politicization of statehood. The metabolism of corruption evolves
through various stages that combine permanence and renovation, as
much as the already mentioned spatial and scalar interconnections.
Corruption persists in the social tissue of highly unequal societies
only to resurface in an intense fashion when the politico-institutional
circumstances are more favourable.
In conceptual terms, the persistence and the new impacts of
corruption derive from a dynamic interface between synchronic and
diachronic pressures. Corruption, as a social relation that reflects
group and class inequalities, remains alive in those same inequalities
during long periods of time (which corresponds to its diachronic
dimension) but proliferate synergically across different sectors and
activities whenever the mechanisms of control are relaxed (its
synchronic dimension). The synchronicity of corruption contains the
convergence of the appropriation of public resources, sociopolitical
asymmetries, weak control systems and the absence of a genuine
democratic, transparent political regime. Diachronic corruption, in its
turn, is located in the (also historic-geographical) relations of
production, allocation and reproduction. Moreover, while synchronic
production is localised in certain places, sectors or moments,
diachronic corruption incorporates the legacy of past injustices and
replicates it on present and coming socionatural formations.
Synchronic corruption is the manifestation of the more persistent and
even more perverse course of diachronic corruption.
The synchronic manifestation of the historic-geographical
phenomenon of corruption is an element of the lived, but profoundly
unequal, space of nations, regions and urban or rural areas. In the
case of the fast growing megacities of the Global South, the
metabolism of corruption plays a very important role in the formation
of uneven and harsh urban landscapes. The unequal megacity is a
locus of condensed corruption, demonstrated by the scarcity of
housing, water and services in some areas next to pockets of wealth
(i.e. urban corruption is another expression of the widespread crisis
of capitalist overaccumulation, as capitalism evolved from abundance
of scarcity to scarcity and abundance).
The pulse between synchronic and diachronic corruption provides
a better explanatory tool than the more common, but static, argument
about ‘systematic corruption’ (e.g. Johnston, 1998). The explanation
around systematic corruption typically fails to consider the also
important roots of corruption in national development and social
inequalities. In contrast, it is the mutual reinforcement between
diachronic and synchronic axes that makes corruption such a resilient
and challenging problem. Because of synchronic and diachronic
tendencies, corruption is a highly contextual but also a generalisable
phenomenon that tells a great deal about the uniqueness and
commonalities of local and national development experiences in
different parts of the planet. More significant than trying to assess
whether corruption is increasing or decreasing is the careful
consideration of the diachronic and synchronic manifestations of
corruption and what these means for the legitimization or
transformation of socioeconomic relations, as analysed next in
relation to Peru.
Diachronic and Synchronic Corruption in Peru
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We may start the analysis with a reference to one of the most
famous books published by a Peruvian author: Conversation in the
Cathedral, by Vargas Llosa (published in 1969). The story takes
place in the post-World War II years, characterized by political
instability, authoritarianism and recurrent corruption scandals that
basically reproduced many of the controversies faced by the country
since independence. The government of Odría (1948-1956) combined
populist measures with a harsh treatment of left-wing groups and
rampant corruption. The context of limited economic and political
liberties of the time, amid the rapid enrichment of president’s
advisors and ministers, was brilliantly captured by Vargas Llosa. The
main character in the story is Cayo Bermúdez (also known as Cayo
Mierda, inspired in Alejandro Esparza Zañartu, the right-hand man of
Odría for political repression). Don Cayo is the paradigm of an
opportunist, violent and corrupt minister.
Vargas Llosa’s book shows the promiscuous relation of civilian
and military authorities and the struggle to maintain close proximity
to power. For a while, Cayo is a key figure in the central
administration, charging substantial bribe in exchange for facilitated
contracts and inflated payments. Moreover, he is fully aware of the
transitory nature of his influence and the vulnerable position of all
leaders, including General Odría. Don Cayo knows that his role is
doing a dirty job that is only temporary and that he will be later the
obvious culprit of the excesses perpetrated by the administration. In
his words: “Cuando el régimen se termine, el que cargará con los
platos rotos seré yo” [When the political regime is over, I will be the
one responsible for the broken plates] (Vargas Llosa 2010: 325). The
predictable of debacle of the minister mishandles a situation of
regional strike and allows too much violence to take place. Cayo is
expelled from government and escapes to Brazil, not without leaving
a serious message about how to operate in a corruption circle: “No te
fíes ni de tu madre” [Don’t trust even your mother] (p. 557). In real
life, history was more understanding and Odría managed to negotiate
a transition to formal democracy in exchange for a generous amnesty
to him and his ministers.
Between the 1960s and 1980s, Peru was governed by elected
presidents and military dictators who promoted different nationalistic
policies but never really attempted, or were able, to curb
institutionalized corruption. The limitary coup of 1968 marked the
end of the old oligarchy and opened space for the emergence of new
groups and networks of power that once again reproduced huge
social inequalities (Figueroa, 2002). Corruption was nurtured by
growing drug production and the rambling effort to control the
advance of leftist guerrillas in the 1980s. The most destabilizing
politician of this period was Alan García, the first and only president
affiliated to APRA, which is the oldest and best organized political
party of Peru, founded in 1924 with a revolutionary manifesto but
with a long history of populism and connivance with corrupted
practices. Numerous cases of corruption emerged during his
government, among those the very suspicious purchase of Mirage
fighter planes and deposit of national reserves in the troubled bank
BCCI (which was notoriously involved in money laundering and
weapons trafficking). García finished his government with
hyperinflation, instability and a turbulent handover to the next
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president, Alberto Fujimori. Due to numerous allegations of
corruption and mismanagement, García spent most of the 1990s selfexiled in Paris and articulating his defence and return to political life.
Instead of being found guilty of corruption crimes, García
orchestrated a surprising comeback to the presidential palace. “The
history of the legal cases against him between 1990 and 2001
illustrates a pattern of manipulation and exploitation of judicial
incompetence and corruption as a means to regain power, which
García managed to do in 2006” (Quiroz, 2008: 347). The
diachronicity of corruption re-emerged in the last decades of the
century with the widespread, synchronic cases of fraud and graft
fostered by the liberalization of economy and politics in Peru.
The Corruption of Neoliberalism or the Neoliberalization of
Corruption
Fujimori, the improvised candidate and unexpected winner of the
1990 election (to a large extent, due to the unstated, but crucial,
support received by Alan García in his vicious rejection of Vargas
Llosa’s candidacy), seemed to be the right man in the right place for
the job. At least from the perspective of the business sectors and their
expectation that hyperinflation and the Maoist guerrilla were both
contained. The radical neoliberalism promoted by Fujimori served to
consolidate the trend, initiated in the previous decade, of power
concentration in the hands of emerging, significantly more
homogenous economic elite associated with international
corporations (Durand, 2011). In parallel, and nurtured by the
neoliberal disassembling of the Peruvian state, Fujimori and his team
did their best to accumulate huge sums of money. One of the initial
steps to secure that goal was the pocketing of donations made by the
Japanese government for the needs of poor children in Peru (US$
12.5 million); Japan donated around US$ 100 million for
humanitarian causes during the decade, but 90% ended up in the
personal accounts of Fujimori and his relatives (Quiroz, 2008: 378).
In 1992, the regime became semi-dictatorial thanks to a auto-golpe
[self-coup], which allowed the replacement of the last vestiges of an
underdeveloped form of Keynesian state with liberalizing measures
aimed to stabilize the economy and bring inflation under control. The
last years of the Fujimori administration were marred by corruption
in a massive scale by the president and members of the cabinet. What
became clear only a little later was the extent of organized corruption
being managed from the top of the national administration (at that
stage Weyland (1998) still exempted the president from the
widespread corruption, blaming only Fujimori’s top advisers).
The Fujimori government was not only an acute case of
authoritarian neoliberalism, but became a true kleptocracy that
operated through three different mafias specialized in robbing
separate structures of the state: the ‘white mafia’ led by Jorge Camet
(Economy Minister), the ‘yellow mafia’ in the hands of Fujimori and
the ‘green mafia’ (green of the military uniforms) managed by
Montesinos (Durand, 2003). It was particularly the frantic activity of
Montesinos, on behalf of Fujimori and other cronies, responded for
the strength and continuation of the government. The special advisor
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was extremely competent in his extensive bribing and blackmailing
of generals, politicians and journalists. Montesinos accumulated
increasingly power after the (dodgy) re-election of 1995 and operated
in many different fronts, including the channelling of money
obtained from the privatization of public utilities to buy military
planes from Belarus for US$ 470 million (obviously charging a
handsome commission for the operation) and the mediation of 10,000
AK-47 rifles to the Colombian Revolutionary Armed Forces (FARC)
against the interests of the USA (the transaction was later discovered
by the CIA and precipitated Montesinos downfall). The regime
became closely involved in the repeated violation of human rights
and in the payment of illicit commission to foreign countries and
arms and drug dealers (Calderón Navarro, 2006). It became gradually
more evident in the last years of the Fujimori administration that who
was actually in charge of the country was Montesinos and that the
‘elected’ president was rather a symbolic figure (Durand, 2003;
Caistor and Villarán, 2006).
Because of the divestiture of state utilities and companies,
conducted according to the neoliberal canon of the time, Fujimori
was publicly credited with having reduced petty corruption in state
companies, however in reality corruption remained pervasive and
deeply institutionalized, particularly bribes paid to the judiciary, the
policy and local authorities (Hunt, 2006). Beyond the immediate
appropriation of public money and the enrichment of mafia-like
circles, the hypertrophy of corruption was instrumental for the
consolidation of illegal or semi-illegal economic activities. The
Fujimori administration maintained promiscuous connections
between civil servants and corporations, in special the back and forth
movement of people that work for the government, then work for a
corporation just to go back to the government again. The agencies
established to control corruption – particularly the Controladoría
General de la República and the Oficina Nacional Anticorrupción
(replaced by the Consejo Nacional Anticorrupción) – were constantly
undermined and unable to do much about the misuse of public funds
(Grampone and Barrenechea, 2010). An investigation by the postFujimori congress found that corruption was indeed happening in a
massive scale, including the siphoning of money from pension
schemes, the privatization of public companies, foreign debt
negotiation, and drugs and arms trafficking (Congreso de la
República, 2003). It is estimated, although it is very difficult to
demonstrate, that corruption during the Fujimori regime reached 50%
of total state expenditures, something like an annual average between
US$ 1.4-2.0 billion, which means a total loss between US$ 14-20
billion during the 1990s (Quiroz, 2008).
Corruption by the Fujimori government was associated with rentseeking and mercantilist economic behaviour, as well as political
cynicism and apathy (Cotler and Cuenca, 2011). The situation of
limited civil liberties and energised corruption emanating from the
highest echelons of the public administration, together with growing
demand in North America, paved the road to the growth of a vast
chain of cocaine production, concealment and distribution
(Gootenberg, 2006). During the decade, mineral extraction expanded
enormously in Peru due to a combination of high prices in
international markets, new technologies and the institutional
guarantees offered by the government to foreign investors. Between
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1990-1997, while sectoral investments increased by 90% in the
world, in Latin America the expansion of mineral production reached
400% and in Peru it was 2,000% (World Bank, 2005, in Bebbington,
2011: 53). In 1996, a new legislation centralized and simplified the
concession of licences for mineral extraction, at the expense of the
rights, needs and demands of communities living in the mountains
and in the Amazon. It stimulated the internationalization of the
mining sector in the hands of large corporations. Fujimori and
Montesinos, especially after 1996, disorganized the control systems
of the Peruvian State (including the judiciary, public prosecutors and
the media) to feed the money hunger of their criminal circle. In doing
so, they were compelled to flexibilize state control over both national
and international companies, which incidentally became tacit allies of
the government. This connection between the immediate ambitions
of corrupt authorities and bribe-paying companies was more than
fortuitous, but the great corrupting power of the Fujimori regime was
the establishment of renewed mechanisms of economic exploitation
and ideological mystification.
Under growing scandals and an economic downturn, the
Fujimori government crumbled in 2000 and was followed by
the interim administration of Valentín Paniagua, which took
several important measures to restore some confidence in the
judicial system. The nefarious modus operandi of Montesinos
was exposed (ironically, it was facilitated by the videos
recorded by Montesinos himself, known as vladivideos) and led
to the arrest of more than 60 people (politicians, judges,
generals and businessmen) caught in the web of corruption
spun by the regime. The National Anticorruption Initiative
(INA), promoted by the Ministry of Justice, was an attempt to
bridge state and civil society. However, other plans and
suggestions were never implemented and quickly shelved by
the next administrations. In July 2001, the economist Alejandro
Toledo started his government with good level of political
approval. Nonetheless, the new president was soon criticised
for the mishandling of privatization and for his turbulent
negotiation with civil servants. President Toledo was personally
affected by bad publicity about his personal habits (e.g.
purchase of expensive liquor and lavish holidays) and because
several of his advisors were involved in cases of corruption.
Toledo concentrated on prosecuting those involved in the
Montesinos affair, but failed to adopt anti-corruption
recommendations of agencies such as the World Bank once the
new anti-corruption mechanisms threatened his own
government (Hunt, 2006). Despite the evident condemnation of
corruption during the Fujimori years, the Peruvian judiciary
continued to lack financial resources, inadequate budget and
limited transparency of the anticorruption system (Calderón
Navarro, 2006). At the same time, a significant proportion of
the media was still associated with the Montesinos Mafia and
used that information to press for amnesty of those being
prosecuted. The Toledo administration gradually lost interest in
advancing more efficient procedures to curb corruption, which
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became even worse under the subsequent government (Pariona
Arana, 2012). The first decade of formal democracy (after the
end of the Fujimori dark years) neither removed the
authoritarian legacy nor reduced social conflicts and
widespread corruption (Meléndez and León, 2010).
The 2003 report of the Commission for Truth and Reconciliation
– the commission had been set up by Paniagua to investigate
allegations of recent human rights violations – contained a
comprehensive assessment of the period 1980-2000 and related
corruption and violence to the long legacy of inequalities and the
shortcomings of the Peruvian public sector (McClintock, 2006).
Despite the course of action recommended by the Commission,
Toledo showed signs of hesitation and had very little political
appetite to advance a serious reform of the judicial system and of the
military. Since the downfall of Fujimori, the reaction against
corruption gradually lost prominence in favour of economic growth
and market expansion (Peña-Mancillas, 2011). The reluctance to
fight the roots of corruption was followed by the determination of the
next president – Alan García, who capriciously returned to the
presidential palace in 2006 – to exercise his undue influence over the
judiciary, the congress and his own party (APRA). García is probably
the main character of the recent history of Peruvian politics, the
person who made Fujimori a victorious candidate, forced the
retirement of Vargas Llosa from politics, sustained Fujimori’s legacy
and consolidated neoliberalism. García incarnates the old populist
patrimonialism of the Latin American elites, disguised in neoliberal
colours and subordinate to the logic of globalized markets. Just as in
the 1980s, García controlled his party and in the country through
mysterious manoeuvrings and had his name constantly associated
with questionable practices. During his second term as president,
García strived to advance the neoliberal agenda, which included
several free-trade agreements, concessions of natural reserves and
contracts with foreign construction and investment companies.
To be sure, the election of García can only be explained by
the fear that the other candidate in the second round of the 2006
elections – Ollanta Humala, another improvised candidate,
uncomfortably supported by Evo Morales and Hugo Chávez –
could undo the neoliberal achievements since 1990. García
used his vast political expertise and profound knowledge of the
electoral game to promote a business-friendly image (e.g.
promised to support the USA-Peru trade liberalization)
combined with demagogic proposals. García was so
comfortable using his populist and centralizing approach that
even acknowledged, with a dose of irony, the stereotype of
APRA politicians as notoriously corrupt (McClintock, 2006).
After the electoral victory and the return to the presidential
palace, the García’s administration was marred by scandals
involving bribes and suspicious activities. In 2008, the case of
the ‘petroaudios’ attracted huge attention and forced the
resignation of the prime minister and supreme court judges:
videos were made public with executives of the Peruvian stateowned petroleum company Petroperú negotiating payments by
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the Norwegian company Discover Petroleum to facilitate the
wining of exploration contracts. Not by coincidence, also in
2008 García closed down the Oficina Nacional Anticorrupción
(Grampone and Barrenechea, 2010). While the anti-corruption
instruments were scaled down, there was a significant
sophistication of illegal practices or the corruption associated
with economic activities.
Another strange incident happened when García accepted a
private dinner invitation from the writer and journalist Jaime
Bayly in 2010. What really happened is not entirely clear, but
Bayly later affirmed that the president incited him to run for
office in the next general election, despite the journalist’s
disappointment with the official salary (something like US$
3,000/month). According to Bayly, García lighted and candidly
reassured him that it should be no problem because, once you
become president, “the money arrives on its own” [the full
sentence was a bit more vulgar: “no seas cojudo, hombre, la
plata llega sola”]. In the same evening, García apparently
claimed that, if Humala wins the election, he would lead a coup
d’état to ‘free the country’ (sic) from such threat (Bayly, 2010).
The result of the 2011 general election – the dispute for the
succession of President Alan García – was once again extraordinary.
First, repeating what had happened in 1990, García destroyed any
chance of his party, APRA, to gain the election in order to leave the
door open for him in the next presidential election in 2016. Second,
for several years before the election, very few people believed in the
possibilities of Ollanta Humala, especially because of his
unconventional career, nationalist discourse and confusing political
allegiances. In the second round, Humala competed against Keiko
Fujimori (who is a strong candidate for the 2016 presidential
elections), the congresswoman who was converted into the new
leader of the Fujimori clan. Humala’s victory and his almost
immediate submission to the neoliberal order was part of Latin
American’s movement to a different, pero no mucho, state of
capitalist production. The day he was invested with the office of
president, Humala promised allegiance to the Constitution of 1979
(approved in the process of redemocratization after the military
period), but in practice quickly moved to become a defender of the
1993 neoliberalizing constitution introduced by Fujimori. It follows
the trend of left-wing politicians coming to power in Latin America
to introduce some social concessions (especially as conditional cash
transfer programmes) but mainly to manage an hegemonic neoextractivism that frustrates those expecting deeper changes (Burbach
et al., 2013).
Humala tried to give to the national and international public the
impression that he was going to take corruption seriously. The
National Anti-Corruption Plan was published in 2012 (Supreme
Decree No. 119) and the Anti-Corruption Strategy of the Executive
Branch was introduced in 2013 (Supreme Decree No. 046) with a set
of principles and recommendations. The government strengthened
the work of the Prosecutor Anti-Corruption that had been established
in 2001 and then watered down by García (although in 2013 it was
still spending most of its energy on petty crime instead of large
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corruption incidents). There were 20,000 cases of corruption under
consideration in 2013, but a main problem was still the lack of
resources and specialized knowledge of investigators and judges.
Under the leadership of the recent presidents, the Peruvian
economy remained significantly dependent on mineral exploitation,
as well as the commercialization of imported goods. The concession
of mining activities to foreign companies continued to create
opportunities for new rounds of corruption, as well as the
intensification of socioenvironmental conflicts. According to the
Defensoría del Pueblo (2009), 46% of social conflicts in 2009 were
related to socioenvironmental disputes. The most violent was the
Baguazo, when indigenous communities occupied roads against new
laws passed by García to allow oil and mining companies to enter
their territories without consent or consultation of the local
communities (García claimed these laws were necessary to
implement a Free Trade Agreement with USA). The police attacked
on the 06 June 2009 and the clash resulted, according to official
government sources, in 5 civilians killed and 5 natives, 23 policemen
and 89 people wounded; journalist and indigenous leaders bitterly
disagreed and some claimed that hundred were killed and the corpses
were thrown to the river (BBC, 2009).
A further and notorious example was the concession granted by
the García administration to American company Newmont to explore
Conga, near the northern city of Cajamarca. The US$ 4.8 billion
project was supposed to start production in 2015, but the local
communities voiced fierce protest against the threat to their water
supplies due to the inadequate provisions to prevent lake
contamination. Conga was approved in the context of 20 years of
growing mining activity together with the relative absence of the
state from the process of conflict negotiation and resolution (De
Echave and Diez, 2013). There were mounting tensions during the
assessment of the Environmental Impact Assessment, which
prompted a number of marches and demonstrations in several
localities. In July 2012 the conflict scaled and five persons died and
many others were injured by the police. The project was eventually
suspended once it was accepted that it lacked the minimal conditions
for its implementation. Apart from mining operations, investments in
the water sector of Lima also provided favourable opportunities for
politico-economic disputes and associated forms of synchronic
corruption.
Water Sector Ramifications of Diachronic and Synchronic
Corruption
As mentioned above, the water industry of Lima was a privileged
locus for corruption and populist measures during the García
administration. It was certainly not a simple coincidence that most of
the corruption accusations against President García investigated was
related to the projects and investments in water services. On the
contrary, the manipulation of water supply of the capital city has
been a recurrent expedient employed to assist party politics and
enrich corrupted authorities. The fact that around a third of the
national population lives in the capital means that the announcement
of water infrastructure projects for the crowded periphery of the
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megacity has huge political appeal and easily justifies vast sums of
money to be invested in (sometimes questionable) water treatment
works (there has been much less interest in sewage collection and
treatment). Particularly since the middle of the 20th Century, with
high rates of demographic growth and growing water demand, all
governments promised to treat the most urgent water problems of
Lima as a top priority, which invariably led to rushed investments,
waste of resources and corruption. Not surprisingly, despite the
sustained discourse about improving water services, water scarcity
and poor water quality remain key problems for many communities
or entire settlement. Persistent water problems continue to affect not
only the marginal areas of the city (with around 5% of population
without public services), but 48% of the population of metropolitan
Lima suffer from water of substandard quality (RPP, 2013).
There were early signs of extensive corruption affecting the water
utility SEDAPAL even before the transition to the administration of
Ollanta Humala. For instance, in 2010, the chief-executive of
SEDAPAL (Guillermo León) had to resign due to serious allegations
of corruption in new water treatment plants involving members of his
family, politicians and private contractors (El Comercio, 2010). Also
an investigation for the TV programme Panorama, of the local
Channel 5, revealed the recorded voice of a politician of the ruling
party (Julio Herrera) negotiating the results of tendering processes
related to the improvement of the services in San Pedro de
Carabayllo (La República, 2011). The irrefutable evidences of graft
and dishonesty during the García government, together with the
reduced number of congress members from his party (APRA) after
the 2011 election (i.e. there were not enough congressmen to stop the
investigation), prompted to the formation of an investigative
commission, known as the megacommission (megacomisión). Part of
its remits was to scrutinize the Water For All (APT) programme in
Lima (including the allegation of fraud, incompatible transactions
and the abuse of public office in 1,584 engineering works with a total
cost of around US$ 2.0 billion). APT attracted large construction and
consultancy companies to do business with the water utility of Lima,
even beyond its supervisory capacity. With massive investments in a
short period of time and careless control of targets and payments,
APT created very favourable conditions for mismanagement and
corruption. Particularly the wastewater treatment plants of Taboada
(US$ 342 million) and La Chira (US$ 192 million) had serious
suggestions of corruption (Ioris, 2013).
Based on the evidence put before the megacommission, it became
crystal clear that the invocation of the urgency was very instrumental
in facilitating adjustments in original plans and without the need of a
careful technical justification or legality of the changes. As
repeatedly affirmed by the chairman of the megacommission,
Congressman Sergio Tejada, in many occasions, the García
government issued emergency decrees that facilitated the approval
and speeded up the execution of the projects with reduced control
and monitoring (Hildebrandt en Sus Trece, 2013a). APT was so
ambitious that overloaded SEDAPAL with multiple construction
works, although the programme only included modest funds for
infrastructure maintenance (the obvious explanation was the much
easier and quicker deviation of money from large constructions,
especially when carried out simultaneously and with very limited
92
supervision). In New Pachacútec, a large settlement in the north of
Lima, major projects were initiated with only superficial technical
plans and without even sorting out the ownership of the terrain (El
Comercio, 2013a). Several of those interviewed during this research
mentioned that there is a tacit agreement that at least 10% of the total
cost of an engineering project was diverted to politicians and to the
administrators of the public utility. As typically happens in similar
circumstances, after leaving office Alan García started to make
conferences, at the cost of US$ 60,000 each, often paid by the same
companies that own profitable contracts with his government (El
Comercio, 2013b). In that context, the Attorney General’s office
ordered the lifting of banking secrecy of Alan García’s accounts to
facilitate the investigation of wrongdoings. García had publicly
acknowledged the purchase of a US$ 830,000 new house but
explained, with a great dose of sarcasm, that the money was obtained
from the selling of books and conferences. While shocking
revelations coming from the megacommission, the ex-president took
a surprisingly aggressive approach and constantly tried to underplay
the significance and the validity of their work. The megacommission
was attracted fierce reaction from García and his closest allies, who
repeatedly argued that its main purpose was to prevent the next
candidacy of the former president in 2016 (El Comercio, 2013c). In
May 2013, the megacommission decided to formally accuse García
for numerous the irregularities, but the ex-president immediately
replied that it was a ‘Chavist manoeuvring’ [reference to the late
Hugo Chavez of Venezuela] and that his efforts to expand the water
services of Lima were merely the operationalization of a decision
made by the former president Toledo. As it is widely recognized,
García continued to maintain strong personal connections with
judges and supreme court members appointed during his two
administrations, which helps to explain why the former president acts
as if had some sort of immunity from prosecution.
The material consequences of the investigation by the
megacommission were far from certain. Nonetheless, the controversy
around corruption in the water industry of Lima served as
justification for reducing public subsidies and even the privatization
of SEDAPAL (which was intended in the 1990s and then dropped
due to operational difficulties and political resistance, see Ioris,
2012). Utility privatization never really disappeared from the agenda
of multilateral agencies working in Peru, but this argument returned
more strongly once the mismanagement of the Water for All
programme and misconduct in SEDAPAL. That was clearly the
position taken by the most influential newspaper of Peru, El
Comercio, in its editorial page during the coverage of the
megacommission’s work. In January 2013, the newspaper editors
identified as the main problem of water services in Lima the fact that
these remain in the hands of the state. Different than other sectors,
SEDAPAL is state-owned, that is, “has no owner and, therefore,
nobody there is interested in doing the right thing in order to make it
more profitable”. Instead of focusing on social demands for better
services and the criminal activities of utility managers, the newspaper
attacks the government itself for the failures. In their view, “the
government forgets that problem of SEDAPAL is not the lack of
resources, but the lack of incentives to do its job” (El Comercio,
2013d). It is evident here the employment of the same anti-state
93
discourse – disguised as anti-corruption appeals – advanced by
mainstream organizations with neoliberalizing inclinations.
A clear evidence of the insistence on the same model of water
services, highly vulnerable to corruption, was the announcement in
2013 of new investments (8.443 billion soles or around US$ 3.27
billion) in 148 water projects by the new administration of Ollanta
Humala to expand the coverage of potable water and improve the
pipeline network. Once again the promise is to reach 100% of service
coverage and benefit two million residents in 3,600 human
settlements by mid-2016. It is highly significant that such
investments were announced without any significant change in the
rationale of water management and in the relation between
SEDAPAL and its clients. One disturbing indication of how things
remain practically unchanged is the career of senior authorities, as in
the case of the Minister of Housing and Sanitation (Mr René
Cornejo), who has played important roles in all administrations since
2000 and eventually – and quite controversially – became prime
minister early in 2014. This suggests that also the personal trajectory
of key political players moving from one senior position to another in
different governments has in itself an element of synchronic and
diachronic corruption.
Conclusion: Recognizing the Well-Known Unknown
This brief account of the experience of corruption in Peru
illustrates well the mismatch between the narrow, technocratic
comprehension of corruption by national and international
hegemonic agencies and the deeper social and political repercussions
of the same practices. Corruption is more than simply the
mishandling of public assets, but it effectively represents a
misappropriation of social opportunities and the systematic
marginalization of most of the national population. Corruption has
palpable consequences for the lives of the whole population, first of
all because it helps to reinstate in power conservative elites and
maintain class-based hegemony. The previous section demonstrated
that corruption has been a key social institution since colonial times,
but it re-emerges and becomes particularly widespread in specific
historical circumstances or specially associated with certain public
sectors or public utilities. That was the case in Peru under the
neoliberal reform of the state in the 1990s, which provided
favourable opportunities for the manipulation of the political system
and the capture of the revenues of privatization, and in relation to the
investments in the water industry of Lima in the 2000s. Rather than a
purely criminal or ethical issue, the activity of those promoting or
benefiting from corruption represented a creative force for neoliberal
interests and the organization of new accumulation strategies.
Corruption is a social relation at the interface between different
scales of interaction (the sectoral, local, national and international
scales) and between long-term tendencies and contemporary
developments. It means that the metabolism of corruption involves
spatial and temporal synergies that operate in synchronic and
diachronic directions. Every new scandal involving public authorities
in another ploy to make money and maintain political alliances (the
synchronic element of corruption) is also nurtured by the long-lasting
94
organization of statecraft and socioeconomic exclusion (the
diachronic element of corruption).
Corruption may never have been so much in evidence in Peru
since the fall of Fujimori in 2000 as it is now with the investigation
about mishandling of water investments by the García administration.
At the same time, it doesn’t seem to matter much, given that higher
income groups benefit greatly from the export of primary
commodities to global markets hungry for Peruvian minerals
(especially in Asia). The majority of the population maintain a daily
struggle for survival and have developed significant cynicism about
national politics (largely because almost nobody is ever punished for
practicing or soliciting corrupted practices). Most of the attention
paid to corruption is driven by the initiatives of multilateral agencies
and international NGOs, which campaign to improve the business
context, preserve the flows of money and reinforce the model of
development. This anti-corruption discourse narrowly focuses on the
immediate threats to the integration of Peru into globalized markets,
but it is an effort aimed to please foreign constituencies. Corruption
is apparently a problem of the better-off, while the poor continue to
suffer hunger, inflation and violence (Torres Guzmán, 2011). For the
Peruvian society there is nothing really new in the fact that public
authorities abuse their positions for private advantage and 90% of the
population answered in a survey that do not report graft cases (The
Economist, 2013). Every government since independence has
promised the moralization of the state just to repeat the same
practices and, at best, remove corrupt ministers and civil servants.
The situation changed very little and almost all the names with some
chance of running for presidency in 2016, as well as one quarter of
the congress, were lately involved in obscure events or faced
corruption charges.
Particularly the controversies about the water sector of Lima
contain all the element of the wider debate the future of the public
sector and the extent that corruption is a problem with different
epistemological basis and conflicting repercussions. The conservative
modernization of the water utility of Lima demonstrates the perverse
synergy between diachronic and synchronic corruption. The sector
has always been a favourite locus of populism and an easy
justification of large projects (when public funds or loans are
available), which represents the diachronic pattern of corruption. But
in more recent years the water services of Lima became the locus of
massive investments and spurious transactions that were not
dissociated from other criminal activities and large-scales projects
synchronically promoted by the national government. Multiple
strategies were needed to justify and implement those projects,
including the manipulation of public involvement. Public
participation has been significantly weakened in recent years
following the World Bank protocol of ‘participation for results’.
What has happened in Peru reflects the consideration of water
corruption by agencies such as Transparency International (2008),
which highlight the negative impacts of corruption on low-income
groups and on the environment, but largely restrict is to a crisis of
governance and as a threat to private sector participation. Corruption
is not only a destructive phenomenon, but is can also be a productive
process, at least from the perspective of those in power and directly
or indirectly benefiting from corruption and those with other hidden
95
agendas. Overall, the effort to interpret and do something about
corruption is only one chapter of the much wider struggle to
democratize the state and produce a more inclusive and egalitarian
society.
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