Business, Economics and Jobs

In Colombia, unease over sleaze


BOGOTA, Colombia — When contractors tore down the only gas station in Silvania, they promised a new one would go up as soon as they finished widening the highway that connects the farm town to Bogota.

Two years later, the road project sits idle and there’s still no service station in Silvania. Motorists have to drive to a neighboring town to fill their tanks. Even worse, the town government is losing $40,000 a month in sales taxes on gasoline and diesel.

“The consequences are enormous for the whole area” said Silvania Mayor Jorge Guevara.

The highway upgrade is one of a series of major public works projects plagued by cost overruns, shoddy work and epic delays largely blamed on government corruption. Grabbing most of the headlines are backroom deals allegedly involving Bogota Mayor Samuel Moreno, his politician brother and other city officials.

One construction company owner, Miguel Nule, said he was pressured to pay 2 percent kickbacks to the city comptroller in exchange for road-building contracts. He claimed Sen. Ivan Moreno demanded 6 percent payoffs plus control over several gasoline stations owned by Nule’s company. That prompted the media to dub the lawmaker “Ivan the Terrible.”

Unfortunately, greasing the palms of politicians is widely thought to be the rule rather than the exception in Colombia. The illegal payoffs for public works contracts mean there’s less money for roads, bridges and schools in some of the neediest areas of the nation.

In the impoverished northern state of Choco, for example, the regional government signed a $73 million contract to construct a 130-kilometer road connecting jungle villages to the rest of the country. Four years later, just 11 kilometers have been built.

But the damage goes beyond unfinished or never-built projects.

“The institutional cost is also very high,” said Elisabeth Ungar, who heads the Colombia chapter of Transparency International, which monitors government corruption around the world. “People lose confidence in their politicians and institutions which is a huge, if intangible, loss.”

In October, Transparency International ranked Colombia 78th of 178 countries in the organization’s 2010 Corruption Perceptions Index, a drop of three places over 2009.

That’s about average for Latin American nations but bad news for Colombia which is trying to overcome its reputation for violence in order to attract new foreign investment.

Whereas kidnappings and car bombings used to scare away investors, these days the No. 1 concern for foreign businesses owners is corruption, according to Ungar.

Fueling the problem are campaign donations. Many businesses funnel money to political candidates as quid pro quo investments. These donors often recuperate their money and then some as winning politicians hand them lucrative contracts to build streets, sewers and hospitals.

In theory, government contracts are awarded through sealed bids. But politicians can favor well-connected companies by designing contracts with such rigid specifications that only certain firms are qualified to bid.

Then, there’s the longstanding tradition of paying “commissions” to politicians once contracts are awarded.

One businessman recalled how after winning a $500,000 contract to install refrigeration units in the town of Zipaquira, a bag man for the mayor demanded a 30 percent kickback. The businessman canceled the deal and vowed to never again work in the public sector.

The situation is worse in conflict zones where left-wing guerrillas finance their war through drug trafficking and extortion schemes. In these areas, contractors often come under pressure to pay off politicians as well as the rebels, who threaten to sabotage projects if they don’t receive their cut.

For a long time, such shady deals were viewed as a problem of the provinces but not Bogota, the nation’s capital where voters have elected a string of mayors known for honest, efficient government.

But Samuel Moreno, the current Bogota mayor, is facing accusations that his administration demanded kickbacks and favored a small group of contractors who lacked the knowhow and financial muscle to tackle major public works.

One result is that a project to rebuild the highway connecting downtown to the international airport sits semi-paralyzed, making the city’s rush hour traffic jams even worse.

Members of Moreno’s own political party were so disgusted by the sleaze that they held a news conference to denounce the mayor. Moreno — whose job-approval rating has dropped to 25 percent — and 18 other city officials are now being investigated by the Office of the Inspector General, a government watchdog agency.

“If there’s one city hall that has to lead by example it’s Bogota,” said Mauricio Cardenas, a former minister of economic development. “This is a step backward.”

President Juan Manuel Santos is promoting a new anti-corruption bill but it’s met fierce resistance in the Colombian Congress, which is widely viewed as the most crooked branch of the national government.

Lawmakers have refused to even debate the bill and have come up with some head-turning excuses. One senator claimed the president’s proposal would put so many politicians behind bars that the country would dig itself a fiscal hole building new prisons.

In Business, Economics and JobsMiscellaneousAgence France Presse.

Tagged: Colombia.