CORRUPTION in BRAZIL X CORRUPTION in the USA!

After reading an INTERESTING POST ( titled C for corruption ) on fellow German expat blogger in Sao Paulo, Neven, from "Brazil Country of the Present?", I decided to comment and my comment turned out a little long and made me think about the main differences between corruption in the US versus corruption in Brazil.

Below is the post text, and my comment:

Saturday, May 28, 2011

C is for Corruption



Let us hope he showered

 Transparency International publishes an annual corruption perceptions index, where "the degree to which corruption is perceived to exist among public officials and politicians" (TI.org) is measured. A non-corrupt country gets a 10, a corrupt country gets 1. In 2010, ranked first in the list is Denmark with a 9.3. Last on the list is Somalia with 1.1. Brazil is 69th, between Romania and Bulgaria, at a 3.7... improved from 4.0 since 2002.

A lot has changed, especially in the private sector, with more multinationals coming into the country, bringing higher compliance standards in and with Brazilian companies also adapting, often because of compliance codes, but also because of better fiscal controls, such as with the electronic centralized invoicing system nfe: nota fiscal eletronica.

In politics, corruption still is a major issue, such in the Escândalo do Mensalão no Distrito Federal, where the then governor of Brasília José Roberto Arruda was accused of (and subsequently arrested for) siphoning off on significant sums of governmental funds to companies and political companions. What made this case spectacular is that Arruda filmed several of these money hand-overs (as depicted above) - but it is not singular.

But also in the private sector, corruption is still a problem. Having been in Brazil for a few years now and never having lost contact between the early 90s and now, when I was out of the country, I have several accounts of corruption cases which have not made it into the media (yet), which I will post in the next few weeks.

But let us start with a juicy one - to protect those involved, I have anonymized each case:

The Paper Company

A major paper company wanted to install a new factory in one of the poorest states in the Northeast of Brazil. Because the company wanted to have the local political buy-in, they decided to meet with the governor to discuss the licensing and subsequent construction - for this, the president of the company flew in. In the first meeting, the governor clearly stated that no license would be emited unless an upfront payment would be made. This upfront payment was to be a deposit into a personal account of the governor and the value was a significant 6-digit value. Infuriated, the paper company president left the governor's palace and instructed to shutdown all non-crucial activity in the state immediately. The new factory will be built a few kilometers down the road... in the state next door.

MY COMMENT:

1 comments:

Ray and Gil said...

Neven, I totally agree with you, Brazil has improved a lot regarding corruption, it still has a good way to go. I found your perception interesting, you are under the impression that more foreigner companies would bring more "strict" or "higher" standards regarding compliance, I feel the exact opposite. I have worked in banking and compliance with the financial services industry for 19 years now and always noticed much higher compliance standards in Brazilian companies, for the exact reason of the culture of corruption in Brazil, companies are much more regulated and have always had higher standards of compliance in general. When the events of September the 11th forced a wave of radical changes in the American financial services world, ( hence the Patriot Act ), Brazilian banks and financial services companies had absolutely nothing or very little changes to make, because they already had very tight checks and balances in place. My experience is that "corruption" is a very relative term, principally when you are talking about Brazil and the US. Many practices that are considered "corruption" in Brazil are perfectly legal and common place in the US. Lobbying for example, is practically illegal in Brazil, with very feel exceptions, but it is common place in the US. Powerful industries in the US that have money to PAY politicians to vote in favor of their businesses, do so, and it is perfectly legal. K street in Washington DC is a LOBBY firms Mecca, it is where the American Congress is defined. In Brazil, it is a scandal for a company to give money to a certain politician to "force" him to vote in favor of a certain project that benefits that company directly, in the US, it is perfectly legal, it still doesn't mean it is moral or even ethical, but it is done all the time and it is not considered corruption. Long story short, in the US, if something is illegal, they pass a law to make it legal, end of story, no longer considered corruption. American politicians still approve huge salary increases for themselves, they still have a shamefully fancy health care benefits, and so forth and so on...we could frankly write a book about it. The good news is that Brazil is improving, most people get mad when they see political corruption scandals on TV, I get glad, because it means they are getting caught. When you don't hear anything on the media, it only means they are getting away with it. ;) Ray

June 8, 2011 10:35 PM

Since we first moved to the US I would be appalled and at times amazed at what companies get away with here. Companies manipulate life as they please, money is KING, depressing, but true.

Drug companies, credit card companies, oil companies are banks are probably the worse, hands down.
Long story short! Do you think Americans would really vote against "Universal Health Care" if they ever really understood what it is all about? I don't think so.
Ok, who am I kidding! I could never make a long story short, so below is my opinion on the matter :)

If we had an efficient Universal Health Care system in the United States, the people would benefit ( NO, your taxes wouldn't go up, and even if they did, it would cost you less than what you already pay for health insurance ), but the real and ONLY ones to loose would be the Health Insurance Companies, many corporations that owe large Hospitals, doctors who make 600K a year, ( God forbid they had to survive on mere 300K ).

The list goes on and on, Food companies that produce food here with unhealthy and sometimes carcinogenic ingredients banned in Europe decades ago, the same with Drug companies.

The way ( Republicans ) companies have demonized Unions and managed to move factories overseas for no other reason than PURE GREED is just horrible and created ghost depressing towns all around this country, and the worse is that they managed to brain wash an entire portion of the population ( The REPUBLICANS for example ), that the unions are really bad and that is why all the factories left, not true, GREED, just GREED.

Come on! Have you ever heard of Germany? Yes, I am talking to you if you are a MEAN EVIL REPUBLICAN or a TEA PARTY sympathiser and think the factories are leaving the US because of unions.

Germany has tougher regulations and stronger unions than the US ever had, and they kept all their factories and their jobs, thank you very much, plus to add insult to injury, they have Universal Health Care that works.

OK, I know, I love to blame the EVIL REPUBLICANS for everything that is wrong around here. I know, they freed the slaves, but that benefit was way too long ago and they have done far more damage after that...so, back to my original point.

I think while in Brazil corruption is more prevalent in the PUBLIC sector, ( in my opinion ), in the US, corruption is way more prevalent in the PRIVATE sector.

Corporations here get away with murder! It's a travesty, it's awful and depressing.

Example NUMBER 1:

President Obama's administration is trying to create an agency to protect American families from abusive Credit Card and Banking Fees!

The current President is having a real hard time, first because the REPUBLICANS took over the house, and second because large Banks are doing everything they can to protect their abusive fees:

Example NUMBER 2:

Banks are fighting Obama to protect their Fees!

Before you make the wrong conclusion that I am a radical socialist liberal, please, don't even go there, keep in mind, I am not, no, really, I am not, I consider myself a social liberal and a fiscal conservative, who believes in a well managed Universal Health Care system.

I have worked for banks and financial services companies most of my life, they are an important and essential part of any healthy economy and they deserve to be very well paid and make great profits for their work.
My criticism is clearly against abusive, predatory practices that unfortunately are more common than you could imagine.

I truly think corruption exists in both the US and Brazil, more or less here or there, who knows, you also have to consider that many things that are totally immoral, unfair and indecent are simply the law here and are considered illegal in Brazil, so I honestly think there is way more "wrong" stuff happening in the US than the perception sold the world over.

Brazil does have it's share of problems with corruption and according to my experience, it is much stronger among politicians than corporations.

Example in point, Lula was a middle class guy when he was elected for office, his family didn't have any money and he didn't win the lottery.

More or less about the time of his second term, I find out from reading on the news, that his SON owes PHONE COMPANY EMPIRES in 2 Brazilian states!!!!!!

How the hell does that happen? Stolen money I tell you! Maybe not stolen as opening the safe and literally carrying the CASH in bags but just to give you an example, President Lula's brother had an office where he SOLD "meetings" with his brother president!!!!
Yes, before you ask me, that IS illegal in Brazil, it is called "Trafico de influencias" or "Influence peddling", not surprisingly, INFLUENCE PEDDLING is NOT ILLEGAL in the US, it is basically called Lobbying, you pay a politician for a favor.

"INFLUENCE PEDDLING" : LEGAL IN THE UNITED STATES, ILLEGAL IN BRAZIL.

If you follow current events, you probably know by now that nothing sticks to LULA, I think all his years in PUBLIC life taught him to cover his tracks very well, or buy his way out or whatever this kind of people do to get away with things like that.

I am really not here trying to bash the US or Brazil for that matter, but just trying to share my thoughts regarding corruption and the notion of what is right and wrong in the two countries where I have spent most of my life, the one that I was born in and the one that I chose to live in.

In a perfect world, we, as a society, in the US, should find a way to NOT ALLOW the private sector to get away with murder, you know, things like getting a bail out from THE PEOPLE and then hoarding all the CASH and holding on to it and chocking the US economy, ok, you get my point.

I am really happy with the way things are going in Brazil, I truly think the country is in the right direction regarding busting THUGS like the recent "Ministro Palocci", who was just "forced" to resign when the people found out his fortune grew many times over, not compatible with his Minister's salary.

Gleisi Hoffman, the new Minister who was hired by President Dilma Rousseff has a great reputation for being honest and very efficient.
I wish Mrs. Hoffman all the best in her new leadership role.

Gleisi Hoffman just replaced the corrupted Minister Palocci

Brazil WINS, THUGS loose. :)

President of Brazil Dilma Rousseff and Minister Gleisi Hoffman

I would like to say that if a corruption scandal is being exposed either in Brazil or in the US, it is not necessary a bad thing. It is a bad thing it happened in the first place, but trust me, if you are watching it on the news from the comfort of your living room, it means THEY ( whom ever they are ) DID NOT GET AWAY WITH IT!

Dirceu and Palocci, the most recent THUGS busted in corruption scandals in Brazil and kicked out of office!

By the way, I strongly recommend the movie "TOO BIG TO FAIL", it is a great way to learn how the US sank into the biggest economic crisis of our time. It will give you a good inside view of the back room deals that took place in our country during this tough period in history.

Ray