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Weekly Report - 27 February 2020 (WR-20-08)

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PARAGUAY: Combating ‘dirty money’ in electoral campaigns

Following months of debate, and amid public pressure, Paraguay’s congress has approved a new bill that seeks to stop the financing of political campaigns with ‘dirty money’ - funds obtained from dubious sources. This has been hailed as a major step forwards in the fight against corruption and money laundering and in the strengthening of Paraguay’s democracy. It should also help to improve Paraguay’s international image at a key moment for the country.

The ‘political campaign financing control’ bill was promoted by the small opposition Partido Patria Querida (PPQ). The issue of irregular campaign financing has long been a bone of contention between the country’s smaller and main political parties. The smaller parties repeatedly accuse the traditional parties of resorting to irregular and even illegal sources of financing to the detriment of political pluralism. But taking advantage of the fact that one of the recommendations by the Financial Action Task Force (FATF) as part of its current review of Paraguay’s efforts to combat money laundering was to tighten the rules on political campaign financing, the PPQ presented a bill to this effect in November 2018.

Initially the bill was given short shrift by the ruling Asociación Nacional Republicana-Partido Colorado (ANR-PC). But, with the country threatened with being blacklisted by the FATF the government led by President Mario Abdo Benítez eventually came out in support of the PPQ initiative and urged congress to approve a bill on the matter.

The bill tabled by the PPQ proposed the establishment of a new publicly available political campaign financing register to which all candidates would have to submit information, including their sworn declaration of assets. The register is to be maintained and supervised by the electoral and tax authorities and the national secretariat for the prevention of money and asset laundering (Seprelad), a government agency. The idea is that Seprelad will supervise the sources of financing for all electoral campaigns from general elections to party primaries.

However, legislators from various parties (but mainly from the ANR-PC) had some reservations about the PPQ’s proposal and introduced modifications to the bill before approving a version of it on 4 February by the chamber of deputies. This version of the bill stipulated that the proposed rules would be applied to all national electoral campaigns but not to party primaries. Crucially, it also proposed that the entities in charge of monitoring financing sources should be the electoral and tax authorities but not Seprelad.

The modifications to the bill were rejected by supporters of the original PPQ initiative, including the Comisión de Escrache Ciudadano protest group, which has been leading public campaigns against political corruption. They argued that the changes introduced by deputies betrayed the spirit of the original bill.

  • Comisión de Escrache

The Comision de Escrache Ciudadano was created in July 2018 after a group of self-convened demonstrators, outraged by the numerous corruption allegations against national legislators, decided to organise and lead public derision (‘escrache’) campaigns targeting individual legislators. After naming and shaming them, the group stages noisy demonstrations outside individuals’ homes and calls on local firms to refuse to serve them and their families. The actions of the Comisión de Escrache has succeeded in forcing the impeachment or resignation of various legislators accused of corruption.

The Comisión de Escrache staged a series of demonstrations outside congress to pressure senators to reject the modified bill and to approve a new version that includes all the main aspects of the original bill. The pressure exerted by the Comisión, the government, and the legislators from the PPQ and other parties had an effect.

On 14 February the senate unanimously approved a new version of the bill that more closely resembled the original during an extraordinary session. Moreover, in another extraordinary session on 17 February, the chamber of deputies unanimously approved the bill after several (mainly ANR-PC) legislators changed their minds and backed the incorporation of some aspects that just a few days earlier they had decided to remove.  

The approval of the bill was celebrated by its supporters. They maintain that the initiative will help to improve the transparency of electoral campaigns significantly to the benefit of democracy. They urged President Abdo Benítez to sanction the bill into law before 7 March - the deadline set by the electoral authorities to introduce any legislative changes that are to be implemented in the municipal elections scheduled for November. Abdo Benítez also hailed the approval of the bill and pledged to promulgate it as soon as a copy of it is placed on his desk.

Abdo Benítez described the bill as “another tool” that would allow the authorities to clamp down on criminality and money laundering. In fact, Abdo Benítez said that with approval of the bill a total of 13 separate legislative initiatives have been approved under his administration to improve the fight against money laundering, including the 12 initiatives presented by the government in response to the FATF recommendations.

Cuevas case ramps up pressure

The case of ANR-PC deputy Miguel Cuevas, who has been formally accused of various acts of corruption by the attorney general’s office, most likely also influenced the decision by ANR-PC legislators to vote in favour of the ‘political campaign financing control’ bill.

Cuevas, a former president of the chamber of deputies (2018-2019), has been accused of illicit enrichment, influence trafficking, and of lying in his declaration of assets, with the accusations dating back to the time when he was mayor of the city of Sapucái (1996-2010) in Paraguarí department, and Paraguarí governor (2013-2017).

Cuevas disappeared from public view after the chamber of deputies voted to lift his immunity from prosecution in August 2018. However, he turned himself in to the authorities on 20 February after the courts dismissed his habeas corpus appeal and a judge issued an arrest warrant against him. Cuevas was then placed in preventive detention pending trial.

Cuevas’ arrest served to focus public attention on the numerous corruption cases affecting national legislators and the need to ensure that there are higher standards for those elected to public posts.

Dengue emergency

In addition to approving the ‘political campaign financing control’ bill during its 17 February extraordinary session, Paraguay’s chamber of deputies also approved the resolution declaring a national emergency over the outbreak of dengue fever passed by the senate a week earlier. The current dengue outbreak has left a toll of 20 dead and over 5,000 confirmed cases (among which were President Mario Abdo Benítez and his wife) so far this year, the worse dengue outbreak in the country in recent years. The approval of the opposition-sponsored resolution was controversial as the government did not consider it to be necessary, arguing that it was addressing the situation. But legislators agreed that the government’s response has been inadequate and that more needs to be done.