Notes on History of Corruption

Not es onHi st or y ofCor r upt i on

J u a nR o b e r t oZ a v a l a

L AC I E NCI A AT UAL CANCE

7

Notes on History of Corruption

Juan Roberto Zavala Trevi単o

Notes on History of Corruption

Juan Roberto Zavala Trevi帽o

Universidad Aut贸noma de Nuevo Le贸n

Jesús Áncer Rodríguez Rector Rogelio G. Garza Rivera Secretary General Rogelio Villarreal Elizondo Secretary of Extension and Culture Mario Cesar Salinas Carmona Secretary for Research, Innovation and Graduate Celso José Garza Acuña Publications Director Juan Roberto Zavala Treviño Coordinator of “La Ciencia a tu Alcance” Collection

Padre Mier No. 909 poniente, esquina con Vallarta Centro, Monterrey, Nuevo León, México, C. P. 64000 Tel: (5281) 8329 4111 / Fax (5281) 8329 4095 e-mail: publicaciones@uanl.mx web page: www.uanl.mx/publicaciones

Notes on History of corruption First edition, 2013 © Autonomous University of New Lion © Juan Roberto Zavala Treviño ISBN: 978-607-27-0002-4 Al rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission in writing of the copyright owner and publisher.

Printed in Monterrey, Mexico Impreso en Monterrey, México

Contents

Introduction

13

Chapter I First manifestations • Its genesis • Sumeria • Code of Hammurabi • Egypt • Corruption in China

23

Chapter II Classical antiquity • Greece • Imperial Rome

29

Chapter III Middle Ages • Eastern Roman Empire • High Middle Ages • The Crusades

35

Chapter IV The Renaissance • Profound transformation • Corruption in Church • Corruption in New Spain • Letters of Marque

41

Chapter V The Industrial Revolution • From the countryside to the city, rise of the proletariat • Sale of public offices • Simon Bolivar’s Decree • Second stage • Scientific Socialism • Rerum Novarum Encyclical

49

Chapter VI Contemporary era • Bribery: sign of the times • The Enron case • Other manifestations • Nepotism • Money Laundering • Citizen Action in India against corruption

57

Chapter VII Corruption, international public policy issue • Global Economic Crime Survey • Transparency International • Inter-American Convention against Corruption • OECD Combats Bribery • UN Merida Convention • World Bank • The G20 and its Anticorruption Plan • Corruption in Public Procurement Law • Anti-Money Laundering Mexican Law • People power

71

Chapter VIII A monster that refuses to die • Strict law enforcement • Business approach • Defined and achievable goals • One last and brief reflection

79

References

87

About the Author

89

Notes on History of Corruption

Presentation Dr. Jesús Ancer Rodríguez Rector of the Autonomous University of Nuevo León

In order to present the general public in a clear, attractive, accurate and responsible form, scientific and technological knowledge, not only from a theoretical view, but also its history, recent discoveries, the understanding of technological advances and their relevance in daily life, the Autonomous University of Nuevo León begins this collection: SCIENCE AT YOUR FINGERTIPS. To reach the goal of integrating it, we have invited researchers and popularizers of science from Nuevo León, as well as from other states, always with the idea of promoting interest in science and technology in all sectors of the population, favoring the rapprochement between scientific community and society, and promoting the participation of connoisseurs in outreach efforts.

9

Juan Roberto Zavala Treviño

We want to present not only the formal content of scientific disciplines, their laws, theories, principles, facts and applications, but also to bring the spirit of science to the people of our state and our country.

Another purpose we have in mind is to present the scientists as they are, with the idea that, reading about them, we can better understand their contributions to the welfare and development of society, because although their scientific and technological research meets our needs, they should not lose their human faces.

It is worth remembering that in 1612, when Galileo Galilei wrote, in Italian, not in Latin, as scientific works were presented in those times, his book on sunspots , and later, in 1632 , the Dialogue on the Two World Systems, he laid the foundation for the popularization of science, because , as he said in a letter to his friend, the Canon Paolo Gualdo: “I write in vulgar language because I want everybody to read it.”

Since then on, works on common language followed. In 1637, René Descartes published in French his Discourse on Method, and, in 1661, Robert Boyle presented in English his masterpiece The Skeptical Chemist.

Later on, the popularization of science has been nurturing herself with authors like Nicolas Camille Flammarion (1842-1925), who founded the French Astronomical Society, and who, with his works popularized astronomy; the Russian Isaac Asimov (1920-1992), who besides of being an author of works of science fiction, wrote numerous books and newspaper columns for the general public, with themes of historical, chemical and environmental disclosure, such as his latest book: The wrath of the earth. We have also Martin Gardner (1914-2010), great popularizer of mathematics; Desmond Morris (1928 ), author of the famous work The Naked Ape, and The human zoo”; Carl Sagan ( 1934-1996 ), with his famous books The dragons of Eden and Cosmos: Personal Journey, that became a popular TV series and the 10

Notes on History of Corruption

novel “Contact”, with which a film was made, in 1997; and Stephen Hawking, who with his extensive research on the Einstein’s “Theory of Relativity and on the origin of the universe”, and with his most popular work “History of Time”, is perhaps the most prominent science writer today.

In our country, since eighteenth century, there have been excellent communicators , as Antonio Alzate (1737-1799), who with a clear vocation for physics, chemistry, mathematics and astronomy, was interested in popularizing scientific knowledge, and who, inter alia, beginning in 1768, published weekly The Mexico’s Literary Journal, in which he offered the general public science news, and José Ignacio Bartolache (1739-1790), a famous mathematician, who between 1772 and 1773 published a newspaper with the name of Mercurio Volante, which offered the people of Mexico curious and important news on physics and medicine.

During the last thirty years, the Mexican scientific community outreach has become extremely important , and has been complying with new generations, among which, for lack of space, we only mention Luis Martínez Estrada, communicators former, who achieved the academic category for science communication; Alejandra Jaidar Matalobos (1937-1988), prominent physical and disseminator, who, among other things, promoted the collection of popular science “Science from Mexico”, of the Fondo de Cultura Económica, and Rene Drucker Colin, specialized scientist in physiology and neurobiology, and great communicator, who with numerous awards and distinctions, has been president of the Mexican Academy of Sciences and director of Popularization of Science at UNAM. Also, we mention José Mario Molina, a prominent chemist, author of works on the ozone layer. In 1995 he received the Nobel Prize in Chemistry, and has been performing a remarkable outreach; Julieta Norma Fierro, a leading scientist in the field of astronomy, with numerous bo11

Juan Roberto Zavala Treviño

oks and articles, and the making of a television series entitled “Beyond the Stars”; Antigona Segura Peralta, who, in addition to numerous publications and lectures around the country, has led for more than ten years, the radio program “Towards the New Millennium”, in Radio Red.

This collection , “SCIENCE AT YOUR FINGERTIPS “ adds to these efforts, also with the idea of bringing together our popularizers of science and of being a bridge between the world of scientific and technological research and the general public, who wants and needs to have available scientific and technological knowledge.

12

Notes on History of Corruption

Introduction

W

e can track down the beginning of corruption at the dawn of civilization, particularly when men, intelligently and systematically, began to form groups in order to live not as nomadic hordes, but in villages and cities, all of this resulting in multiple forms of social, political and economic organization, such as nations and private property, and thereby also in values and behaviors 13

Juan Roberto Zavala Trevi単o

El hombre se agrupa en aldeas y ciudades.

relating to business, government and religious activities, which allow the human being not only food, clothing and subsistence, but also to meet legitimate aspirations, as the success and economic prosperity.

Out of these natural aspirations -hard to reach by everybody-, competition for economic resources, power and social status is born. Through their governments, human groups regulate these activities, in order to avoid wars, domination through markets and politics, and discord, which arise sometimes among individuals and groups.

We, human beings, share many aspects of our common life, and in our social interaction we find this phenomenon, which lately, -perhaps to justify a claim-, has been presented as a predisposition or genetic susceptibility. If so, this would mean our parents, inadvertently or unable 14

Notes on History of Corruption

to prevent this, would be transmitting us, across the genes or particles present in the chromosomes, their dishonest features. According with this view, we would blame the inheritance, that is the previous generations, for our corrupt actions.

However, actually, corruption -as we perform it knowingly and willinglyis not intrinsic to our nature. That is, having had the ability to choose, we have decided not to comply with an ethical requirement, fundamental for the achievement of common good: honesty. This situation leads us to a strong individualism, in which the more important things are the economic and political conveniences; that is, the predominance of our personal satisfaction, no matter how, over community rights.

In supporting this, we must remember that, according to Wikipedia, the free encyclopedia, knowledge includes not only “knowing what”, “knowing how” and “knowing where”, but also knowing all the information we have acquired through education, experience and understanding, and even the fact that with our will we consciously order our behavior.

15

Juan Roberto Zavala Treviño

Los griegos utilizaban el término ética no sólo como modo de ser, de actuar, sino como una predisposición humana permanente para hacer lo bueno.

Although in the history of civilization many terms and concepts have evolved, there are principles and values ​​that should not be violated, as they are essential elements of human relationships, which, regardless of laws and regulations that punish those who willfully fail to comply them, lead us to the so called social responsibility and commit us all on an ethic that gives meaning to public affairs in order to reach the common good.

Greeks, for instance, used the term ethics not only in the usual sense, as a custom, as a way of being or acting, but as a permanent human disposition to good doing, a predisposition we acquire as a natural evolution, in reflecting on the individual and social values as well as on lawfulness of human acts.

16

Notes on History of Corruption

Hence the references to Greek mythology and the punishment Zeus imposed Prometheus for stealing fire from heaven, giving it to men, and especially, the one he imposed humanity when uncovering “Pandora’s Box”, wounding men with pernicious defects: vices, diseases, unlimited greed and love of wealth.

Although corruption is grammatically any act tending to cause harm, disturbance or defect on a particular thing, it is generally regarded as the improper use in the administration of common patrimony, particularly the government’s, as the deviation from the purposes of the public service. In its turn, the World Bank defines corruption as the abuse of public power for personal gain.

Since corruption is not a human congenital condition -there are countries where it doesn’t almost exist, like New Zealand, Denmark and Finland-, we can say that corruption is determined by lifestyles, by social and political organization, especially by the extent of civil liberties people have, as press (one of the pillars of the complaint), and the attitudes and desires of wealth of politicians, bureaucrats and businessmen who, considering themselves smarter than the rest of the population, when they break the law, become economically benefit. Several authors quote, from a letter of Saint Paul: “Root of all evil is the greed of money.”

Thus, through history, decisions

17

Prometeo llevando el fuego de los dioses para entregárselo a los hombres.

Juan Roberto Zavala Trevi帽o

on the distribution of power and wealth, regardless of talent, efficiency, skill, work and individual initiative, have been influenced, not by fair competition, not by a longing for general welfare, but for a way of life in which the own interests are above the growth and prosperity of all.

Given the above, we can say that corruption not only undermines the foundations of society itself, because it violates the legitimacy of public institutions, putting into La corrupci贸n pone en entredicho question the right to equality and el derecho a la igualdad y a la justicia. justice, but it is also responsible, in large extent, of many of the ills afflicting many countries in the world, such as poverty, hunger, unemployment, and low levels of education and health.

However, perhaps most importantly, as it has been said, corruption being an obstacle to economic growth and social development is more harmful to the poor, as they are the most vulnerable to extortion by public servants and the most affected because of fewer resources for infrastructure and social welfare programs investment, especially education, health and housing.

But it also affects every one of us when, because of having given bribes to officials, we recei18

Notes on History of Corruption

ve lower quality in so necessary works as hospitals, dams, roads, streets, power plants, bridges, and such basic services as the water, sewer and electricity.

It should also be noted that, although the essence of corruption is misappropriation -through unjustified exercise of power-, of a common or particular patrimony, some authors consider there is another situation that also affects economy and development. They call it administrative corruption, and this is deliberated or not deliberated inefficiency of public officials resulting in poor service of the administrative machinery, which must always be at the citizen service.

When elaborating on the subject, we are told that this type of corruption, which threatens the government, is after all the atmosphere of incompetence or mediocrity of those who, whatever the position they hold in the administrative machinery, are not aware of the high value of public service.

We can not fail to mention the great ally of corruption, impunity, that in Latin America, we could say, has become endemic, and that literally means “go unpunished�, referring to the fact that those who break the laws don’t get applied the stipulated sanctions.

This daily practice affects not only the whole of society, but it calls into question the role of guarantor of the State on equity and secu19

Juan Roberto Zavala Trevi帽o

La impunidad pone en entredicho el papel de garante que tiene el Estado sobre la equidad y la seguridad y hace nugatoria la impartici贸n de justicia.

rity, and cripples or makes nugatory the administration of justice, so that many crimes go unpunished, and encourages among the population clear feelings of insecurity, helplessness and fear.

Inefficiency of the justice system, whether criminal, civil or administrative, is which, as well as the inordinate desire for enrichment, explains impunity and thus the corruption, because the best way to combat it is by punishing the corrupt. This is not always achieved by the simple reason that citizens avoid to report or denounce corrupt officials, because they are afraid of reprisals and they know the low percentage of convictions for offenses, that is punished, while criminals have well calculated the absence of risks in their activities of bribery, influence peddling, embezzlement of public property and others.

Important factor in this phenomenon is the dependence of the Public Prosecutor from rulers in their high 20

Notes on History of Corruption

levels, federal or state, as when denouncing an act of corruption, considered a crime, you should do it in the same dependence, which is ultimately subordinated to one higher, but in the same level of government, not to mention that in presenting his complaint, the citizen finds that there is no possibility for him to intervene directly in criminal proceedings, and he would be only adjunct of Public Prosecutions.

Finally in the case of human rights, the term is used to refer to their rapists and to the impossibility of punishing them, even if the State has the obligation of enforce the law. To this end in February 2005 the Commission on Human Rights issued a series of principles for their protection and promotion, by combating impunity, whose first sentence states: “Impunity is a breach of the obligations of States to investigate violations, to take appropriate measures respect to the authors, especially in the area of justice, so that those suspected of criminal responsibility

21

Juan Roberto Zavala TreviĂąo

are prosecuted, tried and duly punished; to ensure effective remedies to victims and repair the damage suffered; to guarantee the right to know the truth and to take the necessary measures to prevent the repetition of such violations.�

22

Notes on History of Corruption

Chapter I First manifestations

Its genesis

A

lthough for some catholics, based on the Bible, the first act of corruption occurs when, Eve tempted by the serpent, corrupts Adam convincing him to eat the apple, that is, the fruit of the tree of good and evil, even if they did receive a punishment, having been expelled from paradise, for others the first act of corruption is given after the Last Supper, in the Garden of Gethsemane, or Los Olivos, where for thirty pieces with which the priests bribed him, Judas Iscariot betrayed Jesus and gave him over to his captors.

23

Adam and Eve, from Tiziano Vecellio de Gregorio.

Juan Roberto Zavala Treviño

Sumeria

However, from the view of historiography and in accordance with other authors, the first act of corruption is the one that occurred in lower Mesopotamia, Sumeria, considered the world’s oldest civilization (it is credited with the invention of the wheel and pictorial hieroglyphics, which later became cuneiform script), where a Sumerian essay dedicated to the life of students relates that one of them, in returning home, says his parents that the teacher had scolded Cuneiform script him and given him a whipping (that was then the custom) for fouls, tardiness and bad writing. So, his parents invited the teacher to a dinner with them.

“When the teacher came in, they sat him in a place of honor and offered him wine and, as a gift, they dressed him in a new suit and placed a gold ring in his finger. Thankful, the teacher talked to the student saying: ‘Since you have not disdained my words ..... I wish you great success.....

You’ve done well with your school obligations and you have become a good man”. (1) 24

Notes on History of Corruption

Code of Hammurabi

It is worth mentioning that by the year 1760 BC the Code of Hammurabi, created and carved into a block of basalt on an order of the king of Babylon, (this is one of the oldest laws ever found and are on exhibition in the Louvre Museum of Paris), already established penalties for some behaviors we now call corrupt, as follows: “If a judge has deemed a cause, has pronounced sentence and deposited the sealed document, if later he changes his decision, and it is proven that he changed the sentence that had been issued, such judge will be obliged to pay up to twelve times the amount of what motivated the cause. In addition, he will be forced publicly to get out of his seat of Justice and he will never come back. He will never be able to sit with the judges in a process”.

Egypt

Code of Hammurabi Louvre Museum, Paris.

According to other authors, the first recorded act of corruption was in ancient Egypt, for during the reign of Ramses III (1198-1166 BC) a chain of Pharaoh administrators manipulated food rations designed for the workers in the tombs of the princes, and gave them fewer and lower quality food, as we can read in the following ostracon, aimed to Pharaoh: Ramsés III.

25

Juan Roberto Zavala Treviño

“I inform my lord that I’m working on the tombs of the princes ... I’m doing well ... I’m not at all negligent ... I inform my lord that we are completely impoverished ... We have been taken away one and a half sacks of barley, and they give us one and a half sacks of garbage.”

Since these requests reached the ears of Pharaoh, the workers obtained an agreement with the vizier and other authorities, and because of that the situation was corrected. (2) Another recorded story happened during the reign of Ramses IX (1142-1123 BC). A papyrus contains an account of the difficulties a Pharaoh officer was through, because of reporting another officer’s dirty business, which had been associated with grave robbers, in order to make a blind eye to the tombs theft, so that this officer got substantial profits. (3)

26

Ramsés IX.

Notes on History of Corruption

Corruption in China

Originally, corruption also left its mark in the history of China, the most populous country in the world, where for many centuries nepotism and bribery were present in everyday life, both in court and in the imperial general bureaucracy.

In support of this, several authors tell us that, to combat it, in ancient China government officials were able to receive extra funds called “Yang-lien” whose meaning is “not feeding corruption”.

It is worth mentioning that during the Han Empire (202 BC 220 AD) and especially during the Western Han Dynasty (202 BC-9 AD), the Chinese Empire, looking for honesty and efficiency, established an administrative division of the country, and for the first time in history, with base on merit and experience, selected technical officials were appointed. Once Han Dynasty fell, corruption and disunity returned in the country.

The Imperial Palace of China.

The system of general inspection and of administrative supervision Chinese arquitecture. was born in China. The intention of this one was that emperors could have control on local authorities and could, through the imposition of severe punishments, fight corruption. The system evolved and became more efficient during the Ming Dynasty.

27

Juan Roberto Zavala Treviño

Despite these measures, corruption was not under control, and it is useful to remember the great effort made by the Chinese people to build and rebuild, between fifth century BC. and 17th century, one of the wonders of the world: The Great Wall of China, with ​​more than 6700 kilometers, to protect the country from foreign invasions.

During a long time, the wall stopped many Mongol incursions, until 1644, when Chinese general Wu Sangui, who was defending it, but did not agree with Shun Dynasty, opened the doors of the wall, which allowed a quick Mongol victory over the Chinese. So, Pekin was occupied and the empire was annexed. As the writer Henry Emerson Fosdick -quoted

by Bala Muhammad- says in the article “On Corruption, Yet Again”: the wall, which seemed impregnable, was crossed because of bribed guards.

(4)

28

Notes on History of Corruption

Chapter II Classical antiquity

I

n Greece there were also some cases. For instance, when Solon (638-558 BC), one of the Seven Sages of Greece, tried to amend some economic mistakes of Draco, his predecessor. He decided to abolish the debts so far, and there were those who, near to the Republic high command, were told about the steps to be taken before such steps were implemented. So, they immediately applied for loans to buy land. (5)

29

Juan Roberto Zavala Treviño

The School of Athens by Raphael.

One of the most outstanding cases in history is Socrates’, the greek philosopher who lived from 470 to 399 BC. He used to speak in markets and public squares, and he had his “doubts” about a social and religious system under which the faults were forgiven, depending on the quality of the presents given to the gods; of a system that favored the powerful citizens and the dominant culture of the time...

“This philosopher was acting as mirror, showing the vices and virtues of society, and worked to fulfill his educational mission, by defending the ethical and political principles, contrary to the power groups”. (6)

The Parthenon.

Having strongly challenged the State and religion, Socrates was unjustly accused of being a sophist and a corrupter of youth. Condemned to death, he chose to serve his sentence, and rejected the opportunity to avoid it with the help of some of his friends.

On the other hand, the philosophers Plato and Aristotle already qualified governments as good or bad, just or unjust, according to whether they ruled in favor of themselves or of society.

Roman daily life.

Plato, who was born in Athens in 30

Notes on History of Corruption

the year 427 BC and who was a disciple of Socrates, used to say: “Ideas are the most deserving the name of being. What is subject to change and corruption, we found it between being and non-being. Ideas are unique, timeless, necessary, universal, perfect. Ideas are ordered each other hierarchically. At the top we found the idea of ‘Good’.

It involves all the others, and it is “beyond being” ... Man is his soul, a rational soul ... Man must manage to get the rational soul govern his life ...

As long as he does so, man will be virtuous. “

Bust of Plato.

Imperial Rome

Regarding the Roman Empire, considered the most valuable and lasting in the history of mankind, it was also affected by corruption. Some authors claim that his fall was due, among other reasons, to the loss of traditional Roman civic virtues.

Until the arrival of Octavian to power, extortion, bribe and influence peddling flourished in Roman public life, as Paul Veyne said. This occurred from citizens and soldiers, to emperor’s closest officials.

For this kind of people, there was “very important to be supported by a powerful patron or some remarkable officer that could recommend them for this or that position or public office.

Such favors of the employer were 31

Juan Roberto Zavala Treviño

paid by other favors or gratuities. In the case of the officers appointed by the Emperor, gratuities were paid to the treasurer. The public service was, then, an effective way to become rich quickly... There were even people specialized in making this trade of recommendations... All process was done through bribery, no matter how small it was”. (7) In addition, there were also corrupt emperors. Let’s take the case of Caligula, who came to the throne setting aside the will of the former emperor, Tiberius, who claimed he was insane at the time of nominating him. As some historians say, Caligula used to raise ​​false accusations to senators and wealthy citizens of the time, so to be able to fine them, condemning some to death, to seize their belongings.

Also, some wills of Roman citizens who had left Tiberius their possessions, were modified by order of Caligula, to pass these to his patrimony.

32

Notes on History of Corruption

It should be mentioned that with the territorial expansion of Rome, the figure of proconsul was established. This one was general, manager and supreme judge in his province, and although some remind of Cato, who administered the province of Nearer Spain with honesty and thrifty zeal, because he toured the province on foot, with no army, accompanied only by a single server, the reality is that corruption characCalĂ­gula. terized the provincial administration until year 23 BC. It was when Octavian received the title of emperor and tried to restore the moral traditions of Roman people, combating corruption and licentious habits of the time.

Thereafter good emperors succeeded, such as Trajan, Hadrian and Marcus Aurelius, but also other bloodthirsty, corrupt and licentious, such as Caracalla (211217) and Eliogabalo (218-222). It is worth mentioning that when Emperor Commodus (Marcus Aurelius’ son) was murdered, on the year 192, the Senate elected Pertinax, a virtuous man, who was anxious of restoring legality and public morals.

33

Juan Roberto Zavala Trevi単o

The Colosseum.

However, Praetorian Guards assassinated him, and from their headquarters in Rome stated that the throne was for sale and that it would be taken by the one who offered them more money. With Senate approval, it was assigned to Didius Julianus, who offered five thousand drachmas to each soldier.

34

Notes on History of Corruption

Chapter III Middle Ages

Eastern Roman Empire

L

ater, with the fall of the Western Roman Empire, around the year 476, when Romulus Augustus, the last Western Roman Emperor was deposed, the Middle Ages began. At that time the Eastern Roman Empire flourished, with Constantinople as its capital.

Later, this became known as the

35

Juan Roberto Zavala Trevi単o

Byzantine Empire, in which the reign of Justinian (527-565 AD) highlights, not only because of his military victories, but also for the cultural development then reached.

Under his inspiration, many poets, educators, philosophers and historians highlighted, and a committee, formed and chaired by Justinian, codified Roman Law in the Corpus Juris Civilis, one of the most important legacies of the ancient world. He also strongly encouraged the arts, and ordered the building of one of the most important architectural works of history: the Hagia Sophia.

After a thousand years of existence, with periods of splendor, decay and renewal, the Byzantine Empire ended when, after a siege of two months, on May 29, 1453, Constantinople, the capital, fell to the Ottoman Turks.

36

Notes on History of Corruption

In the West, Middle Ages was characterized by a predominantly rural society, with a feudal mode of production, the development of small city-states and feudal monarchies based on personal relations of vassalage. It was in the fourteenth century when the Black Death, or bubonic plague, came to Europe from Asia, and around 1351 had wiped out nearly a third of the population of that continent.

As from the edicts of Constantine (313) and Theodosius I (380) Christianity had been implemented as the new official religion, with such a momentum that spirituality was the center of human existence, corruption was substantially reduced, because the life of Christ was taken as a model to follow.

High Middle Ages

However, gradually it was given a terrible subjugation by powerful lords, who controlled most of the population, thereby returning despotism, injustice and corruption, which worsened during the so-called High Middle Ages (1000-1453), now with the growing power of the monarchies and the flowering of long-distance trade. It was at this time when the concept of strong nation-state was created, and it, as in the Roman Empire, systematically overcharged taxes and gave form to national armies.

37

Juan Roberto Zavala Trevi単o

But it was in the Catholic church where the greatest excesses appeared, such as the sale of the forgiveness of sins, through the purchase of indulgences, despotism and wealth of the papacy and the clergy in general. Feudal lords, kings and church officials dispossed of the positions of the church, putting on sale bishoprics and even the parishes.

In The Divine Comedy, written around 1300, the Florentine poet Dante Alighieri presents the afterlife kingdom in three songs: Hell, Purgatory and Paradise. Hell is divided into nine circles, where convicts serve their punishment, according to the seriousness for the sins committed. In the eighth circle are placed those who committed sins such as fraud or betrayal, and there are also corrupt politicians, immersed in boiling pitch, because they knew the wrong they had done.

The Crusades

In the Middle Ages, and for nearly 200 years, from 1095 to 1291, military campaigns called the Crusades were conducted mainly against Muslims, stating as the purpose of Christianity to take control of the Holy Land, and to get Jerusalem free 38

Notes on History of Corruption

of the Turks, who had occupied it in 1070, and, at the request of the Byzantine emperor Alexius I, the Although many of the participants in the Crusades did so with true Christian fervor, serving firstly the idea of Pope Gregory VIII and then the call of Pope Urban II, to fight against what they said was the enemy of religion: Islam, the reality is that the Catholic Church sought hegemony over Eastern churches, and monarchs, nobles and knights, eager of land because of the growth of the European population, participated to gain control of trade in the region, and their monarchies.

Proof of this is that in the Fourth Crusade, the siege and looting occurred, by the Crusaders themselves, of Christian Constantinople, much of whose artistic treasures were taken by the invaders and ended up in Europe as well as it was also given the distribution of the Byzantine Empire between Venice and the Crusaders.

39

Juan Roberto Zavala Trevi単o

40

Notes on History of Corruption

Chapter IV The Renaissance

Profound transformation

W

ith the Renaissance (beginning around 1450), when Greek philosophical thought is reborn -it had been forgotten during the Middle Ages, saved only in a few monasteries of the Catholic Church-, and also with the use of scientific reason to give order to the thought, a profound transformation in the arts,

41

Juan Roberto Zavala Trevi単o

sciences and especially in the economic aspect is achieved, as the economic and social period is separated, as Marx would later call it, from feudalism and capitalism.

The medieval view of the world is then broken, as the discovery of America occurs, the same as the invention of printing press by J. Gutenberg, the philosophical movement called humanism began, man coming then to be the center of attention, and the great thinkers and artists such as Nicholas Copernicus, Michelangelo, Da Vinci, Cervantes, Shakespeare, Galileo Galilei, Rembrandt, Isaac Newton and Goya appear.

Although during this time, with Utopia, Thomas More is the precursor of religious naturalism and socialism, presenting an ideal state where there is no property, and in The Prince, Niccolo Machiavelli believes that only the state (state order) ensures proper organization of human society, as politicians are selfish, ambitious, revengeful and fickle by nature, the reality is that Renaissance thinkers fought for a principle of authority based on freedom, autonomy and research. (8)

Corruption

in 42

Notes on History of Corruption

Church

However, corruption continued, especially in the Catholic Church, and particularly in the higher clergy, because although there were excellent Popes, as Nicolas V, founder of the Vatican Library, a good portion of them showed a clear moral and political relaxation such as Alexander VI (Rodrigo Borgia), who bribed members of the College of Cardinals to come to power and he gave his sons and numerous lovers power, titles and wealth.

Also, as the sale of indulgences continued, now with the excuse of the building of St. Peter’s Basilica in Rome, the reform of ecclesiastical sectors and the establishment of the first Protestant Church dividing Christianity in Catholics and Protestants, began in 1520, undertaken by the German Martin Luther.

This triggered numerous wars.

Although we do not agree, Mario Puzo, in his novel Los Borgia. La primera gran familia del crimen, says this powerful Venetian family was the first to create an empire based on murder and corruption.

At this same time, and with the discovery in 1492 by Cristobal Colon, on behalf and in the name of Spain, of the Americas, its colonization began and with it the expansion of the Spanish crown, which although stating that the aim of the conquest was 43

Juan Roberto Zavala Treviño

the spread of the Christian faith, the reality was the desire for wealth, built on land ownership, mining of gold and silver and the monopoly of trade between the colonies and the mother country.

Corruption in New Spain

There is no reliable documentation of corruption in pre-Hispanic America, although there was a tradition that Quetzalcoatl was defeated by the forces of evil and fled by the east, and Aztec peoples exploited due in wars; with the arrival of the Spaniards to the New World, this phenomenon occurred, fully, in public life, perhaps, among other things, because colonization was the work of characters enabled as soldiers, with the only requirement of pleading as loyal Christian subjects to Spain.

With them, in addition to the grants awarded, the Spanish crown managed its vast and in solitary confinement territory of New Spain and thus collected taxes, creating checkpoints to charge those carrying goods, resulting in a strong corruption, because of the difficulty of transport and communications.

At this time “The first viceroy, Antonio de Mendoza, was accused of receiving gifts and presents by the part of some trustees who wanted to increase their territorial extensions, and of pocketing 2000 gold ducats annually for the 19 years of his government, money that had been assigned him by King Charles V as the salaries for people who were in his charge”. (9) With colonization, miscegenation 44

Viceroy Antonio de Mendoza.

Notes on History of Corruption

of Spaniards and Indian women begins, and later a black population of slaves from Africa joins it, resulting in the Latin race, which populates much of the continent.

In 1542, Emperor Charles V established the Council of the Indies, which governed the life of the colonies, including its municipalities, and in the middle of the sixteenth century the viceroyalties were established: the Viceroyalty of New Spain in 1535, which included what is now Mexico, Central America, The Antilles and southern United States, and Viceroyalty of Peru in 1543. Later in 1739, the Viceroyalty of New Granada was established with current Colombia, Ecuador, Venezuela and Panama, and in 1776, the Viceroyalty of RĂ­o de la Plata, with the actual countries of Argentina, Uruguay, Paraguay and Bolivia.

After several years of arguments between theologians, philosophers and Spanish jurists on whether the natives of the Americas should be slaves or not, and as Pope Paul III promulgated in 1537 the Bull Sublimis Deus, in which it was established that the Indians were men with all their capabilities, Spanish 45

Juan Roberto Zavala Treviño

law prohibited their slavery,-not the slavery of other races-, but established, however, a system of servitude called encomienda, consisting in the delivery of a group of indigenous to an Spaniard, for their care and evangelization.

This is the way in which a new form of corruption appeared –and it was going to last for many many years-, because this regime was instituted for the purpose -in addition to collecting taxes that would be payable to the Crown- of indoctrinating the natives into the Catholic faith, and of taking care of them. Also, the encomenderos (trustees) should feed and paid them an adequate salary. The encomenderos should as well “live in the capital city of the terms in which their indigenous entrusted lived”.

46

Notes on History of Corruption

However, the trustees simulated law enforcement, but mistreated the indigenous, forced them to work as slaves and subjected them to grueling hours and occasionally, breaking the law, rented them to other trustees.

Towards the end of the seventeenth century and early eighteenth century, this institution lost strenght because of the so-called demographic catastrophe, caused by diseases such as smallpox, measles and mumps, against which the natives were not protected, and because of the arrival in America, for heavy work, of millions of black slaves.

Letters of Marque

On the other hand, the so-called piracy -the form of organized looting in international waters or in areas not protected by any state, in which the shipment of unprotected vessels is stolen, or passengers are hijacked for ransom, or in earlier times to make them slaves-, had been seen since ancient times –let´s just remember that the Roman emperor Julius Caesar fought against it-, with the discovery of America and the consequent sea traffic between Europe and the new continent, a new form of this crime appeared, in which the criminals enjoyed of the so-called “letters of marque”.

This official approval for maritime freight theft and looting of ports and cities close to shores of America, one of the clearest and most terrible forms of corruption, was given in England, under the reign of Henry VIII, and was boosted with Queen Elizabeth I, who gave patents in return for part of loot earned. Originally, this kind of piracy was clearly aimed at the 47

Juan Roberto Zavala Trevi単o

Spanish ships, and it was intended to weaken that country (Spain) with which England had commercial, political and religious differences.

Corruption went so far that the queen herself used to invite nobles and merchants to constitute forms of society, along with the crown, to build ships and send them to the looting of vessels, initially the helpless, and to divide the proceeds. Upon their return, the pirates were reintegrated to their normal, private or public activities, and some of them received honors Francis Drake, or awards, as Francis Drake, who cirHe was knighted by Elizabeth I. cumnavigated the world, attacked and looted Santiago, the port of Valparaiso and numerous other locations, as well as unarmed vessels, having obtained the greatest booty in the history of piracy: the shipment of gold and silver of two Spanish defenseless vessels.

It is worth mentioning that these pirates -who were joined in their activities by other Dutch and Frenchmen-, when the Spanish fleet initiated the defense of their ships, changed their trade and began a strong traffic of black people, who were captured or bought in Africa, and brought in America, to be sold as slaves. There are calculations of about seven or eight million Africans having arrived by 1860, in our continent, as slaves.

48

Notes on History of Corruption

Chapter V The Industrial Revolution

From the countryside to the city, rise of the proletariat

With the arrival of the Industrial Revolution, which began in England in the late eighteenth century, inter alia with the construction and use of “Spinning-Jenny� (1763), which reproduced mechanically the movements of the spinner and worked with several spindles to get thread,

49

Juan Roberto Zavala Trevi単o

not only the form of production changed, -until then, the man had used just tools-, but also consumption. The reason: with the steam engine were created the locomotive and the steamboat, and so the products could be transported faster and farther, Thus a true diffusion of knowledge, new technologies, large-scale trade and the lowering of costs were achieved.

That is, the industry became the most important sector of the economy.

Also, a profound transformation of society occurred, as people went from manual labor to the machine, from workshop to the factory; farmers abandoned their fields and moved to work in cities (mass migration), whereby the proletariat appears: people who work with machines that are not theirs. (10) However this sector of the population, which became the most numerous and important, suffered very poor living and working conditions, as they received very low salaries and lacked the most basic rights, such as education and health. These conditions continued until the mid-nineteenth century, when the union movement appeared, in defense of the rights of workers.

At that time the concept of representative democracy was also consolidated: people delegated their sovereignty to officials elected by them, to act on their behalf and representation.

Meanwhile, worldwide, but es50

Notes on History of Corruption

JosĂŠ de Iturrigaray and his family. He was viceroy of New Spain from 1803 to 1808.

pecially in Latin America, with the colonial order, there were old forms of government, with which, deficient administrations and abuse of power openly propitiated corruption.

Example of this is that, in New Spain, with the idea of avoiding the payment of salaries to civil servants of the crown, raising taxes or sales taxes was given on lease, by contract, to individuals or private organizations, which opened the door to even more corruption, because normally the tenant gave to the treasure just a fraction of what he earned.

In order to stop these irregularities, the Spanish crown introduced in 1786 the Intendant System, to put the collection in hands of government officials. However, corruption continued.

51

Juan Roberto Zavala Treviño

Sale of public offices

Likewise, and for many years of the colony, public offices for short periods or for life tenure were sold to the highest bidder, allowing him to resale, but with the condition for him to pay the crown a percentage. As this practice became widespread, officials sought payback; work supervision was nugatory, and useless posts were created to have more to sell.

In his “Ethics, governance and public administration” essay, published in No. 32 of the magazine IAPEM, Dr. José Chanes says: “In colonial times, the sale of public offices was common. Some reciprocated the appointment by paying the equivalent of a year’s salary. It was the anata. Others with half, the media anata, when the payment was for six months.

Therefore, the naming official perceived a compensation. Since ancient times, influence peddling, nepotism, unjust enrichment, the use of inside information for personal gain, neglect of social issues to address personal or particular favors, among other forms of corruption, laid their reals”. (11)

Simon Bolivar’s Decree

Gustavo Coronel mentions that “in 1813, Simon Bolivar, while fighting in the war of independence against Spain, signed a decree stipulating the death penalty for those who were found guilty of corruption in the First Republic of Venezuela and in 1826 he signed another one, defining corruption as “the violation of the public interest” and established the death penalty for “any public official guilty of stealing ten pesos or 52

Notes on History of Corruption

more�. It also established that judges that did not comply the decree should be executed. (12) In order to fight corruption in Mexico, from the early years of independence the professionalization of public servants through the career civil service and the so-called property of public office was sponsored. However, this was a more attractive loot, because the charges were already life tenured. Later, this system was changed to one in which public servants are replaced, not only when there are changes of government, but during each period, allowing the persistence of corruption and impunity. (13)

Second stage

The period from 1870 to 1914 is considered as the second phase of the Industrial Revolution. On June 28, 1914, in Sarajevo, Bosnia, the assassination of Franz Ferdinand of Austria, heir to the throne of the AustroHungarian Empire, and his wife, was recorded. With it the First World War was detonated, which involved the major world powers and more than nine million combatants were killed.

In this period, characterized by new production techniques and the use of different forms of energy, such as gas or oil, and with the invention of the internal combustion engine, the automobile and aviation industry were developed and many other products such as telephone, radio and refrigeration were widely marketed. (14) As markets were expanding, there was also 53

Juan Roberto Zavala TreviĂąo

rapid urbanization and change took place in finance, emerging large companies and monopolies which concentrated capital, and major international banks emerged.

However, and as through planning, time optimization and specialization of labor, a strong increase in production was achieved, the proletariat improved their economic conditions and could consume the products they manufactured.

Like everything came in an economy based on the free supply and demand, and the bourgeoisie imposed their customs and values​​, which evolved around wealth, savings and work (15), corruption continued as an historical force, now immersed, not in church, but in a vast tangle of rulers, politicians, bureaucrats, bankers, industrialists and traders.

Very soon, large international companies began paying bribes outside their countries, winning millionaire contracts of government agencies, thereby corruption through tendering and contract assignments, came to represent, in some countries, more than 20% of public money, calling into question the principle of equality between people and sometimes democracy itself.

Scientific Socialism

For a long time in this period, prole54

Notes on History of Corruption

tariat worked under the most ignominious conditions: miserable salaries, unsanitary factories, without medical care or medicines, phases of work in factories or stores up to 15 hours a day, hiring of women and children for the toughest tasks and without provision for accidents.

Although in England at the beginning of the nineteenth century some better working conditions began to be given, such as prohibited employment of children under ten years, and it was determined that working days did not exceed 12 hours, it was not but until mid-century when the first movements of revindication of workers’ rights emerged and consequently the first, although temperate, protecting workers laws.

It is then when the stream of thought called Scientific Socialism appeared. Its creators were Karl Marx and Friedrich Engels, and it has influenced the history of economic and political thought of humankind, first with the Communist Party Manifesto, written in the 1840’s, which is a study of society, the emergence of private property and the proposal of a new classless society, which could only be achieved after the dictatorship of the proletariat.

Later, in 1867, Karl Marx published the first book El Capital 55

Juan Roberto Zavala Treviño

and then, in 1885 and 1894, his friend and colleague, Friedrich Engels, published the other two books, which study and raise the domination of capital over all aspects of society.

Rerum Novarum Encyclical

Given the poverty in which most of the population was, and abuses against workers, Catholic Church spread the Rerum Novarum encyclical, the first social encyclical of the story, written

by Pope Leo XIII, which was opposed to class struggle given by Marx, and suggested an economic system meant to serve the man.

With this encyclical the church made ​​clear his interest in social problems, and among other things, allowed the workers to join unions, denounced the impoverishment of the working class, and made recommendations on a decent salary, establishing as a goal the common good.

56

Notes on History of Corruption

Chapter VI Contemporary era

Global Economic Crime Survey

A

fter the conclusion of the Second World War -conflict in which over 70 countries were involved, and that left, by some estimates, over 50 million dead, including soldiers and civilians-, a higher population growth has occurred, which has led to a more rapid urbanization and envi-

57

Juan Roberto Zavala Trevi単o

ronmental degradation, as well as to the consequent increase in raw materials and energy resources. At the same time, though, with the advancement of science and new technologies, there have been significant changes in population incomes and in the form of labor, because of the passage of the so called manufacture to mentefactura, which has resulted in individual but also social benefit.

However, as market and economy have grown and become universal, in the same measure the desire for wealth has been growing and becoming universal. Many people has considered wealth, erroneously, as a value in itself, without having in mind that money should be only a way to satisfy hardships. Thus, corruption has grown now in a more intelligent way to correspond to the scientific and technological advances and to the increasing levels of education. And bribery is one of the main manifestations of this form of corruption.

According to the Global Economic Crime Survey 2011, Pricewaterhouse Cooper (PwC), among the companies that have been victims of bribery and corruption, 20% reported having lost an average of more than five million dollars.

Since bribery is an act of giving money to an official in order to obtain a favor or a normally illegal benefit, like avoiding the payment of fines and taxes, or to be conducive to favor a certain person or company in a bidding or competition, gover58

Notes on History of Corruption

nments have less money for their investment programs in infrastructure and social benefit. In the case of acquisitions, Transparency International estimates that corruption can increase their costs up to 25 percent.

According to the National Survey on Corruption and Good Governance, of Transparency Mexico, in 2010 were spent in our country 32 billion pesos in bribes; a 2011 report from the Organization for Economic Cooperation and Development (OECD) recognizes Mexico´s advances in the fight against corruption, but at the same time says our country must strive to reduce the culture of corruption, be sure that the authorities have all the resources to investigate complaints, and must improve its laws to detect and punish bribery and to adequately protect auditors who investigate corruption as well as those who denounce it.

In this regard, it is noteworthy the recent disclosure of U.S. government -March 2012- on a network of corruption in the American Biz Jet International Sales & Support, Inc., which bribed Mexican officials to obtain contracts worth more than 20 million dollars to provide maintenance, repair and overhaul of aircraft, between 2004 and 2009. Sometimes, according to this revelation, bribes were given directly to staff and others through a so called “ghost” company.

59

Juan Roberto Zavala Trevi単o

The Department of Justice of the United States revealed that this company, based in Tulsa, Oklahoma, pled guilty to violating the Foreign Corrupt Practices Act, which prohibits the payment of bribes to foreign trade agencies. It recognized having paid bribes to Mexican officials, and accepted to pay a fine of 11 million 800 thousand dollars, pledging to cooperate with the investigation that takes place between the U.S. and Mexico.

The Enron case Outstanding in international plane is the case of the powerful Enron Corporation which, based in Houston, Texas, with nearly 21,000 employees, originally was dedicated to the transmission and distribution of electricity and gas, and to the development, construction and operation of power plants and pipelines worldwide. This company openly paid bribes to obtain lucrative contracts in countries of America, Africa and Asia and, as Wikipedia says (16), at the time there were rumors about the use of this practice in a 30-billion dollars contract with energy company Maharashtra State Electricity Board. In 2001, Enron collapsed and filed for bankruptcy protection.

60

Notes on History of Corruption

In addition and regardless of bribery of public officials to get the award of contracts or streamline governmental processes, since late twentieth century and so far XXI century, and perhaps because of the market competition among producers, bribery has been taking place between private companies, so that the phenomenon is not exclusive to the public sector, but also to the business sector. Transparency International has already drawn attention to this problem, and in its report on the Bribe Payers Index 2011, has alerted the private sector, as this brings with it financial and reputational risks for the companies themselves.

Other manifestations

In addition to bribery, corruption now takes many forms, such as misappropriation of public funds, influence peddling, nepotism, making laws for the own benefit, financial scams, and others. And it is so strong that, according to the World Bank, it costs annually a billion dollars ($ 1,000,000,000). So, wealth of countries decreases and the gap between rich and poor is widening. An example of this is the reduction of 61

Juan Roberto Zavala Treviño

the amount of money the government can have to pay workers and buy supplies such as books and medicines.

Regarding influence peddling, in its mode of privileged information and according to an article published by Master Rodrigo Soto in the Ciencia Conocimiento Tecnología magazine, we can remember the case that happened in the United States during the global crisis of 2008, when many bankers and American companies, knowing that the values ​​of some companies would go down, recommended their customers and even sold them, shares of those companies, which in a few days became worthless. (17) This massive betrayal, which cost many million dollars to many people who lost their savings, was made by financial speculators and corporate executives, thanks to the lack of a clear regulation of the markets, but especially because of privileged information they had. (We can’t help it ... the bankers on Wall Street said ... it’s in our nature. Soto Moreno, Rodrigo. Ciencia Conocimiento Tecnología 123).

It is worth also mentioning that with the fall of the regime of Hosni Mubarak, who ruled Egypt from 1981 to 2011, a significant number of senior officials 62

Notes on History of Corruption

and businessmen with close ties to the regime, were accused of enrichment because of influence peddling, as they got major contracts and manipulated the stock market in their favor.

A special case is that of Hussein Salem, a Mubarak close friend, accused of having used his connections with the head of state to win lucrative real estate deals and a contract to export to Israel cheap Egyptian gas. Recently, a criminal court in Cairo sentenced Hosni Mubarak.

Salem and his two sons, to seven He ruled Egypt from 1981 to 2011. years in prison for speculation and influence peddling by about two billion dollars.

Nepotism Regarding nepotism, a form of corruption in which public officials, using their position, give their families public offices, it has one of its roots in Greece, where Pisistratus, tyrant of Athens, adjudged his relatives most of the political positions; it continues in Rome and is accentuated in the Middle Ages, when popes and bishops placed their relatives in the top ecclesiastical offices. One of the best known cases is that of Pope Callistus III, of the Borgias family, who made his two nephews cardinals and one of them, Rodrigo, became Pope.

Another well-known case of nepotism in history is that of Napoleon 63

Juan Roberto Zavala TreviĂąo

Bonaparte, military genius, who on his own merits became emperor of France and, together with his troops, spread throughout Europe the principles of the French Revolution, abolishing privileges and birth inequalities.

When finishing a conquest, Napoleon used to implant the French Civil Code, which gave men legal and political equality. In his honor, these set of laws were given the name of Napoleonic Code.

However, once in power, Napoleon adjudged his numerous family members and friends a number of kingdoms, principalities, and public offices. Among others, he made his brother Joseph King of Spain; Joachim Murat, his brother in law, he made ​​him King of Naples, and gave his son, Napoleon II, born in 1811, the title of King of Rome, although he never reigned, because he died in 1832, and since 1815 the emperor had been deposed, imprisoned and exiled to the island of St. Helena.

64

Notes on History of Corruption

In contemporary times, in different countries around the world, this phenomenon has been regulated by the law, which prohibits the appointing, hiring or promoting to public office or employment of sons, siblings or relatives up to the fourth degree of consanguinity and second degree of affinity, of those in public power, and provide penalties for those who contravene it.

However the reality is that, especially in Africa and Latin America, many officials use their power to place their relatives and friends in the best positions of command, work and wages, regardless of the arrangement and classification of others that can better serve the state.

That is, in the designation or hiring, preference is given to consanguinity or affinity, regardless of training, experience or the sense of responsibility of the other contenders for public office.

This makes equality in competition nugatory, propitiating conflicts between personal interest and public service, as in this form, im65

Juan Roberto Zavala TreviĂąo

partial assessments are prevented and the work environment at the institution is disrupted.

One example of this we have in François Duvalier (known as Papa Doc) who having won the presidential election was perpetuated in power, and ruled Haiti since 1957 until his death in 1971.

According to a constitution he drafted himself, he left his son JeanClaude Duvalier (Baby Doc), 19 years old, as president for life of the country, who lasted in office for 15 years, until 1986, when he was overthrown.

Francois Duvalier

The same phenomenon also occurs in the private sector of our country, because according to a survey of 2900 people, conducted by http://www.trabajando. com/, most Mexican state that in companies where they work, nepotism and cronyism are given.

66

Notes on History of Corruption

Namely, chiefs use their power to employ or provide concessions to their families.

This is detrimental to the business efficiency, because besides the disgust of the rest of workers, the company is prevented from access to the most qualified in the labor market, i. e. those with better training, capability and experience.

Money Laundering Another contemporary form of corruption is called “money laundering” in which, quoting Wikipedia, “the origin of the funds generated through the exercise of illegal or criminal activities is concealed..., making them appear as a result of legitimate activities and such funds are moved, with no problem, in the financial system.”

Example of this activity, which is usually done through deposits in banks or financial institutions, to later invest money illegally acquired in legally constituted companies, is the recently detected case in Mexico of HSBC Bank, 67

Juan Roberto Zavala Trevi帽o

which between 2004 and 2008 had a number of administrative failures, that allowed transactions with illegal proceeds.

For that reason, the Comisi贸n Nacional Bancaria y de Valores imposed the bank fines for 379 million pesos and remedial plans to improve its internal controls.

It is estimated that this institution transferred to its counterpart in the United States, between 2007 and 2008, seven billion dollars, a part of which may be related to this phenomenon.

Another recent case is that of Wachovia Bank, to which in March 2010, the Department of Justice of the United States imposed a fine of 160 million dollars for similar failures in transactions with Mexican exchange houses.

68

Notes on History of Corruption

Citizen Action in India against corruption

We must not forget that, in recent years, in India, a major civil action against corruption has been given, because in that country bribes are paid for many activities of daily living, such as opening a business, obtain a driver’s license or passport, admission to schools, civil registration, etc.., besides that there have been high-profile cases, such as the Commonwealth Games and other telephone granting licenses.

Recently, in November 2011, a group of farmers, tired of bribe demands to deliver them the tax records of their lands, emptied three bags filled with snakes in a tax payment office in Batsi, population 300 kilometers southeast of Lucknow.

As this country ranks 95 in the Index of Corruption Perception 2011

by Transparency International, according to a study by the Indian Forensic company. quoted by La Voz de Galicia, which reports that in the last ten years this phenomenon has cost the country some 240,000 million (18), Anna Hazare, Indian activist 74 years old, with an outfit that evokes the figure of Mahatma Ghandi, undertook, from civil society, a campaign against corruption which has generated many followers, and has achieved international renown.

69

Juan Roberto Zavala Trevi単o

Faithful follower of the nonviolence doctrine, Anna Hazare has led mass protests, was jailed when he was about to begin a hunger strike and refused to be released while he was not authorized to continue his fast. The movement, which has grown throughout India, especially among young people, has also opposed an Anti Corruption Bill, which they consider wrong, because it grants the prime minister impunity.

As a result of this movement, recently a Law on Public Procurement for the transparency and efficiency of the procurement process, was approved, and the government also, through the Ministry of Personnel and Grievances, has initiated a strong mobilization against corruption, and it has been reported that in the last three years more than 40,000 public officials have been penalized on corruption charges.

70

Notes on History of Corruption

Chapter VII Corruption, international public policy issue

Global Economic Crime Survey

S

ince the phenomenon of corruption is an obstacle for developing nations and the general welfare, because according to the Global Economic Crime Survey 2011, PricewaterhouseCoopers, corruption is also responsible for 24% of it, in the past decades,

71

Juan Roberto Zavala Trevi単o

internationally, have taken significant measures against this evil, as no longer see it as a matter of internal policy of each country, considering it as a true matter of international public policy, to boost, locally and internationally, the general election; citizen action surveillance authority in the most vulnerable sectors, and promotion to the complaint, because impunity is the most important factor that fosters.

Tr a n s p a r e n c y International

Among such actions, the founding in 1993 of the civil society organization Transparency International

by Peter Eigen highlights.

Eigen, who had been a World Bank official, was convinced that corruption remains an international phenomenon, and it is necessary to stop it, to measure it, to evaluate it and to discuss it systematically, without political or diplomatic considerations. So, he took on the task, through surveys and assessments of external entities, of developing and 72

Notes on History of Corruption

disseminating the Corruption Perceptions Index, which appeared for the first time in 1996.

It is worth mentioning, according to documents from the same institution, that in the Corruption Perceptions Index 2011, in 183 countries and territories, the perceived levels of public sector corruption were measured, scoring them from 0 (perceived to be highly corrupt) to 10 (perceived with lower levels of corruption), two-thirds of which obtained a score below 5. The countries with lower corruption index are New Zealand, Denmark, Finland, Sweden and Singapore, and those with higher corruption perception are Somalia, North Korea, Myanmar and Afghanistan.

I n t e r- A m e r i c a n Convention against Corruption The adoption, in 1996, by all the members of the Organization of American States (OAS), of the Inter-American Convention against Corruption, was the first international legal instrument to prevent and punish acts of corruption.

OECD Combats Bribery

Later on, in 2001, the OECD member states agreed in establishing a mechanism to monitor the implementation of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of the Organization for Economic Cooperation and Development, signed on December 17, 1997. In Mexico, this was ratified by the Senate on April 22, 1999.

73

Juan Roberto Zavala TreviĂąo

UN Merida Convention

Also the United Nations Convention against Corruption or Merida Convention, was signed in December 2003, and ratified by Mexican Senate in April 2004.

This is the first global instrument for fighting corruption that integrates aspects and practices to prevent and combat corruption frontally and globally.

World Bank

The actions of the World Bank to raise consciousness among governments of the countries that corruption affects the economy, are also important, as well as other surveys, such as Global Economic Crime Survey, above quoted, and the Transparency International‘s Bribe Payers Index, which points to the fact that in 2011, companies and enterprises of Russia, China and Mexico were the most given to bribe officials when working abroad.

The index comprises the 28 leading exporting countries.

74

Notes on History of Corruption

The G20 and its Anticorruption Plan

Similarly, and with the idea of achieving a fairer and more open economy, creating conditions for the stability of future growth, the group of countries G20 called, recently pledged to combat transnational bribery, launching an anti-corruption plan. It is worth mentioning that recently Mexico became president of this organization on economic and financial cooperation, which groups the most important countries with advanced or emerging economies in the world, having had that year -June 2012-, a meeting in which the heads of state took part, in Los Cabos, Baja California Sur.

Corruption in Public Procurement Law

It is noteworthy that the March 13, 2012, the Mexican Chamber of Deputies approved the Federal Anti-Corruption Law in Public Procurement, an initiative launched by President Felipe Calderon, which includes millionaires penalties and officials’ debarment for up to ten years. Such law was approved the same year, in April, by the Senate of the Republic.

75

Juan Roberto Zavala TreviĂąo

The law punishes individuals or corporations, of Mexican or foreign nationality, that commit bribery, conspiracy, insider trading and false reporting in the federal procurement process, with fines ranging from 623 thousand pesos for individuals, to 124 million pesos for moral corporations.

Anti-Money Laundering Mexican Law

After over two months of discussion, in October 11, 2012, the Senate of Mexican Republic unanimously passed a bill to combat the so-called money laundering: the Federal Law on the Prevention and Identification of Operations with Illicit Origin Resources, with a permanent system, was established to identify and track down “vulnerable and unusual� economic operations.

This law gives the tax authorities and law enforcement greater powers to prevent and sanction the use of illegal proceeds, establishing that, to ensure professionalism and honesty, the enforcers officials shall be subjected to confidence controls.

76

Notes on History of Corruption

As long as the law sets limits on the use of cash in transactions for the sale and purchase of services, movable and immovable goods, it also gives the authorities greater powers of surveillance, among others, over bank accounts -savings or securities-, including trusts, the issuance or sale of credit or service cards, and on issuing of traveler checks, the marketing of air, sea or land vehicles, the sale and purchase of jewelry, precious metals, works of art and the sale and purchase of commercial entities.

The reform includes the obligation for public notaries to inform when they notarize the sale and purchase of real estate or transfer of rights; it also sets limits on cash payments and provides for imprisonment of two to eight years, for those who provide false data.

People power

An effort we should also not fail to mention is the Janaagraha organization (its meaning is “the people power), which in 2010, in India, and on the initiative of Swati Ramanathan, Rasmesh Ramanathan and Sridar Iyengar, created the ipaidabribe.com network site (literally, I paid a bribe), with the purpose that, anonymously, the citizens of that country could report when, for procedures, services or evasion fines, they paid bribes, were requested to or refused to pay.

Indians have now a powerful tool that allows them to publicly denounce dishonest bureaucrats, exchange information and tips on how to avoid illegal actions and measure the impact that bribery has on their daily lives, because information, which is open to anyone who wants to see it is classified by themes, cities and departments of government.

77

Juan Roberto Zavala Trevi単o

According to the New York Times, this network site has been a success, as more than 80% of the 400 thousand complaints document the behavior of bureaucrats asking remuneration in exchange for procedures and services, such as the payment of 120 rupees for registering the birth of a child in respect of fees, or for a child who has approved the tests to be accepted at a college. The example spreads, since similar sites have already been developed in countries like Bhutan, Kenya and Pakistan.

78

Notes on History of Corruption

Chapter VIII A monster that refuses to die

A

lthough in this XXI century we have in our country and in the rest of Latin America, a population with higher education levels, more informed and more critical; although all actions and conventions above mentioned to combat corruption, which affects the economy, democracy and integral development of nations, the eradication of this phenomenon has not been possible, perhaps 79

The roots of corruption.

Juan Roberto Zavala TreviĂąo

because of the limitless desire for wealth of human beings, which affects their behavior, and because we live in a system that encourages and gives more importance to power and money, than to principles and values ​​such as truth, honesty and solidarity.

This situation could also be caused by the fact that the societies of our countries have not decided to organize themselves and acquire technology to raise complaints and follow them up, and to be more involved, all of which may allow them true access to public information, to the complaint, denunciation and to demand greater and more effective prosecution of crimes related to corruption.

Strict law enforcement

Some people think and suggest, as Dr. Jorge Carpizo, recently deceased, that to combat this scourge (corruption) -one of the major obstacles to development, and that also explains the entrenched poverty of half of the world population-, that law must be enforced, without exception in its application; i.e. zero impunity, and it must start with the most significant cases, so that society can see and understand that it is not a simple campaign, that they are not mere words, but the real manifestation of the political will to implement the law.

To this end, Dr. Carpizo proposes a 80

Notes on History of Corruption

series of actions, such as the simplification of administrative procedures for citizens to easily meet their obligations, and for public servants to have a minimal discretionary margin; campaigns in the media, for society to get involved in the fight against corruption, and to fulfill the democratic principle that no one is above the law and that no one should request exceptions to its application; also encouraging children and young people to understand that the most important values are not power and money. (19)

Business approach

Another important approach, this one of the Mexican business sector, through Coparmex president, Gerardo Gutierrez Candiani, proposes that with the participation of the three branches of the Union and all levels of government, Mexican people can commit themselves on a crusade against corruption, to mobilize society, naming an Anti-Corruption-Appointee (Anti-Corruption-Tsar). This Tsar, serving as an institutional link between the state and civil society, would be representative and citizenship advocate, capable of receiving complaints and proposals in order to canalize them to the competent institutions and track them until final solutions are given.

Among the tasks of this ombudsman -who would be supported by a City Council and would have autonomous office and resources of his own-, would be the classification of the most relevant themes and cases; those that outrage society the most, such as 81

Juan Roberto Zavala TreviĂąo

high-level corruption. In addition to have public opinion fully informed, the ombudsman would articulate and coordinate national programs and issue recommendations of a binding nature, serving also as a witness in investigations and trials. (20) In this topic it is worth mentioning the recent actions undertaken by the private sector of the United States: in April 21, 2012, the New York Times reported that Wal-Mart de Mexico had paid “extended bribes� to local Mexican officials, for $ 24 million dlls. to streamline permits that allow them to build and open stores over a large part of the country, and that the U.S. Justice Department announced the initiation of a criminal investigation against the company.

As a result, the supermarket chain Wal-Mart, the largest world retailer, appointed a director for Mexico, with the only function of monitoring compliance with the Anti-Corruption Practices Act (FCPA for its acronym in English), exclusively in Mexico. The chain director in our country, Eduardo Castro Wright, resigned.

The new director will report directly to the corporation in the United States, taking a series of actions to comply with the law, such as more robust and effective internal controls, improvement of audit procedures, and constant review of the escalation and remediation protocols.

(21)

82

Notes on History of Corruption

Defined and achievable goals

We have also the detailed strategy of others who claim, as the outstanding poet and essayist Gabriel Zaid, that “to avoid corruption there is no way to save public pressure, even if it is costly in time and dislikes... What can be done from outside? Organizing for complaint.

But how manage public pressure, without partisan deviations, without wasting time or causing dangerous reprisals? Indefinite, excessive or impossible goals should be avoided. Anyone seeking to end all the incompetence, irresponsibility and corruption, will fail�.

83

Juan Roberto Zavala Treviño

“We must distinguish direct (complaints) from indirect (support to those who denounce) actions, and the different levels of severity, cost and risk. The creation of an external center to control serious anonymous complaints and protect whistleblowers, would be a big operation. The creation of an external center to request information on the outcome of each complaint, has lower cost and risk ... It is practical to start with allegations that do not create too much panic and where the losers are officials of lower level: lack of street signs, overcharges in electricity bill, unsafe daycare centers, gas stations stealing, improper construction permits, shortage of medicines, neglected street lighting, excessive queues in that window (long waits in line), unsafe taxis, transit bribes, dangerous potholes and a thousand other things.”

“Right now, citizens are more demanding than ever, and that is a sign that the country is improving, even if sometimes it seems otherwise. But there is too much to learn. Starting from below by highly visible and easily solving problems, allows the officials to boast and the citizens to be satisfied. This is not a small achievement. Living the experience that government can improve, when people is demanding, is educational for both parts and has multiplier effects”. (22)

One last and brief reflection

It is striking and frustrating to see that in Latin America and especially in Mexico, since 1980, it seems that with advancing democracy, corruption and impunity grow: to a greater transparency and accountability, less law enforcement.

84

Notes on History of Corruption

Proof of this are numerous detected cases, without consequences for offenders, as lately the millions of pesos in cash discovered in a Veracruz government plane to alleged payments, the case of Walmart, whose U. S. officials made us know that its employees in Mexico had paid bribes to officials throughout the country to streamline permits that allow them to build and open stores, or that of a mayor’s brother, who was videotaped receiving cash from the manager of a gambling house, which later confirmed extortion.

Hence, the perception of citizens in the sense that corruption in the country is steadily increasing, as shown by a survey conducted and released on October 12, 2012 by Grupo Reforma, where 73% of polled citizens stated that corruption in the country had increased in the last year.

85

Juan Roberto Zavala Treviño

Regarding the rate of corruption in government, respondents gave an average of 8.3, where 0 means that there is nothing of corruption and 10 there is a lot. It is worth mentioning that in 2001 the average was 7.9 and in 2007 8.2. The index relates the perception of citizens regarding instances of government, including politicians, the bureaucracy, the police, judges, prisons, etc.

As corresponds to the index of civic corruption surveys showed a 6.4, compared with an average of 6.0, which was recorded in 2001 and 6.5 in 2007. According to Grupo Reforma this index consists of measurement related to entrepreneurs, corporations, merchants, journalists, teachers and citizens in general.

Therefore, the need and importance of the participation of civil society, businessmen, workers, housewives, journalists, intermediate agencies, churches (religions) and all kinds of associations and citizen groups in combating and denouncing acts of corruption in both, public and private fields. They must pay attention to them so that such acts do not go unpunished. In addition we must remember the importance of individual, honest, ethical behavior. Example is the best antidote.

We conclude this brief work with the following excerpt, taken from Federico Reyes Heroles, Cuaderno de Transparencia Corrupción. De los ángeles a los índices: “It is true that the phenomenon is still there, but it is also true that we have many and better tools, product of science and reason, to deal with this pandemic. This is a major achievement. I am optimistic: applying rational actions, within a reasonable time we will begin to notice changes”. (23)

86

Notes on History of Corruption

References

(1) www.diariolarepublica.com.ar 01/03/2007. “Honestidad, un perfil bajo argentino”.

(2) www.egiptomania.com “La primera huelga de la historia: Egipto, año 1166 A.C.” (3) Poder Judicial. República del Perú. Diálogos de la OCMA. “Promoviendo la transparencia judicial. Programa Umbral Anticorrupción”.

(4) http://weeklytrust.com.ng/ Fosdick, Henry Emerson, citado por Bala Muhammad en el artículo “On Corruption, Yet Again”.

(5) Revista Conozca Más. “Historia de la Corrupción”. Indice de Historia.

Agosto 1993. http://www.artrev.8k.com/0000000366.htm (6) Rangel Hinojosa, Alejandra. “El Intelectual en el Mundo de la Tecnología”. Revista CIENCIA. CONOCIMIENTO. TECNOLOGÍA. No. 124.

(7) Veyne, Paul. Histoire de la vie privée. Vol. 1 Le Sevil. 1987. “Historia de la vida privada. Imperio Romano y Antigüedad Tardía”.

(8) Papini, G. Cronología del Renacimiento. Renacimiento III. (9) www.exploramex.com “Época colonial. Orígenes de la corrupción en México”.

(10) www.monografias.com meli_tre. “Revolución Industrial”.

(11) Chanes Nieto, José. Revista IAPEM No. 32. Octubre-Diciembre 1996. Instituto de Administración Pública del Estado de México.

(12) www.cato.org Coronel, Gustavo. “Corrupción, administración deficiente y abuso de poder en la Venezuela de Hugo Chávez”.

87

Juan Roberto Zavala Treviño

(13) Chanes Nieto, José. “Ética, Gobierno y Administración Pública”.

Revista IAPEM No. 32. Octubre-Diciembre 1996. Instituto de Administración Pública del Estado de México.

(14) Wikipedia. “Segunda Revolución Industrial. Finales del siglo XIX”.

(15) www.profesorenlinea.cl “Revolución Industrial”.

(16) http://es.wikipedia.org/wiki/Enron Enciclopedia Wikipedia.

(17) Soto Moreno, Rodrigo. “No lo podemos evitar… Dijeron los Banqueros en Wall Street… Está en nuestra naturaleza”. Revista CIENCIA. CONOCIMIENTO. TECNOLOGÍA. No. 123.

(18) www.lavozdegalicia.es Siddharta Kumar. “Corrupción, la lacra que devora la India”. La Voz de Galicia, 20 de agosto de 2011.

(19) Carpizo, Jorge. “Impera en el país la quinteta de la muerte”. Revista CIENCIA. CONOCIMIENTO. TECNOLOGÍA. No. 123.

(20) Periódico NOTICIAS. Voz e Imagen de Oaxaca. 29 de enero de 2012. “Urge un Zar Anticorrupción Ciudadana”.

(21) Cfr. www.proceso.com.mx 24 de abril de 2012. “Crea Wal-Mart “Zar” anticorrupción para México”.

(22) Zaid, Gabriel. Corrupción en las alturas. Revista CIENCIA. CONOCIMIENTO. TECNOLOGÍA. No. 123.

(23) Reyes Heroles, Federico. “Corrupción: De los ángeles a los índices”. Cuadernos de Transparencia. Instituto Federal de Acceso a la Información Pública (IFAI).

88

Notes on History of Corruption

Juan Roberto Zavala is the author of the following books: La historia en Alfonso Reyes (1978), Historia de la educación superior en Nuevo León (1990, 1996 and 2008); Leyendas y realidades de la educación en Nuevo León (1990), Pasajes de la historia. Episodios poco conocidos (1992); Nuevo León en pocas palabras (1993), Mesones y hoteles en la historia de Nuevo León (1994 and 2004); Los presidentes en la historia de México (1995) La vivienda en la historia de Nuevo León. Siglos XVII, XVIII y XIX (1996), Diccionario biográfico de constructores de Monterrey (2003), Científicos y Tecnólogos de Nuevo León. Diccionario Biográfico (2005 and 2009) Reconocimiento a personajes nuestros (2009).

In 1969 he received the Alfonso Reyes National Award in a contest held by the Capilla Alfonsina, the Government of the State of Nuevo León and the Superior State Normal School; in 2000, the Nuevo Leon Society of History, Geography and Statistics awarded him with the Medal of Steel to the Historical Merit “Capitán Alonso de León” and in 2012 Journalists of Nuevo Leon, AC conferred him the Journalism Award “Francisco Munoz Cerda” in the category of Science Journalism.

He has been professor at the Superior Normal School of the State, Secretary of the Department of Humanities Research and of the Rectory of the UANL, professor at the Faculty of Communication Sciences of the UANL and Head of Educational Programs of the State Delegation of the National Council of Educational Development (CONAFE).

89

Juan Roberto Zavala Trevi帽o

He also was Regional Director of Higher Education of the State Government; Advisor of the undersecretary of Higher Education and Scientific Research of the SEP; General Director of Coordinated Services of the SEP in Nuevo Leon, Head of Credit Area of INFONAVIT and from October 2003 to April 2012 he was Director of Scientific Culture of the Coordination of Science and Technology of Nuevo Le贸n (COCYTENL).

90

Notes on History of Corruption

Notes on the History of Corruption, was printed in 2013, at Serna Impresos workshops.

In its composition the type Gill Sans MT Pro 9, 10, 11, 12, 22 was used. The careful editing and layout were made by José Jesús de León Rodríguez, the cover design was led

by Lindsay Jiménez Espinosa. The printing of this edition consists of 1000 copies.

91

Juan Roberto Zavala Trevi単o

92