Central American Bank for Economic Integration: Need for accountability and reform to address corruption and governance failings

In the wake of serious failings exposed by investigative journalists, Transparency International and its chapters in ten countries are calling for accountability and systemic reforms at the Central American Bank for Economic Integration (CABEI). In a letter addressed to CABEI’s governors, Transparency International expresses concern over allegations of corruption in bank’s supported projects going back at least ten years. The appeal comes ahead of the Board of Governors’ meeting on Friday when they are scheduled to elect the bank’s new executive president.

See our letter to CABEI governors: English and Spanish

The Dictators’ Bank investigations by the Organized Crime and Corruption Reporting Project (OCCRP), the Columbia Journalism School, and Redacción Regional uncover misuse of funds, possible conflicts of interest and alleged breaches of procurement rules. In many cases, the bank appears to have failed to conduct appropriate due diligence before approving the loans. In some cases, internal audit documents reviewed by journalists show that risks had been flagged but ignored.

The signatories urge CABEI governors to initiate an independent investigation into the bank’s operations and undertake a comprehensive review of all projects. Additionally, the letter stresses the need to put in place an adequate oversight mechanism for the bank to monitor implementation of anti-corruption conditions in its supported projects. Finally, for enhanced public debt transparency, CABEI should disclose detailed information on issued loans.

Edie Cux, Legal Director of Acción Ciudadana, Transparency International’s chapter in Guatemala, said: “Corruption in CABEI’s projects hinders progress and exacts a toll on the daily lives of the people the bank is meant to serve. In Guatemala, CABEI’s loans have not contributed to economic development but instead resulted in a string of unfinished infrastructure projects. We urge the Board of Governors to address systemic governance failings that have come to light in order to prevent abuses going forward.”