No more Ms. Clean.

Photographer: Morten Andersen/Bloomberg

Latin America Will Tackle Corruption Later

Mac Margolis writes about Latin America for Bloomberg View. He was a reporter for Newsweek and is the author of “The Last New World: The Conquest of the Amazon Frontier.”
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When Latin American heads of state sit down in Panama City starting Friday for the 7th Summit of the Americas, one empty chair will stand out. Officially, Chilean President  Michelle Bachelet will stay home to oversee the reconstruction of stretches of northern Chile devastated by torrential rains and flash floods.

That is not the only emergency on Bachelet's mind, however. For the past month, a multimillion dollar corruption scandal has engulfed business tycoons, some of Bachelet's political allies and her own son, who is under investigation for taking a questionable $10 million loan. The case has dominated the news cycle and gutted Bachelet's stellar approval ratings. At a press conference Wednesday, Bachelet felt obliged to tell foreign correspondents that she had "no intentions of resigning."

So if the region's model country, a paladin of probity as well as sound economic management, has fallen into disrepute, what to say about the rest of the pack?

Earlier this week, a stealth protestor dropped a handful of rodents on the floor of a congressional committee room in Brasilia where lawmakers were grilling a ruling party apparatchik accused of raiding the state oil company for political campaign funds. The symbolism was not lost on the Brazilians, who have seen Petrobras, their biggest brand, consumed by varmints in suits.

It's much the same across Latin America, where the highest authorities have helped themselves at the public trough. "In almost every Latin country these days you find a grand scandal," Alejandro Salas, Transparency International director for the Americas, told me.

Corruption may well be the invisible elephant in the room in Panama City. Start with the hosts. In January, former Panamanian president Ricardo Martinelli boarded a plane for Miami, leaving a vapor trail of scandal and no date of return. Several of Martinelli's former aides and allies are answering to charges of taking public money, and his former chief Supreme Court justice was sentenced to five years in jail. His successor and former vice president, Juan Carlos Varela, who often quarreled with Martinelli, has refashioned himself as Panama's unlikely Mr. Clean.

But don't bet on corruption coming up much in Panama City. One reason for the likely silence on corruption is esprit de corps: With the rot spread ecumenically across the hemisphere, leaders aren't eager to call out their neighbors, for fear of drawing scrutiny. Another is that kickbacks and payola, as bad they may be, take a back seat to the economic slump that is grinding down growth and presidential approval ratings. Venezuela's Maduro is polling 22 percent, and Brazilian President Dilma Rousseff, 13 percent.

They ignore the muck at their own peril. In flusher days, Latin Americans have been willing to look the other way when official fingers strayed, but no longer. Recession, inflation, political polarization and paralysis in the executive branch and now the Petrobras scandal sent more than a million Brazilians to the streets against Rousseff's government last month, and may do so again this Sunday.  Job losses, double-digit inflation and the byzantine case of the death of top prosecutor Alberto Nisman have touched off an explosion of pot banging across Argentina.

On Thursday, protestors marched in the Dominican Republic against a ruling by a Supreme Court judge who threw out a case against a federal lawmaker from his own political party who had squirreled away a fortune on a public servant's paycheck.

Not long ago, Latin Americans might never have been the wiser. Thanks to a new generation of diligent prosecutors, financial sleuths, and especially a quarrelsome press, that has changed.  "Our societies may be no more corrupt than they were 20 or 30 years ago. The difference is that people know more thanks to freedom of information laws and independent media," said Transparency International's Salas.

It's little wonder that journalists are under assault in Argentina, Ecuador, Venezuela, Nicaragua and even mostly democratic Mexico. But unfortunately, that, too, will be a story for another summit.

(Corrects name of Panama's president in sixth paragraph of article published April 10.)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Mac Margolis at mmargolis14@bloomberg.net

To contact the editor on this story:
James Gibney at jgibney5@bloomberg.net