Corruption and Investments
Under its new government headed by Iván Duque, Colombia faces new reforms aimed at improving the economic climate for foreign investors. In his speech preceding the presidential elections, Duque emphasized the fight against corruption to be one of his government`s primary goals.
The reforms were spearheaded by societal developments and changes in economic policy. Due to the fight against systemic corruption in other LATAM countries such as Brazil („Lava Jato“), Peru and Guatemala the intolerance of Colombia’s civil society with view to corrupt public officials and politicians has increased dramatically. The rise of social media has created more attention and transparency regarding violations which fueled civil society claims for more severe punishments for those responsible for corruption.
The Colombian government is also highly interested in fighting corruption, both in order to attract foreign investors and to comply with its responsibilities arising from its OECD membership. Consequently, the respective regulatory authorities received technological support to help them fight corruption effectively.
One of the first regulatory steps is the new anti-corruption law. It`s aim is to increase transparency in order to prevent and detect corruption while imposing higher punishments . Specifically, the new law includes regulations on the following aspects:
- Whistleblowing: citizens, judges and journalists can publish previously hidden information on corruption cases
- Speed and Penalties: the government wants to increase the speed of prosecution while increasing the penalties
Secondly, on August 26th a referendum will be held on the Anti-Corruption-Consultation which has been accepted by Congress already. The referendum includes the following regulations:
- Salaries and Taxes: congressmen will receive lower salaries and have to disclose their income tax reports
- Penalties: higher penalties in case of conviction
- Public Procurement: reform of the bidding process for public contracts
- Civil society: participation of civil society in more transparent budget debates
However, whether these reforms – if they do receive the approval of the population – will be successful does not only depend on the quality of the regulations. A sustainable implementation is only possible if the judiciary gains independence and is provided with the necessary resources by the government to fulfill its duties. Particularly on the local level a depoliticization of the judicial process is the precondition for both an effective fight against corruption as well as politics in regaining the trust of their voters.
For international businesses and investors the new regulations entail the chance of an improved business climate while presenting a new risk: that of non-compliance. In order to avoid public audits and potentially high penalties it is crucial for companies to pay even more attention to due diligence and compliance issues.