New Civil Society Report on Chile: even better implementation of preventive measures of corruption & the establishment of an asset recovery office needed

14 February 2023 –

Click on the report to download it in Spanish!

A new civil society report authored by Fundación Multitudes finds that, Chile has developed a broad regulatory framework of laws to prevent corruption, in line with Chapter II (Preventive Measures) of the UN Convention against Corruption (UNCAC). With strong and independent state bodies in charge of fighting corruption and a high level of transparency in the public administration, a solid framework for citizens to access information and participate in decision-making processes, Chile has great preconditions to fully implement the Convention. However, for this to happen, the existing regulatory framework needs to be more effectively implemented and enforced, and more inter-institutional coordination is needed. Regarding Chapter V (Asset Recovery) of the UNCAC, the country is mostly compliant with international standards of anti-money laundering, but more needs to be done to improve the national asset recovery system, for instance, by setting up a dedicated asset recovery office and gathering related data in a systematized way. Produced by the civil society organization, Fundación Multitudes, with technical and financial support from the UNCAC Coalition, this report is intended to contribute to the UNCAC implementation review process in its second cycle.

Chile is still lacking a national anti-corruption strategy. Recent developments, such as the proposal for a new constitution in October 2020, and the mass protests that followed, ending in the rejection of the proposal in September 2022, signal a general dissatisfaction of civil society with the government’s actions. However, President Gabriel Boric has taken steps to counteract this trend, for instance, through announcing the launch of a National Public Integrity Strategy in June 2022, with the aim of raising the standards of transparency, anti-corruption and integrity at the State level. This process has so far stood out for its inclusiveness of civil society, academia, the private sector and the Chilean public administration in a cross-cutting manner, but more institutions need to be involved and an effective way to measure its impact needs to be developed.

The country established a working group in 2012 called the UNCAC Anti-Corruption Alliance, which aims to design actions and strategies to comply with the UNCAC, bringing together representatives of public and private institutions, academia, civil society and international organizations. However, the Alliance does not have a clear operational structure or a clear work plan, which makes it difficult to measure its impact.

The official UNCAC review process in Chile was scheduled to begin in 2019. The country visit took place in August 2022 with the involvement of civil society organizations, including Fundación Multitudes. In line with its commitment to the UNCAC Coalition’s Transparency Pledge, the government of Chile has published a draft of its self-assessment checklist on a governmental website, making the country mostly compliant with the Pledge. The final document, together with the full country report, which is currently being drafted, will be available once finalized on Chile’s UNODC country profile page.

For all the detailed findings, read the full civil society report in Spanish. A translated English version of the report is also available.

Main findings

The following are some of the main findings according to topic:

Public sector employment

Chile’s public sector employment regulations comply with the recommendations made in the UNCAC. There is an open public employment portal, which each institution uses in a decentralized manner to post job openings. Almost 80% of all public employees are recruited through a standardized and rigorously applied merit-based recruitment system, which ensures stability in public employment and continuity in the execution of public services, the other 20% is recruited for short-term contracts or as direct hires. In early 2022, the Office of the Comptroller General of the Republic issued a ruling establishing that by 2023 new fee-based contract workers may only be hired for short-term assignments or for work requiring a level of expertise of temporary employees.

Political financing

The legal financing of political parties and candidates, whether by the State or by private parties, is regulated by two laws in Chile. In recent years, there has been a decrease in the number of complaints of irregularities, which is a direct result of greater compliance with the regulations by parties and candidates. However, the major shortcoming of these laws and of the National Electoral Service’s (SERVEL) regulations is that it acts only upon reports of irregularities or faults.

Codes of conduct, conflicts of interest and asset declarations

Law 20.955 mandates the ministries and their dependent services to impart rules of general application for the development of codes of ethics on official conduct. However, the main problem is that the legislation does not apply to a large extent to local government officials since its application has been more widely promoted at the level of the central public administration. Although Open Government Chile’s progress report shows that 87% of institutions have integrity systems in place and 63% of institutions have strengthened their intranet and reporting platforms, there is a lack of clarity and knowledge of citizens on how to submit a complaint.

While the government submitted a bill to strengthen public integrity in 2018 with the aim of preventing conflicts of interest that may arise in the entry and exit of public officials, as well as other matters related to the prevention of anti-corruption acts, there is no institution in charge of taking measures to supervise conflicts of interest related to former public officials in private entities in practice. The bill is currently being dealt with in the Senate.

Anyone holding a civil service position is obliged by law to submit an asset and interest declaration upon taking office, then once a year and finally when they leave office. These declarations are submitted directly on the Comptroller’s Office’s InfoProbidad website and are made publicly accessible. To date, around 90 000 asset and interest declarations have been submitted to the platform. The law foresees an obligation for public officials to dispose of certain assets that could present a conflict of interest while exercising their public position. The Comptroller’s Office has the independence and expertise, along with the necessary resources to fulfill its mandate, and therefore continuously monitors the assets and interest declarations.

Whistleblower protection

Reporting and whistleblower protection mechanisms in Chile under Law No. 20,205 from 2007 are outdated. The law only applies to complaints to the administrative statute committed after 2007, it only applies to some public employees, leaving out officials of the armed forces and public security, it does not cover State institutions and there is no compensation system in place for the victims and reporting person.

In March 2020, the government of President Gabriel Boric presented a revised bill on whistleblower protection for reports of corruption, which creates a web-based whistleblower channel, under the responsibility of the Office of the Comptroller General of the Republic, through which whistleblowers can report acts of corruption that may constitute administrative infractions and possibly crimes. Confidentiality and a series or protective measures to prevent reprisals against the whistleblower are guaranteed. The bill is currently in the mixed committee of the Chamber of Deputies due to the rejection of amendments.

Public procurement

There are clear procedures in place with respect to the bids that the Chilean State carries out with different entities. While there are certain exceptions to the rule, the vast majority of contracts in public procurement are made publicly available on the Chile Compra online platform in open data. The platform has a section on its website where it provides access to the analysis of the different government purchases, and a list of purchases made month by month can be downloaded according to the different government agencies.

Several corruption scandals in the sphere of public procurement that happened during the state of emergency caused by the Covid-19 pandemic, which suspended standard procurement procedures, have come to light. In March 2021, a bill was introduced to modernize the public procurement system and improve the quality of public spending, increase the standards of probity and transparency, and introduce circular economy principles in State purchases. The bill was approved by the Chamber of Deputies and the Senate.

Public finances

The Budget Directorate of the Ministry of Finance alone oversees the analysis and the management of public finances according to the two laws regulating this area. The Directorate itself has limited financial means for this major task, making the implementation of any public policy more bureaucratic. The fact that each public agency’s annual budget, the budget management balance of the previous period, transfers, acquisitions, contracting, as well as the monthly trial balance are updated regularly and are publicly accessible via the “Active Transparency” section of their respective websites is noteworthy.

Access to information and participation of society

Chile has a comprehensive law on access to information and an independent body, the Council for Transparency (Consejo Para La Transparencia – CLPT), whose purpose is to promote transparency in the public administration, oversee compliance with the rules in public bodies, apply sanctions in case of violations, and guarantee the right of access to information. Appeals and complaints about non-compliance of public bodies with the right to access information can be filed anonymously with the CPLT. Information on requests for information and their status can be seen publicly on the Transparency Portal. Nevertheless, the scope of the law on the access to information is not very broad and does not cover autonomous institutions. In September 2018, the government of President Sebastián Piñera presented the “Transparency 2.0” bill to strengthen the institutional framework and procedures for access to public information. The bill is in its second constitutional procedure before the Senate.

While in general, the right to access public information works well in practice, despite the CLPT being underfunded for the amount of work it has to do, there have been several instances when information was only partially revealed or denied, for example, regarding official emails, regarding information related to the number of detainees, deaths and injured during the social unrests of 2019, or certain information related to the Covid-19 pandemic. In the latter, the active role of the CPLT is noteworthy.

In general, citizens have several opportunities to participate in public policy making and decision-making processes, for example, in the co-creation of certain measures such as the National Public Integrity Strategy, Open Government Partnership (OGP) Action Plans, public consultations, both of central public administration agencies, such as the Ministry of Health, Environment, among others, as well as consultations of local government agencies, such as municipalities.

Independence in the judiciary

The Public Prosecutor’s Office and the judiciary enjoy functional independence in Chile, and there are support courts in place, such as the Specialized Anti-Corruption Unit (UNAC), the Specialized Unit for Money Laundering, Economic Crimes and Organized Crime (ULDECCO), and the International Cooperation and Extraditions Unit (UCIEX). The Chilean Judicial Branch has a Transparency Commission, which has positioned it as one of the most accessible through electronic channels, obtaining outstanding scores in the Justice Center of the Americas (CEJA)’s international rankings. However, limited financial and human resources hinder intersectional investigations, mainly in the area of drugs and public corruption.

Private Sector transparency

There is no law in place regulating private sector transparency in Chile, and the current efforts of crime prevention in the private sector occur solely on a voluntary basis. Information is usually scarce and depends on the will of the private sector. Conflicts of interest of organizations have been sanctioned by the Chilean Courts of Justice, and there is a restriction for individuals who have served in organizations such as the Financial Market Commission (CMF) from performing functions in the private sector.

Anti-money laundering

Two laws and the Financial Analysis Unit (UAF) regulate the anti-money laundering framework in Chile. The Latin American Financial Action Task Force (Grupo de Acción Financiera de Latinoamérica – GAFILAT) noted in its 2021 report that Chile has developed two National Strategies for Preventing and Combating Money Laundering and Financing of Terrorism (together with their action plans), the National Strategy Action Plan 2014-2017 and 2018-2020. The Action Plan 2018-2020 shows a significant degree of progress in this area. However, a lack of communication and coordination of the UAF with other public institutions, the absence of a “safe havens” regulation, and a delay in the formulation of a National Strategy to Prevent and Combat Money Laundering and Financing of Terrorism for the current period need to be addressed.

Asset recovery

The International Center for Asset Recovery (ICAR) recognizes that Chile’s asset recovery policies have focused on compliance with Financial Action Task Force (FATF) recommendations related to money laundering and terrorist financing, which has led to it being mostly compliant with FATF standards in the fourth evaluation round. In this context, the Chilean authorities have promoted the implementation of a policy aimed at increasing the seizure and confiscation of assets derived from money laundering and the financing terrorism, in order to combat the economy of criminal organizations. Issues that are still pending are the lack of a centralized system in place for the collection of asset recovery data, which is hence hard to find, and the lack of an asset recovery office or adequate mechanism for the custody and administration of assets.

In general, Chile offers a wide range of mutual legal assistance in a constructive and timely manner, and is part of information exchange networks, such as the Egmont Group, several OECD fora, among others. However, other States Parties to the UNCAC are not considered as claimants before Chilean courts. Moreover, Chile does not allow for non-conviction-based confiscation or forfeiture of assets.

Key recommendations

In its report, Fundación Multitudes make several key recommendations for priority actions to be taken to ensure the full implementation of the UNCAC in Chile, for example:

  1. Promote the implementation of the “National Strategy for Public Integrity” to be the coordinating instance of the Chilean public administration around anti-corruption policies and behaviors.
  2. Promote the implementation of a legal framework to generate models of prevention, transparency and monitoring of crimes in the private sphere.
  3. Implement a systematization, with respect to codes of ethics, internal controls and audits to certify good practices, prevent crimes and typify those cases that incur in irregularities.
  4. Implement a national anti-corruption strategy, adding key members to the UNCAC Anti-Corruption Alliance, such as the National Electoral Service (SERVEL).
  5. Generate more structure in the Anticorruption Alliance Chile. Adopt an appropriate guideline that allows the UNCAC Anti-Corruption Alliance Chile to create a working group integrated transversally into the public administration, private entities, academia, civil society organizations and international organizations, and provide them with tools so that they can work on the planning of the institution, enabling the measurement of impact, greater organization and analysis of results.
  6. Promote the tax reform project in order to obtain greater resources. Implement the national registry of final beneficiaries of income, and carry out the corresponding sanctions in case of non-compliance.
  7. Implement within the regulation an expansion of the subjects obliged to provide Suspicious Transactions.
  8. Include in the electoral financing legislation a specific section that allows campaigns and propaganda on social media platforms. Improve the available mechanisms to increase transparency in the political arena and ensure accountability of electoral expenses.
  9. Adopt an information systematization mechanism that allows for the systematization/standardization and/or typification of different cases of conflicts of interest.
  10. Include within the National Electoral Service (SERVEL) regulations a section that allows for the standardization/typification of several cases that currently fall outside the current legal framework, such as updating the allowable expenses for advertising in social networks, typifying irregularities in cases of misinformation, etc.
  11. Prioritize the bill that improves the whistleblower system for public servants.
  12. Sanction and implement regulations for the recovery of assets between States Parties.
  13. Implement a data registry for confiscated assets and seized assets, including information provided by the different institutions that work on this issue. Regarding the confiscation of assets, clarify that the courts and Public Prosecutor’s Office should only confiscate assets once a sentence has been published, and not as a precautionary measure. Promote the implementation of laws that allow for a more developed forfeiture framework, such as non-conviction-based forfeiture, extended forfeiture, among others.
  14. Update the Financial Analysis Unit’s national risk assessment. It is unknown whether another one is being worked on as of 2021, since the last one was from 2017 to 2020.

 For all the detailed findings, read the full civil society report in Spanish. A translated English version of the report is also available.

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