Control Risks

Stuck in the bottleneck — corruption in Latin American ports

By Thomaz Favaro and Niels Lindholm

Latin American ports have received their fair share of bad press in recent years. In November, the Mexican army took over security operations at the port city of Lázaro Cárdenas as part of continuing operations to fight the Knights Templar cartel. The local port has long been a hotbed for the group’s illegal trade and extortion rackets and will be a critical test case for the Mexican government in its fight against the infiltration of organised crime among weak local and state authorities.

While infiltration by drug-trafficking groups represents an exceptional case rather than the rule, it is common knowledge that corruption in ports is a common threat for companies operating across Latin America. In recent years, a range of corrupt schemes — from small bribes to tax evasion and bid rigging — have been uncovered throughout the region by local law enforcement investigations or during occasional government crackdowns against corrupt port officials. In June, customs officials at La Guaira port, Caracas region, Venezuela, were taken into custody for crimes of extortion against companies in the maritime business. In Brazil, a federal police investigation targeted port officials at four terminals (Rio de Janeiro, Itaguaí, Vitória and Santos) and found evidence of companies paying bribes to tax auditors and customs brokers in order to facilitate the entry of goods into the country. A November 2012 investigation in Colombia at the Barranquilla port also targeted local national police officers under similar accusations. Even the expansion of the Panama Canal, one of the world’s largest infrastructure projects, was tainted by allegations of bid rigging: in 2010 a local subsidiary of a US-based engineering firm was found guilty of conspiring to make payments to Panamanian government officials to secure contracts. Two executives were handed prison sentences…

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