Colombia

Colombia Corruption Report

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Snapshot

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Corruption is a serious obstacle for companies operating or planning to invest in Colombia. Corruption permeates several sectors of the Colombian economy. The same applies to government hierarchy where corruption cases in the high echelons are as big an obstacle for a transparent and efficient administration as it is for a competitive investment climate. The large networks of clientelism are particularly manifested in the public contracting sector. The Colombian Penal Code and the Anti-Corruption Act criminalizes several forms of corruption including active and passive bribery, extortion, abuse of office and the bribery of foreign officials. Gifts and facilitation payments are also prohibited under Colombian laws. Nonetheless, these practices are widespread. The government generally implemented anti-corruption laws effectively, despite some instances of official impunity being reported. 

Last updated: August 2016
GAN Integrity

Judiciary 

Businesses contend with high corruption risks when dealing with the judiciary. The functioning of the courts is undermined by corruption and extortion (FitW 2015). Irregular payments and bribes are often exchanged to obtain favorable court decisions (GCR 2015-2016). The judiciary is inefficient and businesses rate the ability of the institution to settle disputes and challenge government regulations as poor (GCR 2015-2016). Almost two-thirds of surveyed households believe the judiciary is corrupt (GCB 2013). The courts' independence is undermined by a lack of qualified personnel, absence of the institution is some of the country's territories and susceptibility to corruption among other (BTI 2016). 

On a more positive note, an OECD Investment Review: Colombia 2012 reports that in order to address the shortcomings in the dispute settlement system, the government has increased resources for municipal courts, provided training for judges and improved the performance evaluation of the court staff to overcome the challenges encountered in the dispute settlement system (OECD 2012). Colombia is a member of the International Centre for Settlement of Investment Disputes (ICSID) and has accessed the New York Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

In one corruption case, the president of the Constitutional Court, Magistrate Jorge Pretelt, was accused in 2015 for demanding a bribe of USD 200 thousand from the oil company Fidupetrol in return for a promise to revoke a USD multi-million fine (ICS 2016). The magistrate was forced to resign subsequently to the case (ICS 2016).  

Police 

Businesses may contend with moderate corruption risks when dealing with the security apparatus. Police impunity is a problem in Colombia, despite improvements recorded in investigating police abuse (HRR 2015). Businesses report that the police is moderately reliable in protecting them from crime and enforcing the law (GCR 2015-2016). 

Public Services

Public utilities carry a moderate corruption risk for business. Surveyed companies report that bribes and irregular payments are sometimes exchanged when obtaining public utilities (GCR 2015-2016). The regulatory system is described as transparent in general (ICS 2016). Starting a business requires eight procedures and takes 11 days at a cost of 7,5% of income per capita (DB 2016). Hundreds of electronic services have been integrated into the government portal of Colombia, including one-stop-shops and an e-regulations webpage.

Land Administration

The land administration carries a high corruption risk for business. Property rights are recognized in urban areas and well protected by the government, while in rural areas the protection of these rights have deteriorated due to violent conflict. In general terms, business executives rate the protection of property rights as moderate (GCR 2014-2015). Registering property in Colombia is significantly less time-consuming and less costly than the regional average; taking 16 days at a cost of 2% of the property value (DB 2016). 

Due to violent conflict – between government and paramilitary groups – and economic reasons, several families and peasants have been displaced in Colombia. Many of the lands have subsequently been illegally acquired by businessmen and guerrilla leaders with the assistance of corrupt officials working within the land distribution organization (INCODER) (Amnesty International 2014). Evidence suggest that corrupt government officials within INCODER have been corruptly allocating land between 2006 and 2011 to people pretending to be peasants (Colombia Reports, May 2013). Reportedly, little effort has been directed towards curbing corruption in the land redistribution program in Colombia (Amnesty International 2014). 

Tax Administration

The tax administration carries a moderate corruption risk for business. Bribes and irregular payments are sometimes exchanged when meeting with tax officials (GCR 2015-2016). Colombia's tax system has been criticised for its low efficiency, inequality and with high levels of tax evasion (OECD 2015). Paying taxes requires 239 hours per year at a cost of 69.7% of profits (DB 2016). Some of the major taxes are paid electronically through the online tax records

Customs Administration

The customs administration carries a moderate to high corruption risk for companies trading across the borders of Colombia. Transparency at the border is moderate, while irregular payments when importing and exporting are widespread (GETR 2014). Colombia has put in place the Single Window for Foreign Trade (in Spanish) which has brought together 19 technical control government agencies and allows for import and export licences to be issued online (OECD 2012). 

Public Procurement

The public procurement sector carries a high corruption risk for business. Bribes and irregular payments are widespread in the process of awarding contracts (GCR 2015-2016). Executives report that public funds are often diverted to companies and individuals due to corruption and perceive favoritism to be widespread among procurement officials (GCR 2015-2016). The government has established an e-procurement system

Former Senator Iván Moreno and his brother Samuel Moreno, Bogota’s former mayor have been investigated for corruption and their role in a kickback scheme in Bogota, also known as the ‘Merry Go Round’ case, through which USD 500 million were embezzled from awarding public procurement contracts to construction companies. Moreno was sentenced to 14 years in prison for extortion, influence peddling and the illegal signing of contracts (Colombia Reports, Oct. 2014). Samuel Moreno, was sentenced to 18 years in jail for favouring the Nule Construction Company in procurement processes in return for a USD 15 million bribe (Colombia Reports, Apr. 2016, Colombia Reports, Nov. 2013). The scheme also involve former House Representative German Olano, and several Bogota council members and public officials. Three directors of a Bogota construction company have been sentenced to seven and a half years in prison. 

Ex-Minister of Agriculture Andres Felipe Arias was found guilty by Colombia’s courts of the embezzlement of USD million through an agricultural subsidy program. Arias had reportedly run an opaque and illegal bidding process which allowed for siphoning public funds intended for the program (Colombia Reports, Jul. 2014). Arias was in the US seeking asylum at the time of his trial, yet, by the end of 2015, he was still awaiting the procedures of his extradition (FitW 2015). Allegedly his sentenced had been leaked two week before being made public.  If returned to Colombia, Arias could risk 33 years of prison. He has already been banned from public office for 16 years for his involvement in the case (Colombia Reports, Jul. 2014). 

Natural Resources

The natural resources sector carries a moderate to high corruption risk for companies. There have been reports of corruption in Colombia’s extractive industries; including in the granting of mining rights, monopolies on titles, and the violation of rights in mining communities (Transparency International, Mar. 2013). Furthermore, gold mining companies have allegedly bribed local officials to smooth mining title deals among other favors (Transparency International, Mar. 2013).

Colombia was accepted in 2014 as a candidate country to the Extractive Industry Transparency Initiative (EITI)

Legislation 

The government has setup a comprehensive legal anti-corruption framework and the government generally implemented the relevant laws effectively (HRR 2015). Nonetheless, there have been some reports of government officials engaging in corruption with impunity (HRR 2015). Colombia's Penal Code and the Anti-Corruption Act criminalizes abuse of office, active and passive bribery, the bribery of foreign officials, promising or offering gifts or an undue advantage, facilitation payments, extortion, trading in influence and money laundering. Bribery offences committed by public officials can carry fines and sentences that range between six and twelve years in prison, while bribery in the private sector can carry fines prison sentences ranging from four to eight years - if the offense has caused economic damages, prison terms range between six and ten years (Global Compliance News 2015). These provisions apply to the public and private sector and any person engaging in corrupt practices with a public official (Global Compliance News 2015). The bribery of foreign officials can carry fines and up to 15 years imprisonment for the offender (Global Compliance News 2015). Colombia's anti-corruption laws do not provide for corporate liability, however, companies engaging in corruption with public officers are held responsible for compensating the caused damages and companies, their parent companies and subordinates are debarred from contracting with government entities for a period of 20 years (Global Compliance News 2015). The government has also established regulations governing conflicts of interest of civil servants and the disclosure of assets, nonetheless, these are not effectively implemented (Transparency International, Mar. 2013). Public officials must file annual financial disclosure forms with tax authorities, however, this information is not made public (HRR 2014). The law stipulates for the protection of whistleblowers from the public sector, yet does not provide for the protection of whistleblowers from the private sector. 

Colombia is party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Colombia has also signed and ratified the Inter-American Convention Against Corruption and the United Nations Convention Against Corruption (UNCAC). 

Civil Society 

Freedom of speech and press are guaranteed under the constitution and the government generally respected these rights in practice (HRR 2015). Defamation is a criminal offense in Colombia and journalists commonly resort to self-censorship (FitW 2015). The media is reportedly free to criticize the government, yet, since the 1990s, several journalists have been killed for reporting on issues such as corruption (FitW 2015). In 2014, 131 threats and abuses against the press were recorded (FitW 2015). The government does not exercise any censorship on the internet (FitW 2015). The media environment in Colombia is described as 'partly free' (FotP 2015).

Colombia has longstanding civil society traditions (BTI 2016). The government has violently restricted freedoms of assembly, despite it being guaranteed by the law (FitW 2015). Colombia is considered a dangerous place for civil society, several NGO members have been kidnapped, extorted or killed by paramilitary groups (BTI 2016). For instance, land activists have been threatened by former parliamentarians to crush criticism of the latter's ill-gotten assets (FitW 2015). 

Sources 

Topics: The Americas