Remarks by Ambassador Jean E. Manes at the “Combating Corruption and Money Laundering” Conference

* This is a courtesy translation. Only the original Spanish language text should be considered authoritative.

We are gathered here this morning together with a distinguished group of decision makers from different sectors, including the banking sector. A sector that is vital in order to improve the economic prospects of the country. I hope you can all recognize the important role that you play in encouraging investment in growth industries, analyzing economic prospects and of course combating corruption. This means that the banking sector also has a great responsibility to ensure that its influence is used to benefit El Salvador.

Corruption and money laundering are the main obstacles to good governance and the development of a country. They damage public confidence in the government, disrupt the rule of law, seriously undermine the business climate and confidence in the integrity of the financial system and limit economic growth.

The cost of corruption is exponential, because it is not only about the money that gets lost, but also about all the needs that are not solved and the consequences that these unmet needs have on a vulnerable population.

In recent cases of corruption involving high officials of past governments, it is estimated that around 650 million dollars were lost. The budget deficit for this year amounted to 350 million dollars, an amount that El Salvador had to cover with an IDB loan and for which the country will pay interest for the next 20 years. This means that if the country could have avoided these deviations, it would have been able to reduce or eliminate its budget deficit for more than a year. It also has long-term effects. For the next 2 decades, El Salvador has already committed a part of its budget to paying this debt.

These hundreds of millions of dollars are money that the country needs for its basic functions, for health, education and security services. I do not have to tell you about the precarious situation of public hospitals. There are no beds in the Rosales Hospital; the hospitals of the national network do not have medicines.

The construction of the new Rosales Hospital Complex requires 80 million dollars. With 650 million dollars, 8 more hospitals could have been built.

El Salvador has 3 million young people of age to benefit from secondary education, but there are only 6000 schools in the country. That means that each School has to be able to accommodate more than 500 students. Since a school costs approximately $1 million, 650 million dollars would have financed the construction of 650 schools.

When we talk about the cost of corruption we are not referring to money, but to the consequences that the absence of this money causes in the fabric of society.

It must be made clear that the type of corruption that allows a person to steal millions of dollars of public funds is an endemic, systematized corruption, where all security points fail. This is not about a couple of people evading the law; it is about a system designed to hide fraud that involves thousands of people behind the bureaucracy, inefficiency, and lack of transparency.

There are five key areas to break the cycle of corruption.

First, impunity must end. It must be shown that all those who break the law will be penalized. Demonstrate that abusing institutional weaknesses has consequences. As I said, if you steal from people, you go to jail. And citizens must trust that the system makes it difficult to be corrupt, and that institutions will hold those who decide to take this path responsible. This is the first step that must be taken to recover the confidence of citizens.

Secondly, the public administration and financial management need to be reformed.

El Salvador is at a favorable moment to advance on this point with the Public Service Law. If properly applied, it would show that El Salvador can take positive measures to combat corruption and strengthen public institutions. Standards for selection and promotion based on the merit of public sector employees would be established and the transparency of the public service would be increased. A professional body of public employees is less likely to tolerate or become involved in corruption, and is more likely to report alleged wrongdoing, than staff designated for political reasons.

Governments are administrators of public funds, of the money of their citizens, and these funds are used efficiently or are wasted, and in the case of corruption, they simply disappear. The effective implementation of new and robust measures to combat corruption, money laundering and terrorism will strengthen the financial system and help attract capital to El Salvador.

Third, transparency and access to information must be promoted. All citizens have the right to know how and for what their taxes are being used in order to know if their needs are truly being met.

Fourth, we must empower citizens. Fighting systemic corruption requires the cooperation of all citizens, of all sectors, and all Salvadorans have the right and obligation to demand accountability from their government.

And finally, close the legal gaps at an international level. Criminal activity often extends to other countries: the proceeds of corruption and other illicit activities obtained in one country are invested in another, and legitimate businesses can be used as facades for illicit activities.

Governments must go out of their way to counteract the criminal structures and strategies established by gangs to launder money. This can be a problem in border areas but it should not be an excuse to hinder customs processes.

These five key areas have to work simultaneously, to weaken the networks of corrupt, organized crime and promote a solid state of law.

It cannot be denied that El Salvador has taken some important steps in the fight against corruption. As the approval of the reforms to the Organic Law of the Attorney General of the Republic to strengthen the independence of the Financial Investigation Unit, for example. And the law of regulatory improvement that will be on the table of the Assembly within a few days also represents an opportunity for progress.

Another achievement is the large cases of corruption that are being prosecuted, including cases of former presidents. A conviction gives El Salvador the opportunity to turn the page on a history of corruption and write a new chapter where it will not continue to be tolerated.

However, these achievements are fragile. There are still weak links in the chain of justice, and it is not enough just to say that corruption will no longer be tolerated, we must take concrete actions that guarantee the transparency of the institutions and punish all those who break the rules.

El Salvador has the opportunity to be a leader in this area, and to set the standard in the region. To achieve this there are some aspects that should be considered.

The dialogue between the government, the private sector and financial institutions is key. They must work together. All relevant government entities such as the Attorney General’s Office, the Superintendency of the Financial System and the Supreme Court of Justice must be fully committed. The fight against corruption and money laundering requires effective strategies to prosecute and bring to justice those presumed responsible, including strong support for the functions of the Attorney General’s Office.

However, the application of the law should be the last line of defense in the fight against corruption. The action of the Office of the Prosecutor must be the last resort. The best thing is crime prevention. This has to do with the strengthening of other institutions that can prevent acts of corruption.

We are living a historic moment. Just recently, we are seeing in the news the conviction of a former president of this country. Now, the population is outraged at the level of corruption, but I also have to ask, where was all this indignation fifteen years ago? Twelve years ago? Ten years ago? Five years ago?

This outrage about how thousands of people knew about what was happening in this country. It is a small country, where all this money was being moved. This is not a state secret. It was not a state secret. There were thousands of people ready to look in the other direction knowing what was happening in this country. And now we have outrage. You have the opportunity to use this moment to strengthen all parts of your institutions.

Even now when I travel to different parts of this country, I hear that a public employee has recently bought a coffee plantation in a town. What is the question that comes to mind? How did a public official get this amount of money to buy this land? Why are we not asking this question today? Instead of waiting fifteen years later, and depending only on one part of the judicial system, which carries almost all the responsibility for this entire country. The prosecution is only part of your justice system. What happened to all the other parts of the system?

Where are the red flags that say: this is a problem? We should ask why this person is buying this luxury car. Or this house on the beach. But thousands of people are willing to participate in some way on this sale. This cannot be. If you want to change your country and move forward, the moment is now and it’s in your hands.

On behalf of the United States we can help, we can accompany your efforts, we can give the prosecution the best tools to find the money. But we are talking about fifteen years later, twelve years later. The money is gone. The moment is prevention. Prevent public officials from being able to do that. To say when someone is buying land in one place: look, I have to ask where you got the money from.

The moment is now; if not, ten years later we’ll be in the same situation. Looking back with all the banks trying to find the files and I have to thank the banks because they are doing it, when the prosecution asks for information and documents from fifteen years ago, twelve years, ten years. There are a lot of people spending time looking for all these documents that are sometimes in deposits, in files, on paper. Looking for all the documents that the prosecution is requesting and after you are sending dozens of boxes of documents, what happens on the other side at the prosecution? There are dozens of people who are reviewing each of the documents, trying to connect the information. That is a quantity of labor invested in something that is very necessary, but also this level of investment should be at the beginning of the process, to prevent corruption, instead of waiting ten years. But most efforts are not there and you have already lost all this time to invest in your schools in your hospitals and in other parts of their country.

So I’m here to ask for your commitment, your commitment to look in the mirror and think about what else we can do, each one of us. What else can each of the institutions in this country do? Now we are basically publishing a fraud of which we have all the details to how they were managing to divert money from this country. We need to study that, and ensure that all this process that allowed people to steal millions of dollars from this country no longer exists. To ensure that all this process that in a way is facilitating the diversion of this money to other purposes that we are closing each of these possibilities. To prevent the situation that we face today and from the United States we are at your side, but I also believe that everyone can understand a little frustration that we are investing so much in this country, and we directly handle the money of the United States, of people, of taxes. But knowing that the other side of the door is leaving a quantity of money in an illegal way. Not our money, because we take care of it.

But can you imagine if we had had those 650 million dollars, plus international aid, what country we would have today.

That is everyone’s responsibility.

This level of outrage that the population has with corruption, that when I travel I hear: I’m sick of corruption. We need to use this level of outrage for something positive for everyone. To do everything we can to shut down the possibility that is still happening.

* This is a courtesy translation. Only the original Spanish language text should be considered authoritative.