UNDERSTANDING ODEBRECHT: LESSONS FOR COMBATING CORRUPTION IN THE AMERICAS

[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]




                 UNDERSTANDING ODEBRECHT: LESSONS FOR 
                  COMBATING CORRUPTION IN THE AMERICAS

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
          THE WESTERN HEMISPHERE, CIVILIAN SECURITY, AND TRADE

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION
                               __________

                        TUESDAY, MARCH 26, 2019
                               __________

                           Serial No. 116-18
                               __________

        Printed for the use of the Committee on Foreign Affairs
        
        
                 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]  
                 
                              ___________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
35-616PDF                  WASHINGTON : 2019                 
                 

Available: http://www.foreignaffairs.house.gov/, http://docs.house.gov,
                          or www.govinfo.gov
                           
                           
                           
                           
                           
                      COMMITTEE ON FOREIGN AFFAIRS

                   ELIOT L. ENGEL, New York, Chairman

BRAD SHERMAN, California             MICHAEL T. McCAUL, Texas, Ranking 
GREGORY W. MEEKS, New York               Member
ALBIO SIRES, New Jersey              CHRISTOPHER H. SMITH, New Jersey
GERALD E. CONNOLLY, Virginia         STEVE CHABOT, Ohio
THEODORE E. DEUTCH, Florida          JOE WILSON, South Carolina
KAREN BASS, California               SCOTT PERRY, Pennsylvania
WILLIAM R. KEATING, Massachusetts    TED S. YOHO, Florida
DAVID N. CICILLINE, Rhode Island     ADAM KINZINGER, Illinois
AMI BERA, California                 LEE ZELDIN, New York
JOAQUIN CASTRO, Texas                JIM SENSENBRENNER, Wisconsin
DINA TITUS, Nevada                   ANN WAGNER, Missouri
ADRIANO ESPAILLAT, New York          BRIAN MAST, Florida
TED LIEU, California                 FRANCIS ROONEY, Florida
SUSAN WILD, Pennsylvania             BRIAN FITZPATRICK, Pennsylvania
DEAN PHILLIPS, Minnesota             JOHN CURTIS, Utah
ILHAN OMAR, Minnesota                KEN BUCK, Colorado
COLIN ALLRED, Texas                  RON WRIGHT, Texas
ANDY LEVIN, Michigan                 GUY RESCHENTHALER, Pennsylvania
ABIGAIL SPANBERGER, Virginia         TIM BURCHETT, Tennessee
CHRISSY HOULAHAN, Pennsylvania       GREG PENCE, Indiana
TOM MALINOWSKI, New Jersey           STEVE WATKINS, Kansas
DAVID TRONE, Maryland                MIKE GUEST, Mississippi
JIM COSTA, California
JUAN VARGAS, California
VICENTE GONZALEZ, Texas
                                                                                                                                                      
                    Jason Steinbaum, Staff Director
              Brendan Shields,  Republican Staff Director
                                 ------                                

  Subcommittee on the Western Hemisphere, Civilian Security, and Trade

                   ALBIO SIRES, New Jersey, Chairman

GREGORY W. MEEKS, New York           FRANCIS ROONEY, Florida, Ranking 
JOAQUIN CASTRO, Texas                    Member
ADRIANO ESPAILLAT, New York          CHRISTOPHER H. SMITH, New Jersey
DEAN PHILLIPS, Minnesota             TED S. YOHO, Florida
ANDY LEVIN, Michigan                 JOHN CURTIS, Utah
VICENTE GONZALEZ, Texas              KEN BUCK, Colorado
JUAN VARGAS, California              MIKE GUEST, Mississippi
                                                                                                                                                                                       
                      Sadaf Khan,  Staff Director
                           
                           
                           
                           
                           C O N T E N T S

                              ----------                              
                                                                   Page

              STATEMENTS SUBMITTED FROM COMMITTEE MEMBERS

Prepared statement submitted by Chairman Sires...................     3

                               WITNESSES

Camilleri, Michael, Director, Peter D. Bell Rule of Law Program, 
  Inter-American Dialogue........................................     9
Salazar, Katya, Executive Director, Due Process of Law Foundation    17
Hall, David L., Partner, Wiggin and Dana LLP.....................    24

                                APPENDIX

Hearing Notice...................................................    44
Hearing Minutes..................................................    45
Hearing Attendance...............................................    46

            RESPONSES TO QUESTIONS SUBMITTED FOR THE RECORD

Questions submitted by Chairman Sires............................    47
Questions submitted by Representative Rooney.....................    51

 
   UNDERSTANDING ODEBRECHT: LESSONS FOR COMBATING CORRUPTION IN THE 
                                AMERICAS

                        TUESDAY, MARCH 26, 2019

                           House of Representatives
            Subcommittee on the Western Hemisphere,
                       Civilian Security, and Trade
                       Committee on Foreign Affairs
                                                     Washington, DC

    The committee met, pursuant to notice, at 10:02 a.m., in 
Room 2172 Rayburn House Office Building, Hon. Albio Sires 
(chairman of the subcommittee) presiding.
    Mr. Sires. Good morning, everyone. This hearing will come 
to order. This hearing, titled ``Understanding Odebrecht: 
Lessons for Combating Corruption in the Americas,'' will focus 
on Odebrecht's regional corruption scandal and U.S. policy 
options to support the fight against corruption in Latin 
America. Without objection, all members may have 5 days to 
submit statements, questions, extraneous materials for the 
record, subject to the length limitation in the rules.
    I will now make an opening statement before turning to the 
ranking member for his opening statement.
    Good morning, everyone. Thank you to our witnesses for 
being here today for a topic that extends across much of our 
hemisphere. Odebrecht is a Brazilian construction firm, but its 
name has become synonymous with one of the largest global 
corruption scandals in history. This web of bribery and money 
laundering with Odebrecht at its center has reached at least 
ten countries in the Western Hemisphere, brought down 
presidents, and shaken public confidence in government 
institutions.
    In 2016, Odebrecht and Braskem, a petrochemical company 
partly owned by Odebrecht, reached a plea deal with the U.S. 
Department of Justice. Under that agreement, Odebrecht agreed 
to pay at least $3.5 billion in penalties to resolve bribery 
charges in the U.S., Brazil, and Switzerland. It was the 
largest ever global bribery resolution in history. We know from 
the agreement that Odebrecht paid nearly $800 million in bribes 
from 2001 to 2016. However, this may be a low estimate. 
Countries like Venezuela have stifled efforts to investigate 
allegations linking government officials to corrupt payoffs.
    This scandal has rocked the political system of numerous 
countries including Brazil and Peru. Just last week, Brazil's 
former president, Michel Temer, was arrested for accepting 
bribes and campaign contributions from Odebrecht and other 
firms. In Peru, virtually every major political leader has been 
tarnished by Odebrecht including the last four presidents.
    In this hearing, we hope to better understand how this 
massive corruption scheme was executed. We will examine how 
Odebrecht attempted to buy off politicians from across the 
political spectrum. We will also look at how it moved money 
across borders using anonymous shell companies. A harsh reality 
is that dirty money from Odebrecht passed frequently through 
U.S. banking and financial systems. We must examine how we can 
do a better job in the future of stemming these illicit flows.
    We should also take this opportunity to assess U.S. policy 
and U.S. assistance programs to combat corruption in Latin 
America. Many governments and civil society organizations in 
the region are working hard to learn from cases like Odebrecht 
and prevent this from happening again. I believe the U.S. must 
be a reliable partner for those government officials seeking to 
root corruption and for the local organizations seeking to 
expose it.
    We should identify and support those who show the courage 
and political will to tackle this problem wherever it appears. 
As we look to the Fiscal Year 2020 budget, it is essential that 
we provide levels of foreign assistance funding that reflect 
our commitment to supporting a regional fight against 
corruption. We know that corruption erodes democracy, 
undermines the rule of law, and breeds citizen distrust and it 
is imperative that we work together to strengthen the region's 
institutions.
    Democracy, human rights, and the rule of law should be at 
the center of our foreign policy. I look forward to hearing 
from the experts with us today about further steps the U.S. 
Government can take to help combat corruption in this 
hemisphere.
    Thank you, and I now turn to the ranking member for his 
opening statement.
    [The prepared statement of Mr. Sires follows:]

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    Mr. Rooney. Thank you, Mr. Chairman.
    The Odebrecht bribery scandal is unprecedented in our 
hemisphere. It uncovered a systemic level of corruption that 
has reached every corner of Latin America and has led to the 
arrest and investigations of hundreds of public officials and 
businessmen in nearly a dozen countries. The scandal highlights 
the region's ongoing struggle to combat corruption, but it also 
presents an opportunity for the United States and our regional 
partners to discuss meaningful public-private sector reforms 
and to improve anti-corruption mechanisms and strengthen 
democratic institutions.
    The Odebrecht scandal was discovered through the 
investigation known as Operacao Lava Jato, or Car Wash, which 
was initially launched by Brazilian authorities in March 2014 
to uncover corruption within Brazil's State-controlled 
Petrobras oil company. Odebrecht, a Brazilian construction 
company, was also discovered to be providing bribes for 
preferential treatment in awarded contracts.
    However, Odebrecht's corruption knew no boundaries and 
extended far beyond Brazil, from Argentina to Mexico, and as 
far away as Angola and Africa. Lamentably, I have personal 
experience with witnessing their activities in Panama. Many 
jobs that me and my partners were going to pursue like Tocumen 
Airport, we dropped off as soon as Odebrecht joined the bid 
list.
    To date, we know that nearly 800 million in Odebrecht 
bribes have been accepted by government officials and 
candidates in ten Latin American nations. Through its in-house 
Division of Structured Operations--that is quite a euphemism--
Odebrecht used bribes to secure construction contracts worth 
over $3 billion. High-level officials have been linked to 
Odebrecht scandals in Colombia, Mexico, and the Dominican 
Republic, including links to former presidents and vice 
presidents in Brazil, Peru, Argentina, Ecuador, and of course 
Mr. Martinelli in Panama.
    While no country or region of the globe is completely 
immune to corruption, the Odebrecht scandal highlights the 
pervasive corruption throughout Latin America which holds the 
region's civil society, governments, and economies hostage. 
Corruption within the government and public sector of Latin 
America impedes regional growth, creates artificial economic 
barriers, and erodes public confidence in democratic 
institutions. Further, this corruption and its ruinous 
consequences are a main driver of regional migration in the 
narcotics trafficking which directly affects us here in the 
United States.
    While Latin America faces many challenges in rooting out 
corruption, many countries in the region have provided a 
framework for solutions in trying to solve their regional 
corruption issues. In Brazil, Transparency International, in 
consultation with public and private partners, has developed a 
package of reforms to include constitutional amendments, 
government institution reforms, and new rules related to 
corruption. Brazil's Minister of Justice has so far 
incorporated a number of these reforms into draft laws. 
Similarly, Ecuador, Colombia, and Peru have all considered 
anti-corruption measures in 2018.
    I know that INCAE in Nicaragua and Costa Rica are working 
on things in connection with many of my associates in Panama to 
strengthen institutions there which suffered great debility 
during the Odebrecht-Martinelli corruption times. The United 
States is also providing assistance to strengthen the 
institutional and technical capabilities of our regional 
partners to combat corruption. The State Department is working 
with the Department of Justice to implement programs such as 
the Criminal Investigative Training Assistance program and the 
Office of Overseas Prosecutorial Assistance and Training.
    I encourage our executive agencies to continue to work 
together and with our partners in Latin America to offer 
training and assistance to better practices and good governance 
and rule of law. I further encourage the exchange in posting of 
American officials throughout the region to assist in anti-
corruption and to serve as a resource for the region's 
governments, private sector, and financial institutions.
    Civil society also plays a critical role in demanding 
transparency and accountability in government, and I encourage 
continued support for strengthening civil society's role in 
fighting against corruption. I commend our friends in the 
region who are taking meaningful steps in rooting out 
corruption and upholding the rule of law.
    I am especially encouraged by Brazil's response to the 
Odebrecht scandal and by the activities that Panama is taking 
to try to address the time following the Odebrecht era there, 
and I support continued efforts to build off of these lessons 
throughout the region. I look forward to the testimoneys and 
opinions of all these important witnesses today and I want to 
thank Mr. Chairman Sires for holding this hearing. I yield back 
the balance of my time.
    Mr. Sires. Thank you, Congressman Rooney.
    Let me introduce, first, Michael Camilleri, Director of the 
Peter D. Bell Rule of Law Program at the Inter-American 
Dialogue. He served from 2012 to 2017 as the Western Hemisphere 
advisor on the Secretary of State's Policy Planning Staff and 
as Director for Andean Affairs at the National Security 
Council.
    Welcome to our hearing.
    We will then hear from Ms. Katya Salazar, Executive 
Director at the Due Process of Law Foundation where she has 
worked since 2004. Under her leadership, the Foundation created 
the human rights and extractive industries program and became 
involved in the defense of the inter-American system of human 
rights.
    Thank you.
    Finally, we will hear from Mr. David L. Hall who is now a 
partner at Wiggin and Dana after more than two decades as a 
Federal prosecutor with the U.S. Department of Justice. At 
Wiggin and Dana he advises clients concerning the Foreign 
Corrupt Practices Act, the False Claims Act, and the 
cybersecurity and data privacy, including assessment of 
policies and procedures as well as data breach preparation and 
responses.
    I ask the witnesses, please, limit your testimony to 5 
minutes and, without objection, your prepared written statement 
would be made part of the record. Thank you so much for being 
here today.
    Mr. Camilleri, you have 5 minutes.

STATEMENT OF MICHAEL CAMILLERI, DIRECTOR, PETER D. BELL RULE OF 
              LAW PROGRAM, INTER-AMERICAN DIALOGUE

    Mr. Camilleri. Thank you. Mr. Chairman, Ranking Member 
Rooney, members of the subcommittee, thank you for the 
opportunity to testify today. I am honored to be here.
    Corruption represents an enormous obstacle to economic 
development and human rights across the globe and closer to 
home. It weakens democracies, facilitates drug trafficking and 
organized crime, breeds extremism and unrest, and prompt mass 
migration. It also creates an unlevel playing field for U.S. 
businesses as the ranking member referenced.
    For these reasons, I believe that combating corruption 
advances the U.S. national interest and a more free, secure, 
just, and peaceful hemisphere and world, and I commend the 
subcommittee for convening today's hearing.
    Latin America, today, is with a few notable exceptions 
characterized by functional democracies. However, consolidating 
the rule of law is a consuming challenge and corruption remains 
pervasive. The Odebrecht case offers a singular opportunity to 
understand how corruption works in Latin America, why it 
happens, which countries are best equipped to combat it, and 
what the U.S. Government can do to help. My written submission 
to the subcommittee addresses all four of these issues in some 
detail. I will focus here on the role of the U.S. Government.
    First, the basics. Odebrecht admitted to the Department of 
Justice that it paid $788 million in bribes in ten Latin 
American and two African countries. Odebrecht's bribery was not 
just widespread, it was systematic. The company's secret 
Division of Structured Operations was set up specifically for 
this purpose. The bribes in question were often destined for 
political campaigns.
    From Brazil to Mexico, Venezuela to Panama, the Odebrecht 
schemes had a dual impact on citizens. Not only pilfering 
public funds for private use, but also distorting electoral 
processes through elicit campaign financing. The Odebrecht case 
reveals a series of structural weaknesses that allow corruption 
to flourish in Latin America. These include a permissive 
environment characterized by lack of accountability and 
specific challenges related to public contracting, campaign 
finance, and the role of shell companies and offshore accounts.
    The contrasting responses to the Odebrecht case are also 
revealing. In some countries, presidents, ministers, and CEOs 
went to jail; in others, investigations stalled. The judicial 
systems that enjoyed the greatest success were characterized by 
prosecutorial independence and political will, as well as 
technical capacity, effective use of tools such as plea 
bargaining, and a strong supportive role for civil society and 
the independent media.
    So what can the United States do to support Latin America's 
anti-corruption fight? I will offer four recommendations based 
on lessons learned from the Odebrecht case. First, strengthen 
the Department of Justice's mandate and capacity to combat 
foreign corruption. The Foreign Corrupt Practices Act is one of 
the most underappreciated sources of U.S. soft power in Latin 
America. Of course, the SFPA is designed to keep corporations 
with ties to the U.S. out of the business of corruption. It 
does not aim to police the conduct of foreign officials.
    But when a citizen of Mexico or Argentina or Ecuador learns 
from a DOJ plea agreement that Odebrecht paid tens of millions 
of dollars in bribes to dirty politicians in her country, she 
wants to know who was on the receiving end of those bribes. I 
believe it should be the policy of the United States to help 
her find out.
    Second, support proven in-country accountability 
mechanisms. This can be as simple as a well-timed tweet or an 
appearance by the U.S. Ambassador at a high-profile trial. It 
includes maintaining U.S. backing for international cooperation 
mechanisms that have proven highly effective in supporting 
countries with fragile judicial systems, most notably CICIG in 
Guatemala. And U.S. foreign assistance programs should 
prioritize support for independent journalism and civil society 
watchdog groups.
    Third, maximize the impact of the Global Magnitsky Act. 
Staffing up the Treasury Department's Office of Foreign Assets 
Control will help ensure that OFEC has the bandwidth to 
investigate and target both corrupt foreign officials and the 
networks surrounding them.
    And finally, lead by example. The U.S. leads best in our 
hemisphere when we lead by example. Unfortunately, in the past 
year, the United States dropped out of the top 20 countries on 
Transparency International's Corruption Perceptions Index. One 
specific way in which the United States can do more here at 
home is by improving beneficial ownership transparency so that 
shell companies cannot be used to launder dirty money through 
the U.S. financial system.
    Thank you again for the opportunity to testify on this 
crucial issue. I look forward to your questions.
    [The prepared statement of Mr. Camilleri follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Sires. Thank you.
    Ms. Salazar?

STATEMENT OF KATYA SALAZAR, EXECUTIVE DIRECTOR, DUE PROCESS OF 
                         LAW FOUNDATION

    Ms. Salazar. Thank you very much. Good morning and thank 
you again, Chairman Sires, Ranking Member Rooney, and members 
of the subcommittee for inviting me to testify this morning.
    As it was mentioned, the Odebrecht case represents maybe 
the largest transnational bribery scheme ever uncovered in 
Latin America. The case was a difficult blow for Latin America 
democracies and a challenge for its judicial institutions which 
were not well prepared to investigate and prosecute cases of 
this magnitude. But it was also important because it allowed us 
to understand how sophisticated criminal organizations operate 
in the 21st century.
    Latin America has robust international and national legal 
frameworks to combat corruption, so how could the Odebrecht 
scheme operate successfully for so many years? I will now 
present some lessons learned and recommendations arising out of 
this case.
    First, a strong legal framework alone is insufficient and 
State institutions must be able, in practice, to address the 
challenges presented by grand corruption, which means adapting 
institutional designs, policies, and methodologies to new 
realities, the realities of the criminal organizations in the 
21st century.
    Second, judges and prosecutors in charge of these cases 
must be able to carry out their work with autonomy and free 
from undue interference either external or internal from within 
their own institutions. And this is still one of the most 
common problems in Latin America especially for highly 
sensitive cases.
    Third, the modus operandi that has been brought to light by 
the Odebrecht case shows that large corruption networks seek to 
control criminal investigations against them and thereby 
guarantee impunity for their illicit actions through the 
control of high-level justice sector authorities especially 
Attorneys General and the high courts. To this end, and this is 
very important, such networks exert their influence on the 
appointment mechanism of these officials which is much easier 
to do when the designations are in the hands of the political 
powers and have little transparency and citizen participation 
as counterbalance.
    In this context, I would like to emphasize the role of the 
Attorney General as a figure of fundamental importance in the 
fight against corruption in Latin America. It is, the Attorney 
General, it is an official with significant power, but also one 
extremely vulnerable on the face of influence of people and 
groups interested in shielding themselves from prosecution. In 
Latin America, most prosecutors are independent from the 
executive branch, but aside from--at least in theory. But aside 
from a few exceptions, the President and the Congress still 
have the almost exclusive power to appoint and remove the 
Attorney General.
    Again, with few safeguards to counterbalance this power, 
these decisions could be--and in many cases are--arbitrary and 
motivated by reasons other than strengthening the rule of law. 
The aforementioned does not discount the need for international 
support mechanisms to tackle grand corruption as occurred in 
Guatemala and Honduras with CICIG and MACCIH, where there have 
been successes, but where the resilience of corrupt networks 
and their capacity to respond aggressively when their interests 
are at risk has also been put on display.
    Although there are many more lessons to be learned from 
this case, I have focused my comments on the role on the 
judicial systems, because in my opinion the best deterrent to 
the commission of corruption crimes is the successful 
prosecution of high-profile cases involving high ranking 
authorities.
    A few broad ideas about what the U.S. can do to support the 
fight against corruption in Latin America. First, through its 
foreign assistance, the U.S. Government should prioritize 
programs that support judicial independence, especially those 
oriented toward improving selection processes of high-level 
judicial authorities. U.S. diplomacy should also play a role in 
monitoring and making public statements on these issues when 
needed like it has done in Guatemala and in El Salvador.
    Furthermore, the U.S. should continue supporting 
investigative journalism in Latin America as well as civil 
society organizations throughout the region, leading the 
investigation of corruption cases, monitoring selection 
processes of high-level judicial authorities, and promoting 
institutional reforms.
    Finally, the U.S. must pay attention to the role of 
campaign financing and support strategic reforms in Latin 
America. True campaign finance reform is needed in the region 
to avoid repeating the history of Odebrecht. Thank you very 
much.
    [The prepared statement of Ms. Salazar follows:]
    
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    Mr. Sires. Thank you.
    Mr. Hall, 5 minutes.

     STATEMENT OF DAVID HALL, PARTNER, WIGGIN AND DANA LLP

    Mr. Hall. Thank you, Mr. Chairman. Chairman Sires, Ranking 
Member Rooney, and members of the subcommittee, thank you for 
the opportunity to appear today.
    On December 21st, 2016, Odebrecht and its petrochemical 
unit Braskem each entered a guilty plea to one count of 
conspiracy to violate the Foreign Corrupt Practices Act. The 
U.S. Government estimated that Odebrecht conspired to pay 
approximately $788 million in bribes in association with more 
than a hundred construction projects in 12 countries, mostly in 
Latin America.
    The global investigation of this scheme has ensnared almost 
a third of Brazil's government ministers, two former presidents 
of Brazil, two former presidents of Peru, a vice president of 
Ecuador, and many, many others. This conspiracy is nothing 
short of astonishing in scale. If somebody wrote a movie about 
it, I would not believe it. And it is not a one-off event and 
it did not result from the actions of a few rogue employees or 
officials. It could hardly have been more systematic and 
sustained.
    The company, Odebrecht, actually created a bribery 
department, which was known as the Division of Structured 
Operations, for the specific purpose of operating the corrupt 
scheme and laundering money. The scheme came to light in 2014 
after allegations of money laundering revealed that money 
dealers operating out of gas stations and car washes were 
working on behalf of an executive at Petrobras, the Brazilian 
petroleum corporation.
    Brazilian law enforcement initiated Operation Car Wash and 
discovered that Petrobras directors had been overpaying on 
contracts in order to fund kickbacks that were then deposited 
into a secret slush fund. This slush fund was used, in turn, to 
bribe politicians. Significantly, and unlike many FCPA cases 
prosecuted in the United States, this case originated from an 
investigation that began outside the United States by non-U.S. 
authorities.
    In the past, the U.S. often stood alone in its anti-
corruption efforts, and as a result, other nations did not 
enforce similarly robust anti-corruption laws. Some believed 
that the FCPA placed U.S. companies at a disadvantage in global 
commerce compared to international competitors that were not 
similarly constrained in behavior and did not operate under the 
financial burden of FCPA compliance and recordkeeping 
requirements.
    All this might be changing. The Odebrecht case itself 
implies as much given the extensive and effective anti-
corruption effort displayed by a magnitude of foreign nations. 
If these trends continue, it is good news for U.S. business 
operating on a global playing field because that playing field 
might become more level.
    There is much that the United States can do to take 
advantage of this momentum. For one thing, it can continue 
enforcing the FCPA against foreign corporations as well as 
domestic ones. But the degree of difficulty faced by U.S. 
enforcement and regulators in investigating conspiracies on 
foreign soil is very high. This is why it is so important that 
foreign governments are increasing their efforts in anti-
corruption enforcement.
    The United States can directly assist foreign authorities 
in anti-corruption investigations and enforcement, and the best 
way to do this is to have U.S. investigators and prosecutors on 
the ground in foreign countries developing relationships with 
their foreign counterparts. This sort of integration can be 
accomplished by expanding the scope of attache programs such as 
those at the Justice Department, the FBI, and the Department of 
Homeland Security, as well as expanding the scope of other 
programs including State Department programs that have already 
been mentioned.
    The United States has long been at the forefront of 
prosecuting anti-corruption cases and is now presented with a 
new opportunity to partner effectively with foreign governments 
in enforcing anti-corruption laws. Thus, the Odebrecht case 
might, with a little luck, portend the beginning of more 
effective and more fair global anti-corruption law enforcement. 
Thank you very much for your attention and I look forward to 
your questions.
    [The prepared statement of David Hall follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Sires. Thank you, Mr. Hall.
    Before we question, I would like to recognize the former 
chairman of the Western Hemisphere Subcommittee, Connie Mack, 
who is in the audience today. We worked very well together when 
he was chairman, from Florida.
    You know, this is a topic of interest to me for many years, 
the corruption in the Western Hemisphere. I really think that 
some of these countries have been set back for so many years 
because of the constant corruption that you read about it. So, 
when I came to Congress and tried to encourage attention to the 
Western Hemisphere and tried to encourage people to have money 
to help some of these countries because they really do need it, 
the question of corruption always surfaces.
    Why should we give money to countries that are so corrupt 
that the money that we give them may not go to the initial plan 
that we originally want it to? And, you know, it is a tough 
question to ask when you try to increase funding for these 
countries, and then we have this huge corruption case with 
Odebrecht.
    Mr. Camilleri, I am interested in how these bribes made it 
through the banking of the United States and how was it that 
they were able to do this and it took us so long to pick up on 
this. Can you answer that?
    Mr. Camilleri. Thank you, Mr. Chairman, and thank you for 
your longstanding interest and concern for this issue and for 
convening the hearing.
    There were, within the Odebrecht conspiracy, acts that took 
place on U.S. soil. Those included meetings of Odebrecht 
executives. It included money that found its way into our 
financial system. Odebrecht, however, was pretty systematic 
about how it used this Division of Structured Operations to 
have the bribes paid and did things, for example, like 
acquiring a bank on a small Caribbean island which it used in 
order to deposit many of these payments into the bank accounts 
affiliated with the corrupt politicians they were looking to 
pay off.
    So while some of the money did find its way into the U.S., 
much of it was routed elsewhere. The issue that I mentioned in 
my testimony is an important one. Beneficial ownership 
transparency is critical to allowing the law enforcement to 
scrutinize these financial flows, and it will, I think, just as 
importantly put the United States in a much stronger position 
to then go to other countries where this sort of thing is 
happening and ask them to take the same steps that keep shell 
companies, in order to keep shell companies from being used as 
a route for illicit financial movements.
    Mr. Sires. Thank you. I am concerned that this 
administration and previous administrations really did not 
speak up strongly enough on some of these issues in some of 
these countries.
    For example, Ms. Salazar, can you speak to the fact that 
CICIG was kind of pushed out of Guatemala and what are the 
repercussions of that?
    Ms. Salazar. Well, thank you. This is a very important 
question, Mr. Sires, because CICIG was a very important 
institution, not just for Guatemala but for the whole region 
for two main reasons. First of all, because it helped Guatemala 
to uncover these criminal organizations networks and how they 
operated, but they also showed the region that it is possible 
to do something to fight against corruption, to prosecute the 
corrupt.
    From the perspective of a Latin American expert on judicial 
reform, I have to say that I felt very disappointed for the 
decision of the U.S. Government to, you know, not give an 
unconditional support to CICIG. It was really sad.
    As you know, the head of the CICIG is living in New York 
right now and the CICIG will finish its mandate at the end of 
the year. And we expect that the U.S. Government can reflect 
about the lessons learned of the CICIG because there are other 
similar initiatives moving around the region. In Ecuador, the 
President of Ecuador, for example, has offered to create a 
similar institution. In El Salvador, the new President has 
offered to create also a kind of CICIG.
    So I think it is important to take seriously the lessons 
learned from the CICIG and support it. In general, 
international corporation to combat corruption is a good idea. 
The bad idea is like thinking that there is a one-size-fits-all 
method, because we need to analyze what are the particularities 
of each country. But I think with all due respect that the U.S. 
Government should support these kinds of initiatives which 
bring international support to our countries.
    Mr. Sires. Thank you.
    I now recognize the ranking member, Congressman Rooney.
    Mr. Rooney. Thank you, Mr. Chairman. You know, I have been 
doing business around the world since 1975 in my family 
companies and when the FCPA came in we did not think much of 
it. It added a lot of complexity to our work in many parts of 
the world, but I have got to tell you, reading this stuff and 
hearing this testimony and watching the Odebrecht thing impact 
in Latin America, makes me really appreciate one of the 
subsidiary roles of the FCPA was to attack the culture of 
corruption. Not just specific instances, but the culture of 
corruption.
    And I just wonder, Mr. Hall and Mr. Camilleri, you know, 
Brazil is known for the jeito and the culture of corruption and 
how does that kind of culture contribute to what Odebrecht did 
and some of their competitors, who I am not going to mention 
right now, and how will that culture impede the Brazilian 
Government's efforts to improve things now?
    Mr. Hall. Thank you, Mr. Rooney.
    I think it is clear that a culture of corruption is what 
leads to the criminal behavior. And in the case of Brazil, I 
would say that the Odebrecht case, what we have learned about 
that one conspiracy, the part that is public so far, 
demonstrates that that does exist. I think that one of the--and 
I say this as sort of a law enforcement traditionalist--is that 
one of the positive effects from law enforcement actions like 
this, and particularly effective multilateral law enforcement 
actions like this, is to create a deterrent effect and to 
change the standard.
    The problem with the culture of corruption is that it 
corrodes standards. It lowers them and it makes it seem OK to 
do things that people individually might understand is not the 
right thing to do, but it is the easy thing to do and I am 
probably going to get away with it. When law enforcement is 
effective in holding people to a higher standard or holding 
companies and institutions and government agencies and 
government officers to a higher standard, it creates a 
deterrent but it also creates an incentive to hit that higher 
standard.
    Mr. Rooney. Thank you, Mr. Hall.
    Mr. Camilleri?
    Mr. Camilleri. Thank you, Congressman. The Odebrecht case 
could only have happened in a culture of pervasive corruption. 
You only set up a dedicated bribe unit and pay hundreds of 
millions of dollars of bribes if you are pretty sure you can 
get away with it. This was not something that was exceptional 
that was a case of a few bad apples in the company. It was 
something that was premeditated, structured, systematic.
    So, I think your question goes to the heart of what the 
case revealed. In terms of how it might be changing, I think, 
and very much consistent with what Mr. Hall said, first of all, 
incentives are changing. The very fact that this case exists 
and the fact that prosecutors in many countries, not all in 
Latin America, have sort of taken up what the DOJ did and 
pursued the cases at the local level, creates a different set 
of incentives, so that is positive.
    We have heard anecdotally that business culture may be 
changing in some places, that the sting of the Odebrecht case 
is being felt and that the business community is pushing back 
against being shaken down for bribes. I think we will have to 
see on that, but it is positive that noises are being heard.
    And then the other piece of this obviously is political 
policy reform that is the preventive strengthening the 
frameworks and the enforcement mechanisms, and Katya spoke to 
this. I think, there, it is going to be more challenging, 
frankly. In Brazil, the current Justice Minister is former 
Judge Moro. He was kind of the hero of the Odebrecht case, the 
Lava Jato case at the local level. He has already had to water 
down the set of anti-corruption reforms that he presented to 
Congress because it is very hard it turns out to get the folks 
who are part of the system to then reform that system.
    So I think there is positive news, but also some wait and 
see and a lot we need to do to kind of stay on this issue.
    Mr. Rooney. Thank you.
    Can I have one more little bit?
    To followup on what Mr. Hall and you said as well, Mr. 
Hall, about the--you mentioned DOS and DOJ programs. How would 
you assess the level of cooperation across the different 
programs in the U.S. Government and what things have been most 
effective?
    Mr. Hall. Of course I can only speak from my experience, 
and I should point out that I did retire from the government 5 
years ago so maybe it is a little dated, but I did serve for 23 
years. I had a lot of experience with international 
investigations and, generally speaking, I would describe the 
programs really as nascent. There are programs in place. I have 
seen them work very effectively in terms of training, in terms 
of advice.
    What I think we can do better is to actually integrate our, 
you know, operations with foreign law enforcement in a more 
sustained way than we do right now. Right now, based on my 
experience, it is very ad hoc. So, my experience would be I 
would have an investigation into a transnational crime and I 
would, you know, basically establish a bilateral relationship 
with a counterpart in a foreign country and we would try to 
work together using, you know, our different sets of laws and 
try to merge them so that we could, you know, work effectively 
together.
    But it really was very ad hoc and, essentially, I was 
talking to a stranger. I was trying to make friends but we did 
not really know each other. What would be better would be to 
have more attaches on the ground, because the job of an attache 
is to establish those kinds of relationships so that when a 
field prosecutor like me shows up and says, here is what I want 
to do, the attache knows who to call.
    And I have seen that work well where there are attaches and 
particularly where there are good ones who really do have those 
kinds of relationships and really can make that work.
    Mr. Sires. Thank you, Mr. Hall.
    Congressman Espaillat.
    Mr. Espaillat. Thank you, Mr. Chairman, Ranking Member.
    So Brazil, Venezuela, the Dominican Republic, Panama, 
Angola and Argentina, Ecuador, Peru, Guatemala, Colombia, 
Mexico, Mozambique, and several other countries that allegedly 
have been involved in this major scandal. My first question is, 
are there any--Mr. Hall, this is to you. Are there any current 
prosecutions, open prosecutions in the U.S. Federal system of 
cases, directly connected to the Odebrecht case?
    Mr. Hall. Since I am no longer with the government I do not 
actually know the answer to that authoritatively. My 
understanding is the answer to that is yes, is that the 
investigation is continuing. I am confident that--with what we 
have just seen with, you know, recent events in Brazil--that 
the investigation certainly is continuing overseas and my 
understanding is that it is here too.
    Mr. Espaillat. So here in the U.S. circuits of Federal 
courts there are open investigations?
    Mr. Hall. Yes. And not anything that is charged, but my 
understanding is that the investigation does continue.
    Mr. Espaillat. OK. My second question is we have seen what 
has happened with CICIG and MACCIH. Ms. Salazar, there seems to 
be a resistance in Latin America, because of the history of 
Latin America, outside groups coming in to tell locals what to 
do. I happen to think that in some of those countries there are 
many good people in the civil society that want to battle and 
combat corruption, nonpartisan people, people of goodwill, good 
government folks that want to really combat corruption.
    Do you have like a model, is there a model that functions 
sort of like outside of the CICIG/MACCIH structure that 
involves local people that could be impartial and really have 
ownership and skin in the game to combat corruption like the 
Odebrecht corruption in these countries?
    Ms. Salazar. Yes, Mr. Espaillat. And, actually, there are 
different models that can be used to support a particular 
country using international law and international mechanisms. 
CICIG and MACCIH are just one more, but there are many others 
promoted by United Nations, by the Organizations of American 
States, which includes a different level of international 
personnel and international law or international mechanisms 
involvements. For example----
    Mr. Espaillat. But what about locally, because I think 
that----
    Ms. Salazar. Yes.
    Mr. Espaillat [continuing]. People see international 
entities or folks from outside the country as interventionists 
in some way. But I feel that in those countries there are good 
people that want to battle corruption. Is there a model that 
will bring in good folks that will combat----
    Ms. Salazar. Well--I am sorry. Actually, in CICIG and 
MACCIH there are many local people. Not all of them are 
foreigners. So I mean, I do not think, I mean the leaders, the 
heads of the institutions----
    Mr. Espaillat. Right. The leadership, right.
    Ms. Salazar. The leadership maybe are people from other 
countries, but there are many locals in the institutions. But 
what I wanted to say again there are different models. There is 
not just one model that we need to apply. For example, and this 
is connected with what Mr. Hall say, there are countries where, 
you know, their general prosecutors' offices have been opened 
to receive international cooperation, international legal 
assistance, people from abroad but work with the local.
    Mr. Espaillat. Yes, but usually those local prosecutors' 
office are appointed by the local government and they may 
themselves be involved in corruption. But what about having an 
entity, an impartial nonpartisan entity in a--is there anything 
that works out there?
    Ms. Salazar. For me, CICIG has worked.
    Mr. Espaillat. OK.
    Ms. Salazar. For me, for example, the International 
Commission of Human Rights belonging to the Organization of 
American States has an initiative called Grupo de Expertos, 
group of experts, and they have created this group of experts 
to send to Nicaragua and to Mexico----
    Mr. Espaillat. OK.
    Ms. Salazar [continuing]. To analyze the case of the 43 
students disappeared. These initiatives were a kind of 
combination----
    Mr. Espaillat. I see, thank you.
    Ms. Salazar [continuing]. And they work also.
    Mr. Espaillat. I have one last question for Mr. Hall. You 
mentioned there was a bribery department, right, sort of like 
structure for this. Where was this department and who headed 
it?
    Mr. Hall. It was a department of Odebrecht and it was 
literally created for the purpose of organizing in a corporate 
way the payment of----
    Mr. Espaillat. Where was it based, yes?
    Mr. Hall. I believe in Brazil.
    Mr. Espaillat. And who headed it?
    Mr. Hall. I do not know the answer to that.
    Mr. Espaillat. OK. Thank you.
    Thank you, Mr. Chairman.
    Mr. Sires. Congressman from Florida, Ted Yoho.
    Mr. Yoho. Thank you, Mr. Chairman. Thank you all for being 
here, I appreciate it.
    And to me it is fascinating to see the level of corruption 
around the world, and I think a universal truth is all 
governments are made up of people one way or another and 
whenever people are involved there is always a level of 
corruption involved. And we can look at our own government in 
our own country, so we are not excluded from that. And it is 
just, the sad thing to me is that it robs the individuals in 
those countries of the resources of that nation, whether it is 
Maduro in Venezuela or in this case in Brazil, and I look over 
the years the level of corruption that goes on.
    And I read an article yesterday in the Wall Street Journal. 
It says since Brazil's return to democracy in 1985 after a 
military dictatorship, four of the eight presidents who took 
office have now fallen afoul of the country's law, either 
impeached for misconduct or arrested after leaving office. Mr. 
Temer's arrest is further evidence of a crisis in Brazilian 
democracy according to Marcelo Freixo, a Member of Congress for 
the left-wing Socialism and Liberty Party.
    This is what I find interesting and I want to ask you if 
this is just the way business is. We cannot celebrate the 
arrest of another former president, he said. Corruption is 
structural and is embedded in the relationships between our 
institution. And I ask you, is this truly the norm for Latin 
America, Asia, Africa, or even the U.S.?
    Mr. Camilleri? Excuse me.
    Mr. Camilleri. Fourth time lucky, thank you, Congressman. 
Corruption certainly was structural in Brazil. I think that is 
what this case among others revealed. I think that has to do 
with different issues, some having to do with accountability 
and some having to do with the particular kind of coalition 
Presidential system that the Brazilians have, where essentially 
presidents are very weak and have to cobble together 
legislative majorities among a dozen or more parties and at 
first pork and later corruption became the currency with which 
they were able to govern.
    And so there are some structural things that are particular 
to Brazil that will make it difficult for them to root out this 
problem and I think that is what the article you are 
referencing was----
    Mr. Yoho. It is. I mean we can look at JBS. I got pulled 
into this to the largest meat producers in the world. They got 
slapped with a $3.2 billion fine for paying hundreds of 
millions of dollars out in bribes.
    In your statement you said the World Bank calls corruption 
public enemy No. 1 for the developing world. The United Nations 
observes that corruption represents an enormous obstacle to the 
realization of human rights and that unchecked it can undermine 
the functioning and legitimacy of institutions, the rule of 
law, and ultimately the State itself. And I see it as a cancer 
that just erodes society, it robs people of the wealth of a 
country that should be propelling society.
    So, my question for the panel is, No. 1, can you point out 
any examples where U.S. support has led to progress in 
addressing anti-corruption in the region? And we will focus on 
Latin America. Ms. Salazar?
    Ms. Salazar. OK. OK, two things. I want to start saying two 
things. First of all, when I, when we, or at least when I talk 
about corrupt institutions in Latin America, I mean in general 
it is true, but in particular we need to see each country and 
each particularities. I mean, I do believe that there are 
countries where in spite the whole institution could be, you 
know, people not corrupted but attacked by corruption. There 
are like good people----
    Mr. Yoho. Sure.
    Ms. Salazar [continuing]. --champions, I mean good people 
working to fight against corruption, so I think we need to 
support or you need to support these groups. And this is 
something that we have seen, for example----
    Mr. Yoho. Let me ask you this, how do you support those? 
Are you familiar with MCC, the Millennium Challenge 
Corporation?
    Ms. Salazar. Yes. Yes.
    Mr. Yoho. You know, they go in and they have a set of 
metrics that they measure a country.
    Ms. Salazar. Yes.
    Mr. Yoho. I propose that we do trade that way. We trade 
with countries, we set up a metric. Countries at the very top 
that fall in alignment with America, not us dictating to them, 
but if they fall up here, they get the best trade deals. 
Countries that are below get a little bit less trade deal. They 
can always aspire to get to the other level, and that is the 
only way I can see that we can do that.
    But in doing that we have to make sure we are following the 
rules the way we are supposed to. I would love to go on, but I 
am out of time. Thank you for being here.
    Mr. Sires. Congressman Vargas.
    Mr. Vargas. Thank you very much, Mr. Chairman, and thank 
you for holding this hearing. And also, the ranking member, 
thank you. Especially, thanks to the people that are here with 
us today especially the presenters.
    Mr. Camilleri, you said that it is hard to get people that 
are part of the system to reform that system. As you know, 
Andres Manuel Lopez Obredor, AMLO, in Mexico, was recently 
elected President. He ran on an anti-corruption platform. That 
was going to be and is what he is attempting to do.
    And a number of us were able to go down to his inauguration 
and he basically said, you know, if we can stop corruption in 
this country, we can do all sorts of things for the country and 
quite aggressively propose the future for Mexico. What do you 
think of Mexico and what is going on there with the programs 
that he has instituted or he is attempting to institute and how 
do you think that is going to work out? Because he was not 
part, I would say he was not part of the people he was trying 
to get in, obviously, but he was not part of that system.
    Mr. Camilleri. Thank you, Congressman.
    I think you are right about that. AMLO is somebody who is 
viewed by the Mexican people as having a level of personal 
rectitude that is pretty unique in that political system. That 
gives him a real platform to take on this issue and I think it 
is right to say that the backlash against corruption was one of 
the things that most drove his successful election campaign.
    I think what has been perhaps concerning is that it is not 
clear what the institutional kind of approach to combating 
corruption will be from his government. That is, having this 
momentum, having this platform, having the personal legitimacy 
that he brings to the issue, what is he going to do with that?
    This is not going to be a case where the fact that the 
president is not a crook is enough to make, you know, every 
last cop in Mexico honest, right. You are going to have to do 
some things at a structural level starting with, for example, 
and DPLF has done a lot of work on this, bringing greater 
independence to the public prosecutor's office. And those sorts 
of things----
    Mr. Vargas. He has proposed a number of these measures. I 
think that you probably have seen them in his inauguration. I 
do not know if he is going to follow through, but he certainly 
did propose them.
    Mr. Camilleri. Yes, I think we are waiting to see. I mean I 
have met with his minister who is sort of running this file. I 
think their diagnosis of the situation is accurate. I think 
they are well meaning, but they have been a little bit slow out 
of the gate, to be honest, in terms of actually putting in 
place a program to weed out corruption in the country. It is 
early, but we will have to wait and see.
    Mr. Vargas. Before my time runs out, I have to do ask this 
and I would be remiss if I did not. I am a former Jesuit. I was 
in the Jesuits for about 5 years. And Nicaragua, right now, has 
an incredible problem with the President there and some of the 
corruption, and in particular I fear for the life of Chepe 
Idiaquez. He is director of the Jesuit university there, UCA, 
because he is standing up to the corruption.
    Can anyone comment about what is going on in Nicaragua, and 
again in particular this priest who I think has been very brave 
to stand up to the corruption that he sees.
    Mr. Hall, would you like to handle that one if you can, and 
then we will go to Ms. Salazar. If you have information, go 
ahead.
    Mr. Hall. I do not think I am the right person to answer 
that.
    Mr. Vargas. OK, Ms. Salazar?
    Ms. Salazar. Yes. Well, the situation in Nicaragua is very 
complicated and somehow, you know, from my opinion, from my 
point of view, what we have seen last year in Nicaragua, I mean 
cities movilizations and the people killed, detained, political 
detentions, and so on and so forth, are the result of a process 
of 20 years of co-option of the government institutions.
    From my perspective, from the work I do, I feel somehow 
guilty for not being able to say something before, because now 
all institutions are corrupted by the political power and it is 
going to take time to find, I mean to enter into a transition 
process. I think this is what this country needs, a transition 
process to go through accountability and institutional reforms.
    Mr. Vargas. Well, thank you. And again, I want to mention 
again the priest's name is Father Chepe Idiaquez. He has been 
threatened many times. The university has been harassed, has 
been attacked. I want to make sure that we keep him and the 
university in our mind when we speak about this issue. I hope 
he was not one of the people that has been killed, because a 
number of people have been killed. So again, I would mention 
his name, Chepe Idiaquez, the Society of Jesus, the rector of 
the UCA. Thank you.
    Mr. Sires. Thank you, Congressman.
    Congressman Levin.
    Mr. Levin. Thank you very much, Mr. Chairman.
    Mr. Camilleri, when it comes to the U.S. role in fighting 
corruption both our actions and our words matter, yet, at 
times, the Trump administration has been inconsistent in 
speaking out about corruption in the Americas. The 
administration has been relatively quiet about the efforts by 
Guatemalan President Jimmy Morales to undermine the U.S. 
supported, U.N. supported International Commission against 
Impunity in Guatemala, or CICIG, particularly while it 
investigates corruption within Mr. Morales' own administration.
    Last month, Foreign Policy reported, quote, that over the 
past 2 years, the Trump administration's political appointees 
have worked to undermine a highly regarded U.N. anti-corruption 
commission in Guatemala, one that has uncovered alleged illegal 
campaign contributions to Morales as well as allegations of 
corruption by his brother and son.
    Foreign Policy also reported that following a March 2018 
trip to Guatemala, then U.S. Ambassador to the United Nations, 
Nikki Haley, began pushing for the U.S. to end its financial 
support for CICIG. Yet months earlier, Haley argued in an op-
ed, quote, corruption spurs revolutions, enables extremist 
groups, and fuels civil wars. Combating corruption is not just 
about good governance, it is about maintaining peace and 
security. What do you think accounts for this inconsistency 
from the Trump administration?
    Mr. Camilleri. Congressman, I honestly do not know, but I 
am glad you raised it. CICIG, in my view, has been the most 
successful innovation in anti-corruption policy and law, 
certainly in the 15 years that I have been working on legal and 
policy issues in the hemisphere. It has also been----
    Mr. Levin. Most important in the hemisphere or most 
important in Guatemala?
    Mr. Camilleri. In the hemisphere, certainly in Guatemala.
    Mr. Levin. And why, expand on that. What is so great about 
CICIG?
    Mr. Camilleri. CICIG took an extremely fragile judicial 
system with almost absolute impunity for the powerful with high 
degrees of penetration and cooption, intimidation by organized 
crime, and turned it into a place where not only was that 
impunity broken, Guatemalan democracy quite literally was saved 
on a couple of occasions by CICIG. Presidents, vice presidents, 
ministers started going to jail. And I think, most importantly, 
the courageous Guatemalans who were always there, the Attorney 
Generals Claudia Paz, Thelma Aldana, were able to do their 
work.
    I think what we discovered when you put CICIG in the 
country and you gave them sort of this blanket of protection 
was that Guatemalans are capable, they are courageous, they 
just need to be in an environment where everything they are 
doing is not being leaked to organized crime and their families 
aren't being intimidated and they are being forced into exile.
    And so CICIG was a gamechanger. It was also something that 
had strong bipartisan support. It was created during the George 
W. Bush Administration.
    Mr. Levin. Right.
    Mr. Camilleri. Supported through the Obama Administration, 
supported at the beginning of the Trump administration. 
Secretary Tillerson gave a speech in Austin in which he praised 
CICIG. So, it came as a, I would say not just a surprise, but 
sort of a devastating blow to those of us who work on this 
issue to see the Trump administration in some respects turn its 
back on CICIG.
    Mr. Levin. And do you think President Morales has felt 
emboldened by the Trump administration's tepid response to his 
actions?
    Mr. Camilleri. There is no question in my mind. I will say 
the Trump administration's broader policy in Guatemala in the 
last couple of months has seemed to find its footing again, so 
the administration's stance on the revival of an amnesty law 
for war-related crimes has been good and some of its statements 
on election-related issues have also been good.
    The decision to, on the jeeps that were misused to 
intimidate CICIG and other Guatemalan organizations and 
institutions, again I think the administration is coming to a 
better place on some of those broader rule of law issues in 
Guatemala, but certainly on CICIG it was not just 
disappointing, but emboldening as you said for Jimmy Morales in 
his campaign to save his own skin by going after CICIG.
    Mr. Levin. All right.
    Well, I have just a little time left. Ms. Salazar, let me 
bring you in to this. Given this idea about the Guatemalans own 
capacity being freed here, what is your idea about how 
different countries have prosecuted or not prosecuted 
corruption cases? Is it differences in legal framework? Does 
the U.S. have a big role to play or the U.N. in helping empower 
countries?
    Ms. Salazar. As I was saying before, I think that--I mean 
in general judicial institutions in Latin America are weak, but 
in particular if you analyze country by country there are good 
people working in good institutions. I mean it is possible to 
identify particular areas, divisions worth it to support. Maybe 
it sounds strange, but, for example, this is what happened in 
Peru. There is a huge corruption scandal, not necessarily the 
Odebrecht case but a similar one, and because of this case the 
general prosecutor had to resign. But there is still a group 
within the general prosecutor's office investigating the 
Odebrecht case and investigating it really good. I mean, 
really, they are doing a great job. So this is my first idea.
    And the second idea is in terms of prosecution for the 
Odebrecht case there are differences in countries. I would say 
that countries that have done more have been Brazil and Peru 
and the countries that have done less are of course Venezuela 
and Mexico, unfortunately Mexico. Yes, they have done almost 
anything.
    Mr. Levin. Thank you.
    Sorry to go over, Mr. Chairman. I yield back.
    Mr. Sires. Congressman Gonzalez.
    Mr. Gonzalez. Thank you, Mr. Chairman, and thank you to the 
panel for being here with us today. I am going to continue 
asking a couple of questions that Congressman Espaillat and 
Congressman Levin talked about, which in particular is with, in 
Guatemala. And I am very interested in Guatemala because I 
think the idea of CICIG is a great idea, but there are some 
issues that concern me. But I think it is a great idea that we 
have a group that is internal in a country and is on the ground 
fighting corruption on a daily basis.
    My concern is, what Department of Justice supervision do we 
have on CICIG, if at all? That could be to anyone on the panel 
who wants to take that question. Mr. Hall might know about 
that.
    Mr. Hall. I do not know authoritatively. My understanding 
is that it is not a Department of Justice program so it is not 
supported directly in the way that other more bilateral 
programs might be.
    Mr. Gonzalez. That is my understanding as well. So how do 
we measure the accountability of CICIG? Does anybody know how 
much has been spent on that group in the last 10 years?
    Mr. Camilleri. Congressman, that information is public but 
I do not have it in front of me.
    Mr. Gonzalez. Yes. Well, it is about $168 million. That is 
a lot of money. And I see what the Department of Justice could 
do with a $168 million just in a small, you know, in the 
southern district of Texas where I practice law, and they would 
have a lot of arrests and convictions. And I know they did a 
great job at the beginning with Otto Perez and that 
organization that was severely corrupt and I am sure we are far 
from where we need to be.
    But my only concern is that I feel the Department of 
Justice should be more involved in overseeing what is happening 
in Guatemala and in particular with CICIG. At the end of the 
day I know, and by no means am I giving President Morales or 
the Government of Guatemala a pass on anything, but it is 
concerning that we have an international organization in that 
group with complete immunity, if I am correct. If I am not 
correct, please correct me, right--with complete immunity, with 
high investment both American and international, and it seems 
like we do not have milestones that we could measure that that 
investment is a good investment.
    And I just could tell you, you know, just looking at what 
we do in the Department of Justice in one area with $168 
million, it seems that we would have a massive result from 
that. And I do not see--I did see some great results at the 
beginning, but it seemed to have kind of taken a huge dip. And 
I know that at the end of the day the President was, the 
President's brother and son had some issues. Can you tell me 
anything about that?
    Ms. Salazar. I agree with you, Congressman Gonzalez, about 
the accountability thing. I really do think, I think all 
institutions need to be accountable for the work they do and 
the money they receive, either State money or private money. 
This is clear. I do not know the details about the 
accountability mechanisms of CICIG where, but I agree totally 
with you that they need to be accountable for the way they have 
spent their money. But on the other side, I have to address the 
great work that the CICIG has done.
    Mr. Gonzalez. Do you know--excuse me for interrupting. Do 
you know why, what are the issues that concern the President's 
brother and son that they got caught up in a corruption scandal 
in Guatemala? Does anybody here know the details of that?
    Ms. Salazar. Well, they were of course they did not like 
what CICIG was doing because in one of the----
    Mr. Gonzalez. But do you know what they are being accused 
of?
    Ms. Salazar. I do not remember. Illegal finance?
    Mr. Gonzalez. OK, that is political. That is the President.
    Ms. Salazar. Yes.
    Mr. Gonzalez. I am talking about the son and the brother.
    Ms. Salazar. I do not remember. I do not remember.
    Mr. Gonzalez. OK. I have done a little bit of research on 
this and it had to do with $10,000 worth of gift baskets.
    Ms. Salazar. Oh, OK. Yes.
    Mr. Gonzalez. Which is quite shocking. And I have no 
problem, you know, anybody who commits a crime should pay for 
it and deal with it, but I have huge issue. I know we barged 
into that Presidential palace with cameras and machine guns to 
arrest a kid who had been going to school here in the United 
States that came down to face the consequences, and I just 
think that CICIG when they did that, really, I think it hurt 
their credibility.
    And I am not talking about Guatemala, because what other 
country--I thought that was a great model to take to other 
countries in Central America and Mexico and South America. But 
how are we ever going to get them to accept that program when 
they see that type of abuse in places like Guatemala?
    Ms. Salazar. I accept that, you know, if this is the case, 
I will agree with you that maybe it was a mistake in the 
strategy to select the case. But I would not think that this 
decision, this maybe bad decision would, you know, nullify or 
would, you know, disappear all that important things that the 
CICIG has done.
    Mr. Gonzalez. I agree with that.
    Ms. Salazar. Yes.
    Mr. Gonzalez. I agree with that. At the beginning I think 
they did a great job, but I do feel that something went off 
track at some point. And, you know, I think that maybe the U.N. 
should have gotten involved at that point and maybe changed the 
leadership or something to save the integrity of CICIG and to 
allow an organization like that to be acceptable to other 
essential American countries or Latin American countries. And I 
am particularly bothered that the Department of Justice plays a 
very little role in that group.
    Ms. Salazar. If you allow me to say, if that happen I would 
agree with you that you need to do more oversight about CICIG's 
activity.
    Mr. Gonzalez. So who would do that?
    Ms. Salazar. I would agree with that. But again, on the 
other hand, we need to preserve the institution. We need to 
preserve the initiative because, you know, if you see in other 
countries in the region, they are asking for a CICIG, because 
in many countries State institutions are corrupted by the 
political power and the criminal organizations.
    Mr. Gonzalez. I agree. But who would supervise CICIG?
    OK, I yield back. You can answer that later.
    Mr. Sires. I gave you a minute and a half.
    Congressman Phillips.
    Mr. Phillips. Thank you, Mr. Chairman and to our panel.
    I would like to move to a little bit more macro level and 
discuss for a moment how we measure corruption, how we best 
measure corruption and how we provide incentives to combat 
corruption. So, turning to the former, I would welcome each of 
your thoughts on using the Corruption Perceptions Index as a 
real measure of corruption and if there are some alternatives 
that we should be considering.
    Mr. Camilleri. Congressman, thank you. So, corruption is 
notoriously hard to measure which is probably why you are 
asking the question. Asking experts is the CPI, the Corruption 
Perception Index does is one method, another is to ask citizens 
themselves their experience, so, you know, have you paid a 
bribe in the last 6 months, in the last year. Those capture 
slightly different things. One is more about petty corruption, 
the other is about grand corruption.
    I think the CPI is probably the best thing we have. I do 
not think it means that we can take a country that is 67th on 
the list and say it is doing better than a country that is 68th 
on the list. You know, it is more, you know, it helps us kind 
of spot general trends and place countries comparatively in 
broader terms. But certainly, you know, we do have a challenge 
in terms of accurately measuring corruption.
    Mr. Phillips. OK. Thank you.
    Ms. Salazar.
    Ms. Salazar. Yes, briefly. Yes, I agree with Michael, it is 
very difficult to measure corruption. For me as a lawyer, I am 
not a political scientist, but as a lawyer I think that, you 
know, if you find high level corruption cases with no 
prosecution or with high levels of impunity, well, for me in 
this country the problem of corruption is very high.
    But I want to--two things. One is that, I mean why 
Odebrecht happened and these kinds of cases happened, the 
Odebrecht case I think it found a very particular context in 
the region because we went through during the last 20 years, 15 
years in Latin America, we went through a crisis of political 
parties. Our traditional political parties lost trust from the 
public and this is why appear many new political parties, the 
small ones who need money. They needed money to do their 
campaigns and this is where Odebrecht appeared, so two needs 
found each other and I think it was a great context for 
Odebrecht to have a success.
    And the second thing is that for me, the main sign that the 
anti-corruption movement or anti-corruption measures are having 
success is seeing that high level authorities are prosecuted 
and are imprisoned. This is the best example that you can have 
in any Latin American countries as a deterrent for corruption.
    Mr. Phillips. Thank you.
    Mr. Hall.
    Mr. Hall. I have already made it clear that I am an 
advocate for deterrence so that is why I agree with Ms. 
Salazar's comment. I also think that perception does matter. I 
mean, I analogize it to the organized crime in Philadelphia 
where I am from and the effect of organized, the pernicious 
effect of organized crime often was overlooked in press 
coverage of the mob.
    What would get covered would be things exploding and people 
getting shot, you know, and exciting events like that. But 
where it really was felt was on the street, you know, if there 
was somebody, you know, causing a problem in the neighborhood, 
the neighbors would have to ask themselves, do I call the 
police or do I call the capo, you know, and when, you know, the 
mob infiltrates unions that affects people's jobs and it 
affects, you know, who gets hired for what.
    And then of course when American politicians are corrupted 
by the mob the same thing happens, and people, it is this exact 
phenomenon we are describing. People just lose confidence in 
the process and they do not believe that they are going to be 
treated fairly and so they have to make these decisions. It 
becomes a shadow government, in effect.
    So the idea of asking people, you know, questions about how 
does this affect you on a concrete level, I agree, makes a lot 
of sense.
    Mr. Phillips. Thank you. And we have less than a minute 
left, but I would welcome any comments on incentivizing good 
governance and in the Millennium Challenge Corporation, whether 
or not any of you think those are worthy mechanisms to provide 
incentives to encourage good government. We have about 30 
seconds.
    Mr. Camilleri. Sure. Well, you know, thumbs up for MCC. 
Certainly, anything that creates a direct link between stronger 
rule of law, stronger programs to combat corruption, and 
stronger support from the United States, I think, is a good 
idea.
    Mr. Phillips. And effective?
    Mr. Camilleri. Yes.
    Mr. Phillips. I like succinct answers.
    All right, we are out of time. I yield back. Thank you.
    Mr. Sires. Thank you.
    Congressman Castro.
    Mr. Castro. Thank you.
    I want to ask you all--and I apologize. I have been running 
around this morning so I just got in. But this corruption, how 
much of it is driven by poverty and socioeconomic circumstances 
versus by greed, for example, or graft or things like that?
    Ms. Salazar. Well, in the case of petty corruption I think, 
you know, poverty and lack of opportunities are an important 
factor. But when we talk about grand corruption, big criminal 
organizations, you know, working as a network to take advantage 
of public wealth for their own gain, I do not think it is 
connected to poverty, it is connected with greed, and taking 
advantage of State wealth.
    Mr. Castro. And also you all may have gone through this 
already, but what is--we have talked a lot, for example, about 
doing something in the Northern Triangle countries of Central 
America. A big part of that would be an anti-corruption 
assistance, right? What is the scale of the challenge as far as 
you all can tell? For example, are we talking about $5 billion, 
are you talking about $20 billion, $30 billion? What is the 
scale of the challenge?
    Mr. Camilleri. Congressman, obviously it is hard to put a 
number on it.
    Mr. Castro. Sure.
    Mr. Camilleri. The Central America package that was focused 
on the Northern Triangle that I was involved in piecing 
together was the one that the Obama Administration designed. It 
was a billion dollar per year package. I think Congress funded 
about three-quarters of that which is still a significant 
investment in the region. And so I think something on that kind 
of magnitude is probably about right.
    There is obviously an issue of absorption capacity as well 
as the vast sort of needs on the ground. But I think just as 
important as kind of a scale is this issue of incentives that 
Congressman Phillips raised, which is, you know, how can we 
more nimble with that money? How can we put it in places where 
it is being used by responsible stewards?
    We have seen, just taking the Northern Triangle countries 
for example, we have seen extraordinary attorney generals and 
we have seen corrupt attorney generals. Shouldn't our 
assistance be responding to the particular people in charge of 
the institutions on the ground that we are supporting in order 
to both get more bang for the U.S. taxpayers' buck but also 
incentivize proper behavior by our partners in the region?
    Mr. Castro. Anybody else?
    Ms. Salazar. Yes, just briefly. Again, for me, the best 
deterrent for corruption is putting high level authorities in 
prison. Really, I mean this is what I have seen in the region. 
This is the best example for others and the best deterrent.
    Mr. Castro. All right, I yield back, Chairman.
    Mr. Sires. Well, I want to take this time to thank the 
witnesses Mr. Hall, Ms. Salazar, Mr. Camilleri, and all the 
members that were here today. And with that, the committee is 
now adjourned. Good job.
    [Whereupon, at 11:17 a.m., the subcommittee was adjourned.]

                                APPENDIX
                                
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            RESPONSES TO QUESTIONS SUBMITTED FOR THE RECORD
            
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