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Calculating the cost of corruption in Guatemala

Guatemalan politics has been upended by a corruption scandal that has President Otto Perez backed against the ropes -- but just how much money has been stolen? It is, by definition, impossible to answer the question precisely: There is no accounting process for government funds that corrupt officials skim, stash, misspend or otherwise plunder. Investigators have not yet said exactly how much they believe Perez stole as the alleged mastermind of a scheme in which businesses paid bribes to dodge taxes on their imports. Prosecutors have charged his former vice president, Roxana Baldetti, with taking a 50-percent cut on the bribes, for a total of some $3.8 million between May 2014 and April 2015. But that may be just the tip of the iceberg. Investigators from a special United Nations commission tasked with fighting high-level graft in Guatemala have also uncovered separate corruption schemes implicating the top officials of the central bank and social security administration. It is difficult to estimate just how much public money vanishes each year in the country, across the board. In a back-of-the-envelope calculation, the humanitarian group Oxfam and the Central American Institute for Fiscal Studies (ICEFI) came up with a ballpark figure of half a billion dollars a year. They arrived at that number by studying how much of the government's budget is "vulnerable to corruption" because of a lack of oversight, transparency or sound legislation, said ICEFI's executive director, Jonathan Menkos. Then they took an educated guess at how much of the "vulnerable" cash is actually being filched. - What's $500 mn worth? - "If 20 percent is being lost to corruption -- the minimum amount observed in the rest of the world -- we would have losses of around 4.2 billion quetzals, or $500 million," Menkos said. That, he said, "represents four times the current budget of the attorney general's office, the people in charge of fighting corruption." To hammer the message home, the researchers figured out what else half a billion dollars could buy in the Central American country, which is still recovering from a 36-year civil war and is torn by violence, poverty and inequality. Half a billion dollars adds up to about three-fourths of the annual public health care budget, school lunches for 3.5 million children and 5,000 scholarships, they said. All are badly needed in the country of 15 million people, 53.7 percent of whom live in poverty. To look at another government project, the vanished money would fund access to violence prevention programs for 800,000 Guatemalan teens, in a country where young people are "cannon fodder" for drug gangs, said Menkos. Guatemala's ultra-violent gangs are responsible for most of the country's 6,000 murders a year, one of the highest homicide rates in the world. - 'Eating away the state' - Despite the corruption, the Guatemalan economy is faring rather well at the moment. It has registered growth of three to four percent per year in recent years -- one of the best rates in Central America. GDP in 2014 was $58.7 billion. But government revenues are extremely low -- about 10.5 percent of gross domestic product, against an average of 34.1 percent among the 34 countries of the Organisation for Economic Cooperation and Development. "Guatemala doesn't have the capacity, in terms of government revenues, to have quality public services," said economist Mynor Cabrera of the Economic Foundation for Development in Guatemala. Government dysfunction is one of the issues fueling protesters' anger with Perez, who on Tuesday became the first president in Guatemalan history to be stripped of his immunity by Congress. In fact, graft and shoddy public services go hand in hand, said Manfredo Marroquin, the head of Citizen Action, the local branch of anti-corruption watchdog Transparency International. He bemoans 50-year-old schools without roofs or desks and hospitals that ask patients to bring their own cotton, scissors and other basic supplies. "Nearly all our public services have collapsed," he said. "Corruption has eaten away the state."