Neoliberalism, Accountability, and Reform Failures in Emerging Markets: Eastern Europe, Russia, Argentina, and Chile in Comparative Perspective by Luigi Manzetti

Author:Luigi Manzetti [Manzetti, Luigi]
Language: eng
Format: epub
Tags: South America, Russia & the Former Soviet Union, Political Economy, Latin America, Comparative Politics, Political Science, Americas (North; Central; South; West Indies), History
ISBN: 9780271074962
Google: lr3QCgAAQBAJ
Goodreads: 8775660
Publisher: Penn State Press
Published: 2009-07-04T00:00:00+00:00

Corruption

Having successfully muted opposition in Congress, the Supreme Court, and oversight institutions, by the end of 1992 Menem had created a system that offered him virtual impunity since all institutions entrusted with the enforcement of horizontal accountability had ceased to operate effectively. It is no coincidence that this lack of accountability corresponded with a mounting number of alleged corruption scandals involving ministers and close presidential aides and friends. Indeed, although government corruption has always been an issue in Argentina, by most accounts it reached record levels during Menem’s tenure. According to Cerruti and Ciancaglini (1992, 28–29), what struck foreign diplomats at the time was not so much corruption but the large amounts of bribes demanded and the high number of government officials involved. Such scandals were revealed by the only institution still escaping Menem’s grip: Argentina’s independent press.

In 1991 Horacio Verbitsky, Argentina’s best-known investigative journalist, published what became the best seller of all times, “Robo para la Corona” (I steal for the crown), in which he painstakingly described Menem’s corruption strategy as well as the deals behind it. Among other things, Verbitsky (1991) detailed how economic deregulation, as well as the privatization of Aerolíneas Argentinas, the telephone monopoly ENTel, the steelmaker Somisa, the federal highways, and the petrochemical company Petroquímica de Bahía Blanca, were rigged to obtain bribes on the order of an alleged $150 million.28 At the center of many scandals were consortia led by foreign companies in association with local investors.

Despite the clamor that these disclosures provoked in Argentina, neither judges nor state prosecutors bothered to investigate the facts. Instead, the Menem administration launched a major campaign to discredit its critics. However, a major blow to the government campaign came from within. In August 1995 economy minister Domingo Cavallo publicly alleged that market reforms were put to corrupt use. Cavallo accused several of his fellow ministers, as well as many federal legislators, of rigging the privatization of the post office to favor what he labeled as a mafialike cartel owned by Alfredo Yabran, an Argentine businessman and a personal friend of the president (Llanos 2002). As a result, Menem forced Cavallo to resign. However, his accusations could not be dismissed as easily, and eventually Yabran had to withdraw from the public tender (Cherashny 1997).

Allegations of serious irregularities continued to surround even the last large privatization affecting the national airports in 1998 (Llanos 2002). The World Bank, which had initially advised the Argentine government on this matter, suddenly pulled out due to the lack of transparency that characterized the whole process.29 Coincidentally, the most controversial privatizations ended by providing mediocre services for telephones and water supply at prices well above international levels. In several cases privatized companies failed to live up to their contractual obligations on investments and service provision, and a few ran into serious financial problems. By the end of 2001 Aerolíneas Argentinas was bankrupt, forcing the government to find another private investor to rescue it. Moreover, the consortia handling the post office (Macri Group) and the

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