1 February 2023 –
A new civil society report authored by Fundación Nacional para el Desarrollo (FUNDE) finds that while El Salvador has a diverse but dispersed legal framework in place in line with Chapter II (Preventive Measures) and anti-money laundering of the UN Convention against Corruption (UNCAC), it is severely lacking implementation in practice. An insufficient asset recovery framework and the unwillingness of the Financial Intelligence Unit to release information on this issue have made analysis on the implementation of Chapter V (Asset Recovery) provisions impossible. Produced by the civil society organization FUNDE, 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.
In the last two years especially, a worrying trend identified in this report is the capture of public institutions and a co-opted judiciary, which have lost their independence through unregulated reforms and arbitrary appointments of officials close to the ruling party. Ever-increasing restrictions of access to information, freedom of the press and retaliation towards anyone who speaks out against the state, are also cause for grave concern. Even in the production of this report, the researchers faced threats and intimidation. The seven high-level cases of alleged money laundering or embezzlement against three former Presidents (see the Saca González, Funes Cartagena and Flores Pérez cases) and four other heads of public institution, three of which have resulted in convictions with the others still pending, speak volumes about the level of state capture in the country.
Lacking a national anti-corruption strategy, there is no inter-institutional coordination on the prevention of corruption and little progress has been made in this regard, despite the existence of the so-called Inter-Institutional Anti-Corruption Working Group. While some institutions have internal “Integrity and Open Government Policies” in place, most do not and none of them carry out periodic evaluations to determine the effectiveness of their activities. The Supreme Court of Justice developed a “Corruption Prevention Strategy for the Judicial Branch” with the support of UNODC and the International Narcotics and Law Enforcement Assistance Office (INL) in 2019, which, nevertheless, has not yet been implemented due to the Covid-19 pandemic. Its completion is envisioned for 2023. Following shrinking civic space reported by civil society organizations, El Salvador was declared inactive by the Open Government Partnership.
The official UNCAC review process in El Salvador was scheduled to begin in 2020, with Guyana and Malta as peer-reviewing countries. No information is available to civil society on the status of the review, nor is there any indication of it on El Salvador’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.
The following are some of the main findings according to topic:
Public sector employment
Public sector employment in El Salvador is governed by an old and dispersed legal framework, with the Civil Service Law dating back to 1961. Lacking a merit-based centralized government hiring system with public competitions, each institution carries out the procedures under self-imposed internal guidelines. For more than two decades, the normal practice in the different state institutions has been to hire sympathizers and allies of the government of the day for public positions. Thus, the government payroll has grown year after year; far from being purged and optimized, it has been increasing. Furthermore, heads of institutions have no guarantees against the possibility of arbitrary removals; an example of this being the former president of the Central Reserve Bank, who was removed from his position after contradicting the official discourse of the Salvadoran government before a legislative commission.
There is a lack of political will, both from the previous and the current government, to analyze the draft bill of the Civil Service Law, presented repeatedly since 2012, which intends to unify, modernize and systematize the regulations of public sector hiring.
Transparency in political financing has been another pending issue in El Salvador. Despite new regulations aimed at increased transparency in this area, entities such as the Farabundo Martí National Liberation Front (FMLN) and Nuevas Ideas (NI) have illegally and persistently refused to comply with the laws and disclose their sources of financing. The Supreme Electoral Tribunal has made the financial information of political parties, specifically the lists of donors and financial statements available to the public only for the years 2014 and 2015. It has only been through efforts such as those of the civil society organization Acción Ciudadana, which have achieved certain progress in the systematization and disclosure of political party financing data, managing to obtain the information from 2014 to 2018 via requests for access to public information made to political parties as obligated entities.
Moreover, the arrival of Bitcoin as a legal currency in El Salvador, raised alarms about the risks of uncontrolled financing and money laundering. Reforms of the Electoral Code and the Law on Political Financing are needed in order to obtain real disclosure of the list of donors through this type of currency, and political parties must be able to acquire the appropriate technology to manage donations through cryptocurrencies.
Codes of conduct, conflicts of interest and asset declarations
The Government Ethics Law aims to establishes sections on ethical principles, duties and prohibitions; undue benefits; disciplinary procedures and the respective sanctions. Most public institutions involved in the prevention and fight against corruption have an institutional code of ethics in place.
However, there is no mechanism in place to identify conflicts of interest of persons seeking public office, which urgently needs to be addressed. A group of civil society organizations, including FUNDE, submitted to the Legislative Assembly a proposal for a draft Probity Law, which incorporated compliance with international standards on declarations of interests, income, assets and liabilities of public officials. However, this initiative has not been taken into consideration.
The Law on Illicit Enrichment of Public Officials and Employees from 1959 establishes a wide range of persons obliged to file asset declarations. However, it is outdated and has many shortcomings; from insignificantly low penalties and an underfunded oversight body, to the fact that asset declarations must be presented only at the beginning and end of the term of office of public officials and employees, with no obligation to update such declaration in intermediate periods. Especially for judges, whose appointment can be for life, this poses a serious problem. Furthermore, asset declarations are not publicly accessible and neither is information on sanctions imposed for failing to submit them or misfiling. The civil society organization Acción Ciudadana has systematized the levels of compliance with the law on this point.
In El Salvador, there are no mechanisms implemented by the State or by any institution at the internal level to facilitate the presentation of complaints by employees when they become aware of any act of corruption in the performance of their duties. Regarding whistleblowing for citizens, only the Government Ethics Tribunal and the Court of Accounts of the Republic have implemented mechanisms for any person to file a complaint about alleged acts of corruption, even anonymously.
The beginning of the Covid-19 pandemic also gave rise to an era of opacity in the public administration. Dominating the Legislative Assembly, the ruling party, Nuevas Ideas has developed a practice of eliminating controls of public procurement in the context of the pandemic and the successive exception regimes, through issuing different legislation that allows bypassing the Public Administration Procurement and Contracting Law.
The General Budget of the Nation has always been a thorny issue for El Salvador. The issue of fiscal deficit has been a constant during the last years, which increasingly aggravates the state of public finances. No data is provided for an accurate analysis of the composition of the State budget, not even with the presentation of the bill. In the approval of the budget, political negotiation prevails, leaving aside the technical discussions necessary for fiscal adjustments. In addition, there are no mechanisms for citizen participation in order to strengthen control over public finances.
Access to information and participation of society
El Salvador’s Law on Access to Public Information is considered one of the best laws on the Global Right to Information Rating. The work of the Institute for Access to Public Information (IAIP), though always underfunded, was significant for granting access to information to the public until 2019. However, with the IAIP increasingly under the indirect control of the executive branch, the availability of information is backsliding.
There are no mechanisms to guarantee citizen participation in decision-making or consultations for public matters. El Salvador has been declared inactive by the Open Government Partnership, following reports by civil society organizations of a general trend of undermining civil liberties and democratic regression. In recent months, journalistic work has been under attack, with an increase in harassment, criminalization and restriction of freedom of expression and freedom of the press by government officials, especially on social media. This has led to the exile of many people who practice journalism. In addition, there have been reports of hacking of journalists’ instant messaging accounts and the tapping of more than 30 telephones of journalists and members of civil society with the Pegasus spying program.
Independence in the judiciary
The arbitrary dismissal of all magistrates of the Constitutional Chamber and the Public Prosecutor of the Republic in May 2021 was yet another indication of state capture by the ruling party, Nuevas Ideas. Pro-ruling party officials were appointed without following the procedure established in the Constitution. In August 2021, the Legislative Assembly dominated by the same ruling party approved a series of reforms to the Organic Judicial Law and the Organic Law of the Public Prosecutor’s Office, through which prosecutors and judges over the age of 60 were removed from office. These violations of judicial and prosecutorial independence can be seen as additional interference in important ongoing cases of those judges who were dismissed, for instance in the El Mozote case. The Supreme Court of Justice has appointed 98 new judges to replace those dismissed, without following the procedure established by law for this purpose
El Salvador has a legal framework for anti-money laundering, however, it is impossible to evaluate its application and effectiveness due to the systematic withholding of information in recent months by the Public Prosecutor’s Office and its Financial Investigation Unit, and by the Supreme Court of Justice. Thus, all the statistical information requested for the parallel report on this topic has been denied. With the entry into force of the new Financial Intelligence Unit (FIU) Regulation in June 2022, rules specifically applicable to financial institutions are being applied also to civil society organizations and independent professionals. This will undoubtedly lead to a saturation in the work of the FIU considering their limited capacity.
The FIU has not issued any rules establishing how compliance with laws related to the fight against money laundering and asset laundering will be verified for transactions carried out through cryptocurrencies – leaving it as an unregulated area.
The most representative examples of the fight against corruption and asset recovery in El Salvador have been the criminal proceedings against three former presidents of the Republic (see here, here and here), all initially based on the revelation of information coming from the Probity Section of the Supreme Court of Justice during its short activation between 2013 and 2016, a former president of the Legislative Assembly and a former Minister of Justice and Public Security, among others.
All information related to money laundering and asset laundering was declared confidential and statistical information on money laundering and asset laundering crimes is non-existent.
In its report, FUNDE makes several key recommendations for priority actions to be taken to ensure the full implementation of the UNCAC in El Salvador:
- Implement a public and well-known state policy oriented to corruption prevention, which coordinates all inter-institutional actions in favor of transparency, accountability, integrity, ethics and corruption prevention.
- Guarantee the verification and sanctioning of non-compliance with the Law on Political Parties, especially with regard to campaign financing, in order to make donations by private individuals transparent.
- Include in the regulations and in practice the oversight of the use of cryptocurrencies in the financing of political parties, with the aim of mitigating the risks of money laundering.
- Ensure the application of the Public Administration Procurement and Contracting Law, especially in those cases related to large public works, avoiding the use of alternative mechanisms that allow public contracting without following procedures that guarantee transparency and accountability.
- Ensure compliance with the Law on Access to Public Information regarding the publication of informal information, as well as the disclosure of requests made to government entities through transparency portals; also, avoiding the abuse of the classification of information as reserved or non-existent in order to allow for citizen’s to holding government accountable.
- Promote the creation of mechanisms to protect whistleblowers who report alleged acts of corruption, including citizens, employees and public officials, ensuring the confidentiality of personal data and the anonymity of the reports.
- Guarantee the exercise of freedom of expression by civil society organizations, journalists and the general public on issues related to the prevention and fight against corruption.
- Make data on money laundering and financing of terrorism transparent to help evaluate the application and effectiveness of the national legal system, as well as to measure the degree of compliance with international commitments in this area, both from the Public Prosecutor’s Office and the Financial Intelligence Unit, as well as from the Probity Section of the Supreme Court of Justice.
- Update the national regulations on illicit enrichment of public officials and employees, including the effective control of the assets of public officials and employees and the establishment of an autonomous and independent entity to ensure the effectiveness and enforcement of the law.
For all the detailed findings, read the full civil society report in Spanish or the translated version of the report in English below.Fullscreen Mode