For anyone living, buying, doing business, or investing abroad, corruption matters. It may not be deal-breaker, but it’s not something you should ignore.
When I first moved abroad in 2001, I didn’t pay much attention to political corruption in the countries in which I lived or visited. I kept a tally of countries that were rated poorly (and those rated highly) but it was an academic exercise rather than a practical one.
Back then I thought public corruption was really no different than what we do in the United States. We allow lobbyists to “purchase” legislation, and permit large anonymous donors to effectively buy our elected officials.
To me, simply handing the money directly to a politician in exchange for a favor was no worse than what we’re doing.
But I was wrong… on several counts.
How To Deal With Corruption Overseas
First of all, public corruption in a corrupt country is not the same as our legalized version of politician-buying. It goes much deeper and is far more damaging to a country where corruption is rampant.
And, more personally, corruption abroad did affect me as an expat, even though I was not involved in politics and had no ongoing interface with my host government.
It affected me because corrupt public officials don’t become corrupt on Election Day. They’re the product of a culture where dishonesty is both tolerated and expected. The same holds true for police and business people in corrupt countries.
As an expat I wasn’t affected by corruption in the public sector. What changed my lifestyle was the corresponding, pervasive dishonesty in everyday life.
We North Americans are among the world’s rule-followers, and we’re basically honest… and we assume honesty in others. Adapting to a dishonest culture can be difficult.
In my experience in Latin America, countries with high corruption levels are the countries where you have to religiously lock your car doors… carefully count your change at the register… and be careful that you’re not being overcharged.
Taxi drivers are more likely to raise the fare when they think they can get away with it. And prices in shops may not be marked, so merchants can charge you based on what they think you can pay…
People often fail to keep appointments, expecting you to accept a flimsy excuse. Even cheating on tests in school is permitted (in Ecuador, they call this “collaboration”).
When you visit an unknown doctor, you hope he was the one supplying the answers rather than the one copying them.
Traffic Police Will Likely Be Your First Interaction With Corruption…
In Cuenca, Ecuador, I once started down a one-way street going the wrong way. I quickly turned around, but not before the police saw me. Two armed officers got into the back seat of my car and took charge. They directed me to a dead-end street in a remote section of town, while another officer followed in the patrol car. They refused to leave the back seat until we paid them a bribe, after which they let us go. (This happened our first month in town… I could have handled it better a year later).
And I had a similar situation in Brazil. In this case, the police at a roadblock falsely claimed that the registration on our rental car was no good. We weren’t allowed to leave until we’d paid a bribe of around US$50. My only other choice was to remain impounded in the breakdown lane of BR-101 in the middle of nowhere. What’s worse, my local police hit me up for another US$50 a week later.
These are a few real examples of how corruption can affect you when corruption is accepted by the local culture.
My experience was very different in Chile, Uruguay, and Spain, however, all of which are ranked as honest countries.
In Chile I pulled an illegal maneuver in a construction zone. A policeman pulled me over, explained what I’d done wrong, and politely asked me to be more careful.
In Spain, I was parked illegally along a highway trying to find a local cemetery on a map. Within a few minutes I was surrounded by four motorcycle patrolmen from La Guardia Civil. But instead of soliciting a bribe, all four motorcycles actually escorted us to the gate of the cemetery we were looking for.
Local Merchants Also Get In On The Con
To give another personal example, I was short-changed in Ecuador perhaps 100 times over 5 years. Each time it was politely claimed to be an honest mistake, but the mistake was never—not once—in my favor.
In Uruguay, I was never short-changed in six years.
In Colombia it hasn’t happened yet.
I get my corruption data from Transparency International, from the Corruption Perceptions Index. The word “perception” is used because it’s impossible to objectively measure corruption using published data. Instead, they use surveys of people who deal with the public sector in the countries being analyzed.
In other words, this index—while a good broad cultural indicator in my experience—is not really tailored towards expats. Your on-the-ground experience is what counts.
And while Colombia may not be ranked as high as Uruguay or Chile (or the States), my experience has been just as good. Our contractors have been dependable and honest, and they show up on time.
When dealing with public officials I’ve found them to be honest and straightforward; no one has ever tried to solicit a bribe from me.
What Does This Mean For You?
While Ecuador is not rated well for corruption, I know first-hand that it’s a great place to live, has fantastic weather, and wonderful people.
Many people—because of where they live and who they associate with—don’t even notice that they’re in a corrupt country… especially if they don’t drive, and thereby avoid encounters with the police.
On the other hand, if you’re thinking of starting and running a business, you should give the country’s corruption rating some extra weighting in your analysis.
Corrupt public officials can make your life difficult when running a business.
Instead of using the corruption rating to pick a country, I’d use it to set your expectation, and to establish your behavior.
Even in the most corrupt countries, you’ll find honest people to work with… merchants and service providers who meet your expectations for honesty and dependability.
So a country’s corruption rating shouldn’t disqualify it for you… at least not country-wide. But it should be among the criteria that you use to make your choice of where to settle or invest abroad.
Everyone’s different, and the available opportunities in a country—or something like perfect weather or beaches—may well outweigh your concerns for corruption.
Contributor, Overseas Living Letter