Argentina Starts Cutting Away Its Legacy of Corruption

Mexico is one model for Latin America of how to secure access to the US market and attract foreign investment. Argentina exemplifies the region's battle with corruption

AS corruption in the Americas claims a prominent spot on the agenda of the Miami Summit this week, Argentina is hesitantly beginning to change a culture in which corruption is woven into daily life.

Through a blend of subtle and bold acts from the boardroom to the courtroom, corruption has ever so slowly been declining over the past four years in this Latin nation. Analysts say the shift is part of a general move away from corruption in Latin America as a whole, as government officials restore democracy and open up their economies.

``It's become more difficult to hide corruption, with articles [in] the press and people talking about it,'' says Manuel Mora y Araufo, a Buenos Aires political analyst. ``And with deregulation ... the markets are more free and less opportunities appear.''

In Argentina, the shift away from corruption started in the business world in about 1990 when President Carlos Saul Menem began opening the economy and privatizing state-owned industries. ``The rules have changed, and people know they have to compete and take care with productivity.... Those who don't are going bankrupt,'' says Pablo Vergara del Carril, a Buenos Aires attorney.

With a closed economy and an endless web of regulations, import barriers, and controls, the nation provided enormous opportunity for kickbacks and bribes. Government-run entities with huge budgets and enormous purchasing power had cozy business relations with some of Argentina's largest companies. The hyperinflation of the 1980s only contributed to dishonest business practices, as inflated sales prices and contracts were easily hidden in the rapid price hikes.

Now the more-transparent playing rules brought about by privatizing dozens of state-owned businesses have squeezed Argentina's largest firms the hardest. ``For 40 years, they lived under the umbrella of the state. Now they have to start competing with foreign companies and products,'' Mr. Vergara says.

But the business world isn't the only arena with changing attitudes. Polls show corruption is a new issue for the public, which is growing impatient with politicians' behavior. ``There's still the focus on the necessity of economic security, but there's an emergence of the citizen and a reclaiming of ethics,'' says Graciela Romer, head of Graciela Romer and Associados, a polling firm.

Carlos Alvarez, the Frente Grande candidate who will likely run against President Menem in May's election, successfully used the issue of corruption to rally support during April elections for the Constitutional Assembly.

As a result of probes by Frente Grande politicians, Argentines have seen many public scandals this year. Analysts say the ousting of several officials wouldn't have happened years ago.

In October, the Buenos Aires mayor shut down the city office that conducts municipal inspections. Charges had been lodged against up to 70 percent of the 1,000 inspectors, who had 70,000 applications on the back burner, many to extort bribes. ``They ask you to pay them $3,000 rather than the $10,000 needed to change the supposedly illegal ceiling tiles,'' says Jose Fernandez, development vice president at McDonald's Restaurants de Argentina SA.

Despite the gains, analysts agree more needs to be done. Citizens think nothing of bribing police to avoid a ticket or paying an attendant to get a better movie seat. Small-store owners pay off municipal inspectors rather than incur fines for violations.

At higher levels, congressmen still accept payments of hundreds of thousands of dollars for approving legislation. The justice system is corrupt, and the public needs more confidence in the police, who should be paid more and get better professional training to reduce bribery, critics say.

``In some areas, Argentina has improved, but not ... the justice system, the police, or Congress,'' Mr. Mora y Araujo says. ``But as the political costs get higher, corruption will become an election issue.''

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