Dangerous Liaisons

Organized Crime and Political Finance in Latin America and Beyond

Kevin Casas-Zamora

• Publisher: Brookings Institution Press
• Year: 2013
• ISBN:
  9780815725305
• Topic: Política y relaciones internacionales
• Subtopic: Política mundial

The relationship between criminal syndicates and politicians has a long history, including episodes even from the earliest years of America's colonies. But while organized crime may not get the headlines it once did in North America, the resurgence of such criminal activity in Latin America, and in some European nations, has grabbed the public's attention.

In Dangerous Liaisons noted scholars describe and analyze the role of organized crime in the financing of politics in selected democracies in Latin America (Argentina, Brazil, Colombia, Costa Rica, and Mexico) and in Europe (Bulgaria and Italy). The book seeks to unravel the myths that have developed around crime in these locales, while providing facts and informing the debate on how organized crime corrupts democratic institutions, especially in relation to the funding of political parties and their activities.

Among the subjects studied in detail are the role of organized crime in political finance through the lens of Argentina's presidential campaigns of 1999 and 2007; Brazil's elected officeholders and their role in corruption; the weakness of Colombia's democracy; the growing role of money in Costa Rica's politics; the destructive effects of drug money on Mexican institutions; the link between organized crime—narrowly and broadly understood—and political financing in Bulgaria; and crime and political finance in Italy.

The work of the scholars corrects what volume editor Kevin Casas-Zamora calls "a glaring gap in the literature on the role of organized crime in the corruption of democratic institutions." That is, the funding of political parties and their activities—which in these cases are mostly election campaigns. The chapters not only present the evidence but also can be regarded as a call to action.

Contributors include Leonardo Curzio (CISAN/UNAM), Donatella della Porta (European University Institute), Delia Ferreira Rubio (a member of the international board of directors of Transparency International), Mauricio Rubio (a researcher at the External University of Colombia), Daniel Smilov (Center for Liberal Strategies, Sofia), Bruno Wilhelm Speck (University of Campinas), and Alberto Vannucci (University of Pisa).

1	KEVIN CASAS-ZAMORA
	On Organized Crime and Political Finance: Why Does the Connection Matter?

The relationship between criminal syndicates and politicians has been around for a long time and has been the subject of endless fascination. The presence of organized crime in the United States, for example, can be traced back to the Puritans. As early as the 1680s, records from the Massachusetts Bay Colony mention organized groups participating in prostitution and selling stolen goods.¹ These groups were as much a part of the landscape as local elections (which were common in some British colonies, such as Virginia, since the early seventeenth century). Peter Lupsha, a scholar of organized crime, writes that before the American Revolution, “well-financed and organized criminal enterprises, using corporate buffers, bribery, political payoffs and corruption, quite similar as a process to modern organized crime, operated in the major port cities of the colonies.”² He describes an organization led by a father and a son who owned fleets of merchant ships and who controlled the waterfront in colonial Boston: “Under this commercial cover, they were among the premiere contraband smugglers in the colonies.”

The family operation so described was that of Thomas Hancock and his son John Hancock, the same John Hancock who would go on to sign the Declaration of Independence. The Hancocks understood well the need to make powerful political connections that could help shield them from the consequences of their illegal activities. Indeed, in ways that resemble those of a modern-day drug lord in a Latin American slum, they made themselves popular in Boston “through the selective use of bribery and political and charitable contributions.” Lupsha adds, “When the [British] crown finally indicted [them]…for smuggling over a ton of French wines valued at over 300,000 British pounds, the letters and testimonials of support from Boston's business, religious, and local political community were such that the British prosecutor was advised to drop the charges for fear of open riot and rebellion on the Hancocks’ behalf.” That's political protection of criminal activities at its best.

These are merely early episodes in a long history of political involvement by the underworld in the United States. These came to include the shenanigans of Tammany Hall's party machine, the political sheltering of alcohol smuggling and bootlegging during Prohibition, and the financial contributions by diverse crime syndicates to later campaigns, estimated by Alexander Heard to have been about 15 percent of total election expenditures at the state and local levels in 1960s America.³

Organized Crime and Latin American Politics

If the issue has become less prominent in the United States since then, the same cannot be said for Latin America. In the latter, the confluence of a vigorous, regionwide democratization process with the noticeable expansion of organized crime—especially drug trafficking—has attracted the attention of political reformers. Indeed, over the past two decades, Latin American countries have enacted myriad reforms to regulate the role of money in political campaigns.⁴ While the traits and results of these reforms have been heterogeneous, the reasons put forward to justify the regulation of political finance activities have been remarkably homogeneous. The risk that money from organized crime, and drug trafficking in particular, poses to the integrity of political parties and electoral processes has been cited in country after country.

This is a collective response not to an abstract danger but to one repeatedly proven real. There is evidence that criminal syndicates began pouring money into campaign coffers in Latin America a long time ago. As this volume shows, even the highly regarded Costa Rican democracy exhibits very troubling examples of this perverse relationship, dating back to the arrival in the country in the early 1970s of U.S. financier Robert Lee Vesco, a master swindler and fugitive who, according to the U.S. Drug Enforcement Agency, was involved in heroin smuggling.⁵

By the 1980s the example of Costa Rican politicians cozying up to Vesco was hardly exceptional. The campaigns of the Bolivian president Jaime Paz Zamora in the 1980s was tainted by accusations of links to drug traffickers, as was the 1994 campaign of Panama's president Ernesto Pérez Balladares.⁶ And then there were the more serious cases of Colombia and Mexico, where the role of drug barons in underwriting campaigns has been an open secret since the 1970s. In Colombia, in particular, the election of the drug lord Pablo Escobar as congressman in 1982 was a sobering as well as farcical moment.⁷ The day of reckoning, however, would come later, with the emergence of tapes showing that the campaign of President Ernesto Samper had sought and received several million dollars from the drug cartels in the run-up to the 1994 election. This revelation, the mother of all drug-trafficking-cum-campaign-finance scandals in Latin America, not only doomed Samper's administration but also rattled Colombia's otherwise solid democracy.⁸

Since then, the problem has not subsided. In fact, there are many reasons to think that it has grown worse in some countries. The situation in Mexico, now in the middle of a drug-trafficking maelstrom, is an obvious concern. One example should suffice to convey the gravity of the situation. In early February 2010 the ruling Partido de Acción Nacional (PAN) decided to suspend all open primaries in the border state of Tamaulipas, due to the systematic risk of infiltration into the process by criminal rings. The PAN's national chairman at the time, César Nava, bluntly said, “In the case of Tamaulipas everybody knows the possible influence of crime in candidate selection. Hence we won't leave any room for that to happen.”⁹ Open primaries are a luxury that Mexico's democracy seems unable to afford.

The case of Tamaulipas illustrates the very real dilemmas that beset democratic systems in Latin America in trying to coexist with a huge illicit industry that requires political protection as humans require oxygen. While not unique to Latin America, these challenges manifest themselves in the region with uncommon intensity. Notwithstanding considerable efforts to eradicate illicit crops and to interdict drugs, Latin America continues to be the world's largest cocaine producer and plays a growing role in the production of synthetic drugs and opiates. Whether as producers of illicit crops, locations for the transshipment of narcotics, entry points to key markets, money-laundering locales, or large consumer markets, nearly all countries in the region take part in a drug trade that involves tens of billions of dollars a year. These money flows—and the sophistication of the criminal networks that sustain them—feed many other illicit activities—and thus have transformed the region's political and security landscape.

The funding of parties and candidates is merely one of the many fronts on which the battle between organized crime and democratic institutions is being played out, but it is an important one. Investing in politics is a natural step for an industry that, to thrive, requires weak law enforcement and a measure of control over crucial public institutions, such as customs. Helping to elect friends who can open doors and peddle influence through the state apparatus is often more efficient than other methods, such as bribery, blackmail, and threats of violence. Even for drug traffickers, the old rule applies: violence is not a sign of strength but of weakness. Better the softer approach.

Beyond the immense amount of funds available to drug traffickers, several political factors add to the vulnerability of Latin American democracies to the penetration of organized crime in campaign finance. Four such factors deserve mention: competitive elections, weak enforcement of campaign finance rules, political decentralization, and feeble political parties.

Competitive Elections

In most Latin American countries, elections are more competitive than ever. In forty-three presidential elections held in eighteen Latin American countries between 2000 and 2010, opposition candidates prevailed 53 percent of the time. Moreover, electoral volatility in the region is very high, comparatively speaking—and indeed reaches astonishing levels in countries such as Guatemala and Peru.¹⁰ Competitive elections and viable opposition parties may enhance political transparency, but they also tend to raise the cost of politics.

While reliable information on the cost of campaigns is notoriously difficult to come by, available data paint a worrying picture. In the case of Mexico in 2000 (according to data from the Federal Institute of Elections), paid advertising on television by the three main presidential candidates amounted to $70 million.¹¹ A similar estimate for the 2006 election puts the figure well above $100 million.¹² One should bear in mind that this number does not include all the other expenses inherent in a campaign, notably organizational outlays, which tend to consume the lion's share of campaign budgets in Latin America.¹³

Nor does it include the cost of elections at the subnational level, which is considerable in large federal countries such as Mexico, Argentina, and Brazil. In Brazil a rough estimation of the cost of the 1989 general election put it at about $2 billion. In 2006 it was $2.5 billion, according to Brazilian expert Bruno Speck, author of the country's case study in this volume (see chapter 3).¹⁴ These sums are often higher for smaller countries, proportionally speaking. The current president of Panama, Ricardo Martinelli, a wealthy businessman, spent $19 million in his campaign, a remarkable figure in a country with barely 2 million registered voters.¹⁵ In short, competitive elections are a wonderful thing for democracy, but they also offer irresistible opportunities for crime syndicates to make a political investment.

Weak Enforcement of Campaign Finance Rules

While Latin American countries have made significant strides toward regulating campaign finance, the enforcement of these rules continues to be extremely weak. Legal provisions are rife in the region. Every country has either banned certain kinds of political funding or introduced contribution limits. Likewise, in nearly every Latin American country, political parties must submit regular financial reports to the electoral authorities, an obligation that also covers individual candidates in several countries (Brazil, Chile, Colombia, Panama, Uruguay, and Venezuela).

Moreover, fines (in all countries except three) and penal sanctions (in seven of eighteen countries) have been introduced to back up existing political finance controls. Yet more often than not, this comprehensive legal apparatus means little in practice. The region is home to many examples of poorly designed political finance reforms and electoral authorities deprived of resources to enforce the law. As detailed by the chapter on Argentina in this book (see chapter 2), the comprehensive controls introduced by this South American country in 2002 lost all credibility when ten days before the 2003 election the leading candidate and eventual winner reported, without any adverse consequence, that his campaign expenses amounted to one dollar.¹⁶

Similarly, the experience of the Central American countries shows that despite numerous cases of blatant violations of political finance laws in the recent past, not a single criminal or electoral sanction has ever been meted out.¹⁷ Mexico stands out as the only case in the region in which a powerful electoral authority has made a genuine effort to enforce campaign finance laws, in some cases with extraordinary severity. The weak enforcement of campaign finance controls in Latin America is old news for everyone, including crime syndicates.

Political Decentralization

Regardless of its merits, the regionwide trend toward political decentralization may be facilitating the penetration of organized crime, a point that the case studies in this volume convey repeatedly. On the one hand, decentralization processes open up new arenas of electoral competition that add to the cost of politics. Very often, these new layers of competition are outside the scope of the already lax campaign finance controls that operate at the national level.

On the other hand, the devolution of significant powers, even police powers, to local authorities creates an obvious incentive for the intervention of organized crime. Even in small countries, co-opting national institutions—through campaign contributions, bribes, or the threat of violence—is a much more difficult, expensive, and conspicuous option for drug traffickers than securing the cooperation of local authorities. Besides, the latter are often the ones with the power to disturb or shield criminal activities in a particular locale. The experience of Colombia, where vigorous decentralization has taken place since the 1980s, is particularly relevant in this regard.¹⁸

Weak Party Systems

The weakness of parties and party systems throughout the region also has troubling financial implications. The dearth of fee-paying party members and the modesty of most public funding systems in Latin America leave parties and their candidates vulnerable in two ways: they become dependent on private contributors and open to power grabbing by political outsiders, who may be supported by little more than a well-funded electoral machine. The cases of Panama's president Martinelli, Colombia's Alvaro Uribe, and Ecuador's Rafael Correa, among many others, offer reminders of this shortcoming. The deficiency of parties points up a glaring risk: in many Latin American countries criminals don't need to buy off a national party structure in order to have a fighting chance at electoral success. All they need to do is bankroll an electoral machine, which can be surprisingly flimsy.

Why It Matters

Thus when it comes to investing in politics, organized crime has it relatively easy in Latin America. Does it matter? Yes, it matters a lot. The capture of parties and elected officials by moneyed interests is bad news for democracy in the best of cases. At a minimum, it compromises the premise of political equality that supports the whole edifice of democracy, reflected in the principle of one person, one vote, and stunts the ability of parties and leaders to channel their efforts toward meeting broader social demands. Such a loss of political autonomy is serious if it occurs vis-à-vis legitimate interests, business or otherwise. It is, however, devastating when it involves organized crime.

The encroachment on the autonomy of elected leaders by the financial participation of organized crime in their campaigns has peculiar traits. Insofar as they come from a donor with an uncommon ability to exert coercion, campaign contributions from organized crime are far more than a mere bid to buy influence with policymakers. The normal codes of etiquette and uncertainty that govern interactions between private donors and politicians, whereby quid pro quos are seldom articulated explicitly and elected politicians always retain the option of not fulfilling the donor's expectations, do not apply in the case of drug traffickers. In the classic formulation that became Pablo Escobar's trademark, plata o plomo (buck or bullet) are often the only choices public officials face. Given these options, once recruited, any politician finds it is exceptionally difficult to escape this dynamic. If he tries to do so, plomo (or something subtler) may come his way. Indeed, once a politician receives drug-related contributions, even if he does so unknowingly, this may be used to blackmail him once he is elected.

This is no Hollywood script. It is exactly what José Castrillón Henao, a Cali cartel associate who contributed generously to the campaign of President Pérez Balladares in Panama, attempted to do when arrested on drug-trafficking charges in 1996.¹⁹ He failed to secure impunity for himself in this case, but others may have succeeded in simil...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Acknowledgments
• 1 - On Organized Crime and Political Finance: Why does the Connection Matter?
• 2 - Argentina: Two Cases
• 3 - Brazil: Crime Meets Politics
• 4 - Colombia: Coexistence, Legal Confrontation, and War with Illegal Armed Groups
• 5 - Costa Rica: Four Decades of Campaign Finance Scandals
• 6 - Mexico: Organized Crime and Elections
• 7 - Bulgaria: Perception and Reality
• 8 - Italy: The Godfather's Party
• Contributors
• Index
• Back Cover