Both Argentina and Mexico scored 3.0 out of 10.0 on the Corruption Perception Index for 2011. Does this mean each country presents the same corruption risk? To dig behind the CPI, Miller & Chevalier and Matteson Ellis Law joined 12 Latin American law firms in a comprehensive survey of 439 executives spanning 14 countries in the Americas. Among many other things, we looked at the specific nature of corruption within each country.
The results suggest that the corruption risks in Argentina are actually quite different from those in Mexico. Respondents were asked to rank levels of corruption in different areas of government within each country. For Mexico, respondents view corruption as highly pervasive in the police (92%) and local and municipal governments (88%) and less significant in the executive branch (15%). In contrast, Argentina scores the best in local and municipal governments (4% viewed as significant) and scores the worst in the executive branch (80%) and customs (88%).
Respondents have equally poor opinions of the effectiveness of each country’s anti-corruption laws. Only 12% view Argentina’s laws as effective and only 16% view Mexico’s laws as effective. These results contrast with the relatively high opinion of the anti-corruption laws in Chile (76%) and the United States (70%).
Miller & Chevalier conducted a similar survey in 2008 (pdf here). Overall, 28% of respondents view the anti-corruption laws in the Americas as effective. Surprisingly, this is an improvement over the 2008 results, when only 18% viewed them as effective.
On compliance mechanisms, 85% of respondents say that their company’s management has taken steps to protect the organization from corruption risk, up from 77% in 2008. Predictably, respondents from multinational companies are more likely to say their employers have implemented compliance measures than respondents from local/regional companies (93% versus 75%).
The survey went even further to gauge the specific types of compliance efforts (e.g., training, facilitating payments policies, procedures for hospitality, third party controls, and pre-acquisition due diligence) that companies are making. These results can serve as helpful benchmarks for compliance personnel.
The uptick in companies taking steps to mitigate risk might be due to the number of FCPA enforcement actions and investigations involving the region since 2008. Indeed, 64% of the respondents indicate that they are somewhat or very familiar with the FCPA. Even the U.K. Bribery Act, which just went into effect last year, is on people’s minds. Forty-percent of respondents are either somewhat familiar or very familiar with the law.
For anti-corruption compliance practitioners interested in understanding risks and compliance trends in Latin America, this survey is a good place to start. It can be downloaded here.
James Tillen is Coordinator of Miller & Chevalier’s FCPA and Anti-Corruption Practice Group. Miller & Chevalier is a premium-listed law firm on ethiXbase, the world's largest database of anti-corruption legislation, gift-giving regulations, and enforcement actions.
Matteson Ellis is Principal of Matteson Ellis Law and writes the FCPAméricas Blog.