Bribery is illegal under Guatemala’s Penal Code. However, corruption remains a serious problem that companies may encounter at many levels. Guatemala scored 28 out of 100 points on Transparency International’s 2016 Corruption Perception Index, ranking it 136 out of 176 countries globally, and 29 out of 32 countries in the region. The same score was observed in the 2015 report.
Investors find corruption especially pervasive in customs transactions, particularly at ports and borders away from the capital. The Superintendence of Tax Administration (SAT) launched a customs modernization program in November 2006, which implemented an advanced electronic manifest system and resulted in the removal of many corrupt officials. However, reports of corruption at major customs locations such as ports and border points remain prevalent. Since 2006, the UN-sponsored International Commission against Impunity in Guatemala (CICIG) undertook numerous high-profile official corruption investigations, leading to significant indictments. Notably, CICIG unveiled a customs corruption scheme in 2015 which led to the resignations of the president and vice president. In that continuing case, a current and former SAT Superintendent and at least 19 others were arrested. In a separate SAT corruption case, two high ranking SAT officials, together with 11 other SAT employees and private sector representatives were arrested in February 2016 on bribery and illicit association charges linked to a tax audit and fraudulent value added tax refunds.
In 2015, the people of Guatemala mobilized peacefully for 19 straight weeks against corruption, spurring government reforms and making corruption the defining issue of the 2015 national elections. Riding a groundswell of anti-establishment sentiment, actor Jimmy Morales won Guatemala’s October 25, 2015 presidential runoff election. Since his inauguration in early 2016, Morales reiterated anti-corruption and accountability themes, prioritizing health, education, and food security funding, improvements very much aligned with regional Alliance for Prosperity (A4P) and U.S. Strategy for Engagement in Central America. Public demands spurred the establishment of congressional working groups that drafted overdue reforms of the civil service, justice sector, government procurement, and electoral laws. In 2016, the new Congress passed legislation to strengthen the Attorney General’s Office; create a customs union protocol with Honduras; strengthen the SAT; and provide incentives to Guatemala’s garment industry. In addition, Congress changed its own rules to become more transparent and restrict nepotism.
Guatemala’s Government Procurement Law requires most government purchases over USD 117,570 to be submitted for public competitive bidding. Since March 2004, GoG entities are required to use Guatecompras, an Internet-based electronic procurement system to track GoG procurement processes. GoG entities must also comply with GoG procurement commitments under CAFTA-DR. In August 2009, the Guatemalan Congress approved reforms to the Government Procurement Law, which simplified bidding procedures; eliminated the fee previously charged to receive bidding documents; and provided an additional opportunity for suppliers to raise objections over the bidding process. Despite these reforms, large government procurements are often subject to appeals and injunctions based on claims of irregularities in the bidding process (e.g., documentation issues and lack of transparency). In November 2015, the Guatemalan Congress approved additional amendments to the Government Procurement Law that improved transparency of procurement processes by barring government contracts for financers of political campaigns/parties, members of Congress, other elected officials, government workers and their family members. The 2015 reforms expanded the scope of procurement oversight to include public trust funds and all institutions (including NGOs) executing public funds. The Guatemalan Congress approved new reforms in October 2016 to help expedite public spending and simplify procedures for implementation of some of the reforms approved in 2015. The U.S. government continues to advocate for the use of open, fair, and transparent tenders in government procurement as well as procedures that comply with CAFTA-DR obligations, which would allow open participation by U.S. companies.
El Salvador, Guatemala, Honduras, and the United States agreed to specific commitments in a joint statement to the support of the Alliance for Prosperity on February 24, 2016. The countries agreed to measures that will ensure more accountable, transparent, and effective public institutions; invest in human capital; provide greater opportunities to all citizens; and guarantee a safe and secure environment for their people, with a particular focus on the underlying conditions driving migration to the United States. The statement follows progress on commitments agreed to by the same countries in March 2015.
Guatemala ratified the U.N. Convention against Corruption in November 2006, and the Inter-American Convention against Corruption in July 2001. In October 2012, the Guatemalan Congress approved an anti-corruption law that increases penalties for existing crimes and adds new crimes such as illicit enrichment, trafficking in influence, and illegal charging of commissions. Guatemala is not a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
Resources to Report Corruption
Contact at government agencies responsible for combating corruption:
Address: 23 Calle 0-22 Zona 1, Ciudad de Guatemala
Phone: (502) 2251-4105; (502) 2251-4219; (502) 2251-5327
Email address: firstname.lastname@example.org
Comptroller General’s Office
Address: 7a Avenida 7-32 Zona 13
Phone: (502) 2417-8700
Contact at “watchdog” organization:
Name: Accion Ciudadana (Guatemalan Chapter of Transparency International)
Address: Avenida Reforma 12-01 Zona 10, Edificio Reforma Montufar, Nivel 17, Oficina 1701
Phone: (502) 2388- 3400
Toll free to submit corruption complaints: 1-801-8111-011
Email address: email@example.com; firstname.lastname@example.org
10. Political and Security Environment
Guatemala has one of the highest violent crime rates in Latin America. According to the National Civil Police (PNC), the murder rate in 2016 was 28 per 100,000, making Guatemala one of the most dangerous countries in the world. Rule of law is lacking and the judicial system is weak, overworked, and inefficient. The police are understaffed and sometimes corrupt.
Given the weak rule of law, violent common crime is a major problem in Guatemala. Gangs are a constant concern in urban areas and gang members are often well-armed. Widespread narcotics and alien smuggling activities make some remote areas dangerous, especially along Guatemala’s border with Mexico. Although security remains a widespread concern, foreigners are not usually singled out as targets of crime.
Recent examples of violence include extrajudicial killings, illegal detentions, and property damage as a result of protests against some investment projects. The main source of tension among indigenous communities, Guatemalan authorities, and private companies is the lack of prior consultation and alleged environmental damage. The UN’s Office of the High Commissioner for Human Rights (OHCHR) reported an increase in conflicts over the exploitation of natural resources in indigenous areas between 2012 and 2014. In more than a dozen incidents between 2012 and 2014, the government’s response was the declaration of a state of emergency, limiting certain constitutional rights in the conflicted areas.
Damage to projects or installations is rare. However, there was an instance in January 2017 in which unidentified arsonists burned machinery and other equipment that was being used to construct a hydroelectric project in an area near the border with Mexico.