Latin America’s New Index Measures Anti-Corruption Efforts

Corruption has long afflicted Latin American countries, periodically rocking businesses, lawmakers and heads of state and undermining confidence in the region’s economies and institutions. But a new yardstick proposes to assess the problem from a different angle: Rather than identifying which countries are the biggest malefactors, it grades them on their ability to uncover, punish and deter corruption.

The new Capacity to Combat Corruption Index (CCC) was created by the Americas Society/Council of the Americas (AS/COA) and Control Risks, a global risk consultant.

The first annual edition looks at Argentina, Brazil, Chile, Colombia, Guatemala, Mexico, Peru and Venezuela. Together, these countries account for 90% of Latin America and the Caribbean’s GDP. Venezuela was deemed weakest in fighting corruption, while Chile scored highest. [See chart.]

The CCC uses 14 variables grouped into three subcategories: legal capacity; democracy and political institutions; and civil society, media and the private sector. Legal capacity variables are mostly focused on judicial and prosecutorial instruments to combat corruption, while the democracy and political institutions subcategory focuses on electoral campaigns, policymaking and overall quality of democracy.

Unveiled in June, the index underscores the intensified investor focus on corruption following recent landmark scandals, like Brazil’s Lava Jato and Guatemala’s La Línea, that have heavily impacted Latin American economies. Lava Jato involved officials from Petrobras and the use of small businesses such as car washes for money-laundering. La Línea enmeshed politicians in the administration of former President Otto Pérez Molina. As of May 2019, 11 former presidents in the region have been charged or convicted of acts of corruption.