    [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:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        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:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        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

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                RESPONSES TO QUESTIONS SUBMITTED FOR THE RECORD

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     [all]