international regulatory enforcement
High Profile Raids Shine Spotlight on Costa Rican Anti-Corruption Efforts
By Bryan Parr, Harry Morgan, Diogo Metz, and Jesse Schley
When one thinks of anticorruption enforcement and Latin America, Costa Rica may not be the first country to come to mind. However, despite ranking 42nd in the most recent Transparency International Corruption Perception Index, recent law enforcement raids in Costa Rica are shining a spotlight on the country’s capacity to prosecute corruption.
On June 14, 2021, Costa Rican authorities led by the Judicial Investigation Agency (OIJ) conducted 57 raids across the country. The OIJ targeted various government institutions, including Costa Rica’s presidential offices and the Ministry of Public Works and Transport, as well as private companies. The OIJ seized data and documentation and made 28 arrests, including public officials and the heads of at least two local construction firms, on charges of bribery, embezzlement, irregular payments of administrative contracts, illicit association, and influence peddling.
According to statements by the OIJ, the raids were part of an extensive investigation launched in 2019 into a bribery scheme between government officials and construction executives in Costa Rica. Code-named “Cochinilla,” the investigation targeted improper payments to public officials in exchange for public works, maintenance, and construction contracts. Officials estimate that roughly $125 million was allegedly misappropriated or embezzled through these schemes between 2018 and 2020.
These raids are indicative of Costa Rica’s efforts over the past few years to more actively investigate and combat corruption and corporate crimes in both the public and private sectors. In the same vein, the enactment of a new law in June 2019 establishing corporate criminal liability law for offenses related to bribery and corruption (Law 9,699) addressing a glaring deficiency in Costa Rica’s anti-money laundering and anticorruption framework. Costa Rica is also party to several inter-American agreements on criminal matters and UN conventions relating to anti-money laundering protocols and, on May 25, 2021, became the 38th Member of the Organization for Economic Cooperation and Development (OECD). Viewed in this context, the raids may provide a test of Costa Rican enforcement agencies’ ability to act independently, and given the scale of data collected, it is possible that the investigation could expand to reach other individuals and sectors.
Regionally, Costa Rica’s raids come on the heels of the Biden Administration’s increased focus on fighting corruption in Central America, which, among other elements, elevated anticorruption efforts to a core national security interest and announced the establishment of Joint Task Force Alpha, a DOJ and Department of Homeland Security joint operation complementing anticorruption efforts by targeting human smuggling and trafficking networks. Though focused on Northern Triangle countries, the Joint Task Force is indicative of the close eye DOJ is keeping on corporate crimes in Central America more broadly.
The raids, along with recent changes in legislation in Costa Rica, suggest that companies operating locally would be well served by analyzing and refreshing their internal compliance programs and risk assessment protocols. Additionally, as the raids show, companies operating in Costa Rica should have robust dawn raid protocols in place to manage potential risks to the company’s business operations or reputation.