North American luxury brand Ralph Lauren will pay US$1.6m to settle charges that one of its subsidiaries habitually bribed Argentine customs officials between the years of 2005 and 2009.

“The purpose of the bribes, paid through its customs broker, was to obtain entry of Ralph Lauren Corporation’s products into the country without necessary paperwork, avoid inspection of prohibited products, and avoid inspection by customs officials,” a statement from the US Securities and Exchange Commission said.

Ralph Lauren Logo

The US$1.6m agreement includes US$132,000 in prejudgment interest, a US$882,000 payment to U.S. Justice Department as part of a non-prosecution agreement, as well as US$593,000 in disgorgement of illicit profits to the Securities and Exchange Commission (SEC).

The SEC decided not to pursue charges of violating the Foreign Corrupt Practices Act (FCPA) because Ralph Lauren Corporation was compliant with the SEC investigation and had reported the original violations on its own initiative.

“When they found a problem, Ralph Lauren Corporation did the right thing by immediately reporting it to the SEC and providing exceptional assistance in our investigation,” said George S. Canellos, Acting Director of the SEC’s Division of Enforcement.

To identify other potential problems, Ralph Lauren conducted a risk assessment of its major operations worldwide. The corporation has ceased operations in Argentina.

Yesterday’s passing of the tax reform bill in the province of Buenos Aires was overshadowed today by the release of a photo suggesting bribery within the provincial parliament.

Clarín published a photo of La Cámpora leader José Ottavis allegedly discussing the handing out of bribes in the parliament session on tax reform yesterday. The photo showed the screen of Ottavis’s phone displaying a text message in which fellow deputy Rocío Giaccone informed him of $150,000 bribes being offered to opposition members during the debate on the rural land tax bill.

Ottavis denied the suspicions, sharply criticising Clarín and accusing the newspaper of “violating the privacy of a worker,” and reprimanded the “impunity of the paper.”

Ottavis told the radio programme of Victor Hugo Morales that, “there is bad blood, and bad intentions.” He said that the  Giaccone “was informed of gossip and instead of celebrating, was worried and told me.”

Cabinet Chief, Juan Manuel Abal Medina spoke of the photo today, declaring to the same radio show, “it means absolutely nothing, it speaks of people who were not there. There is this idea of making a mess, accusing and throwing around of generalities without any sense.”

“It is a very rare thing, but still, it doesn’t look very good in the picture… very strange,” said Abal Medina.

Photo by Sanra Ritten

In the wee hours of 4th August 2007, customs officials at Aeroparque Jorge Newberry in Buenos Aires searched the suitcase of a US-Venezuelan businessman named Antonini Wilson. The US$800,000 that they found set off a series of events that has led to a US investigation, Argentine calls for Wilson’s extradition, and angry denials of wrongdoing by Argentine president Cristina Kirchner. Regardless of the final outcome, the suitcase scandal has once again reminded Argentina of a shadow that has darkened its political landscape for much of its history: corruption.

Wilson’s suitcase isn’t the only one making news. Last June, another suitcase, this one holding US$60,000 in cash, was discovered in the office bathroom of then finance minister Felisa Miceli. Miceli was forced to resign her post and has since been indicted. From ex-president Carlos Menem and his top-of-the-line sports cars to the illegal embezzlements of the military dictatorship, Argentines have come to expect corruption from the highest levels of government on down.

Yet, despite cases that embroil high-profile politicians, the scope and character of corruption in Argentina remains very difficult to ascertain. Is it widespread, or confined to a few flagrant abuses of power? Is it an ingrained part of the culture, or an aberration that can be expunged from the political process.

Worldwide corruption watchdog group Transparency International’s annual ‘Global Corruption Barometer’, released in December, offers some insight into these questions, painting a complicated and, at least at first glance, contradictory picture of corruption in Argentina.

Photo by Sanra Ritten

In Transparency International’s report, only 5% of surveyed Argentines admitted to paying a bribe, less than half the percentage of respondents in Venezuela, the participating Latin American country with the second-lowest percentage of reported bribery. (The Dominican Republic and Bolivia led the pack with 28% and 27% respectively. Three of Argentina’s neighbours – Chile, Brazil, and Uruguay – were not among the participating countries.)

While, Argentines reported paying many fewer bribes than citizens of the other surveyed countries, they sang a very different tune when asked about their perception of corruption in their country. Argentines had less confidence in the private sector, the media, religious organisations, the legal system, and the police than did the respondents of any other surveyed country in Latin America. When asked to rate their perception of public and private sectors on a scale of 1 (no corruption) to 5 (very corrupt), Argentines gave an average response over 4 to political parties, congress, the legal system, and the police.

With regard to government attempts to combat corruption, Argentines proved far more sceptical than any of their Latin American counterparts. An overwhelming 73% of Argentines responded that they thought the government’s measures to combat corruption were ineffective, a full 14 percentage points higher than Guatemala, the next most pessimistic country in this regard in the region.

Photo by Sanra Ritten

The numbers in the survey seem discordant. Why do the citizens in a country where only 5% of respondents admit to paying bribes perceive corruption as a bigger problem than those in a country like Bolivia where 27% of respondents acknowledge paying bribes?

“What we’ve been noting [in the study] is that there’s a widely held perception that there’s a lot of corruption, but when the time comes for us to view ourselves as a society and assume our responsibility for corruption, acceptance of that responsibility is very low,” says Laura Alonso, director of Poder Ciudadano, the Argentine affiliate of Transparency International. “That’s to say, the study reproduces a distinctly Argentine phenomenon…to place responsibility for our problems on others.”

Alonso adds that the discrepancy between the numbers may also have something to do with a problem of recognition. Splashy scandals with cash-filled suitcases make Argentines aware of ‘grand corruption’, but the notion of ‘small corruption’ may cause more confusion. Some Argentines may accept petty bribery as merely part of everyday life, and not interpret it as a symptom of corruption.

Photo by Sanra Ritten

Argentina’s culture of denial and a widespread ignorance of what constitutes bribery may very well have suppressed the overall numbers. Yet it’s hard to imagine that many of the same factors aren’t also at work in Bolivia, the Dominican Republic, and Venezuela.

Could Argentina’s cultural of denial be so pronounced that the actual numbers are more in line with Venezuela or even Bolivia, but respondents simply lie more than in the other countries? Even if Argentina’s cultural of denial is stronger than in those countries, it’s hard to imagine it could have such a dramatic effect as to cut the rate of honest response to a voluntary, anonymous survey in half.

So, if we accept that Argentines on average pay fewer bribes than citizens of the other surveyed countries in Latin America, then why do they perceive that they have a bigger corruption problem? ‘Grand corruption’ is notoriously difficult to quantify (there aren’t many politicians interested in filling out surveys on their own abuses of power), and thus a comparison between countries is very difficult.

Photo by Sanra Ritten

Yet, according to Alonso, Argentina really does lag behind many of its neighbours in combating ‘grand corruption’, a phenomenon that is due to the relative lack of competition in its political system.

“When a political party in power feels that there exists competitive alternatives that could take its place, that party will be a lot more careful and will become a lot more controlled. Competition generates a better climate in which to control corruption.”

Alonso cites México, Brazil, Chile, and Uruguay as examples of countries in which recent increases in electoral competition have lead to a lessening of ‘grand corruption’. However, in Argentina, Alonso says, there’s been a regression: “In the 1980s and part of the 90s, Argentina had a more competitive system than it does today. From Menem’s first election onward, the system has taken serious steps back in terms of competition. This regression doesn’t generate a climate in which reformers can actually reform. Reformers who win elections never enact any reform, because the corrupt rules are the ones that allowed them to win. Today, Argentina’s major deficiency in terms of potential reform is its lack of political competition. It’s a problem that won’t go away merely by changing a few laws.”

Photo by Sanra Ritten

Argentines saw this lack of competition on display last October, when the most newsworthy thing about the presidential election was that it was over before it started. The cloud of corruption that has hung over Argentina didn’t begin with the election of any president – although certainly corrupt officials haven’t helped – but rather with a system of politics in which choice is never given a chance.

Corruption in Argentina is defined by the yawning gulf between the ‘small corruption’ of bribes and the ‘grand corruption’ of a stagnant political system Argentines may not have the displeasure of forking over cash to corrupt functionaries as much as the citizens of many others in Latin America, but when they look toward a democratic process that offers little in terms of democracy, their famous pessimism finds a worthy target.