[1]Among his many accomplishments as a criminal lawyer and international human rights practitioner, Jose Carlos Ugaz Sánchez-Moreno [2] might best be known for his work as the lead special state attorney responsible for putting former President Alberto Fujimori and former head of Peru’s Intelligence Service Vladimiro Montesinos in jail for corruption. Mr. Ugaz currently practices law in Lima and sits on Transparency International’s Board of Directors. He recently spoke with FCPAméricas about corruption risks and compliance in Peru.
How do you think Peru’s history of insurgent groups like the Shining Path and leaders like Alberto Fujimori affects notions of corruption in the country today?
Our country’s history still colors the ways that many in our business community perceive corruption. To begin with, our country is still very divided. Perhaps not as much as in a country like Chile with Pinochet’s legacy. But there is still an important sector of the business community that stands in support of Fujimori and what he did. This is true, despite the fact that Fujimori is a symbol of corruption. He looted the state. He established organized crime as part of government rule. Many people were killed by the Shining Path, but the Fujimori Administration also engaged in significant human rights violations. Montesinos was the President’s personal advisor and he was also one of the main people responsible for controlling drug trafficking in the country. But for some in the business community, these issues are not as important as Fujimori’s successes in establishing a positive business environment here stopping inflation and terrorism.
After Fujimori fell, there was a big push to understand the corruption that had occurred, report it, and preserve the memory of it. By learning from the past, we help prevent the same mistakes from occurring again in the future. But some leaders of the business community, among others, stated that we should not go into the past and instead needed to look towards the future. By going into the past, they argued, it would only mobilize people in an emotional way.
For this and other reasons, appreciating the risks of corruption and embracing anti-corruption controls are not necessarily the highest priorities of the Peruvian business sector. The corruption issue is too easily associated with these former battles, which want to be forgotten. This means that, oftentimes, the easiest way of doing business is by simply paying.
Are international companies doing business in Peru following higher anti-corruption compliance standards, and is this making any impact locally?
If all the relevant international companies were following higher standards, this would certainly make a difference locally. But, to date, this is not happening. There are big companies here that continue to engage in dirty work for the large part, even though they might be subject to the FCPA. Their headquarters do not generally know what is going on here. At most, local subsidiaries are given certifications and other forms that they sign and then send back. It is as if company liaisons say, do not tell me and I will not tell New York. This is how IBM, Siemens, Wal-Mart, and others have had problems in the region.
How does Peru change this?
It is not enough for Peru to have good laws and sign up to UNCAC or the OECD. It needs to create conditions so that companies build cultures of integrity. At the end of the day, companies need to understand that the costs they pay for corrupt business are bigger than the costs they pay if they do clean business. But no one is taking the lead to stop corruption here. Enforcement is not an important part of the system yet.
The Peruvian business environment needs to shift from a culture of corruption to a culture of integrity. Decision-making needs to be more transparent. Access to information laws need to be enforced. There needs to be social reaction against crooks. Currently, impunity is the norm. People tolerate it. Two former Presidents are right now being investigated for corruption, but people seem to look the other way.
How would you characterize Peru’s own anti-corruption laws?
Peru has very good laws. The problem is the lack of enforcement. Part of the problem is that the enforcement system itself is affected by corruption. When you have judges and prosecutors taking bribes, then you have a real problem, because the institutions that should be addressing this are also corrupt.
A local organization I have headed call PROETICA, which is the local chapter of Transparency International, recently conducted a survey. Based on the results, when you consider the top five institutions in Peru considered most corrupt, three of them, the Judiciary, Police, and Attorney General’s office, are directly related to the enforcement system. There is a structural problem to this.
As a result, corrupt schemes in Peru are much more gross because of impunity. The possibility that you will be caught, or, if caught, that you will be punished, is so low that people don’t make efforts to construct complex schemes.
Is it possible for a U.S. company to operate in Peru without paying bribes?
Yes, it is possible. There are foreign and local companies that do it. And when those companies choose not to participate in a public procurement, this is a strong indication that something wrong is going on. This is because these are the type of companies that do not pay. The problem is that there are no organized efforts around compliance, and the local business associations are not taking the lead because integrity is not considered a priority in their agenda.
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