In Paraguay, corruption still king

Every time he goes to a wedding reception, Enrique Biedermann collects a dollar from each of the others at his table and gives them to the waiter at the beginning of the night.

The money doesn't get them more food or drink. It is simply the Paraguayan way of ensuring that service is fast and efficient. In some small way, Mr. Biedermann sheepishly admits, it is encouraging corruption. But he says there is no other way.

"The logical thing would be to pay the waiter afterwards, if he serves us well," says the head of Biedermann Publicity, one of Paraguay's big publicity firms. "But it is the only way to get good service. It is our custom. Here in Paraguay we are all corrupt to one degree or another."

Biedermann's assessment was confirmed last month with the annual report from Transparency International (www.transparency.org), a Berlin-based watchdog that ranks more than 100 countries "on the degree to which corruption is perceived to exist among public officials and politicians." Paraguay was named the most corrupt country in Latin America and tied for third most corrupt country in the world.

"In Paraguay, corruption remains systematic," the annual report said in giving Paraguay a score of 1.7 out of 10, worse than all but Nigeria and Bangladesh. (Finland received the highest score, with 9.5. The United States was 16th with 7.7.)

A nation of 6 million people stuck in the heart of South America, Paraguay established its culture of corruption during the dictatorship of Alfredo Stroessner, the military strongman who seized power in 1954. Back then, power was consolidated in few hands. To win government contracts, those hands often had to be greased.

But even though Mr. Stroessner was toppled by a coup in 1989, "the long tradition of corrupt administration is still alive and well," says Transparency International's Jose Antonio Bergues. Mr. Bergues says that with the spread of democracy in recent years, corruption has become even more widespread as more people have access to power and, therefore, bribes.

Democratic stability has been hard coming since the fall of the Stroessner regime. Yesterday, at least 60 people were injured when some 5,000 supporters of exiled former Army chief Lino Oviedo took to the streets, calling for the resignation of President Luis Gonzalez Macchi. Mr. Oviedo, who is in exile for allegedly masterminding several failed coups, blames the president for Paraguay's economic woes.

But while Paraguayans will take action over politics, they are not as conscientious about corruption. Half the country's retailers do not pay value added tax on the goods they sell and the government only collects around 35 percent of the taxes it is owed, according to experts. Of those that do file returns, 93 percent cheat in some way, according to one recent study.

The government, prompted by local groups and international institutions such as the World Bank, last year charged a joint parliamentary-civilian commission with changing the culture of graft. Focusing on customs, public-works contracts, and the judiciary – the three main areas where corruption is worst – the commission hopes to identify more offenders and more forcefully punish them.

"People feel that those involved with corruption are not punished," says Senator Raul Ayala, one of the commission's 16 members. "If the guilty are punished there will be less corruption."

Others, however, want more immediate action. Following Transparency's report, a group of civic and business leaders called for a day of protest they dubbed the "national day of shame." Few people took part, however.

Some used the Transparency report to show that the champions of graft can still joke about their dubious distinction.

"We finished in third [from the] bottom but it had been worse," jokes Manuel Bogado, the director of an Asuncion consulting firm. "The year before we were second bottom. We bribed them to move us up a place."