Democracy Lab

Changing the Code on Corruption

How a Brazilian government commission tried to fight back against sleaze.

Note: This article is an abridged version of a longer historical case study produced by Innovations for Successful Societies, a research program at Princeton University.

In February 2001, Brazilian newspapers noted something different in Rio de Janeiro's annual Carnival celebration: The public officials who traditionally populated corporate boxes were no longer present. In the past, these high-profile officials received VIP treatment, with private beer companies paying for their airfare, meals, and reserved seating.

The difference hinged on Brazil's year-old Public Ethics Commission. A few months earlier, the commission had published a rule that clarified what gifts, if any, senior civil servants could accept, deeming numerous perks unacceptable because they could bias politically-sensitive decisions.

The rule irked powerful individuals in the private and public sectors. The media exposed three officials who flouted the rule by accepting box seats owned by Brahma beer. The commission reviewed their cases, requested explanations, and issued warnings that discouraged future violations. After the officials apologized, they promised, in writing, to obey the rule in the future. The rule and its enforcement earned public support, with one newspaper survey indicating a 98% approval rating. Senior officials now had to think twice before accepting such perks.

Changing ingrained political behavior was no easy task. After Brazil emerged from decades of dictatorship in 1985, pervasive political scandals detracted from the new democratic emphasis on accountability. Politica de favores, or the politics of favors, rendered merit-based hiring, procurement, and privatization uncompetitive and inefficient. Officials accepted bribes thinly disguised as gifts and gave jobs to relatives as a matter of familial allegiance. Without a formal system of government ethics, doing the "right thing" often was considered foolish, impolite, or offensive. Frequent scandals involving nepotism and influence-peddling weakened public trust in government officials and embarrassed successive administrations. Although the constitution of 1988 set stringent rules and harsh penalties regulating civil servants' behavior, they were rarely enforced.

In the mid-1990s, the administration of President Fernando Henrique Cardoso generated a clear impetus for change with a modernization, privatization, and government-reorganization drive. The administration was forced to take action after internal scandals exposed unseemly behaviour by senior government officials and cast public doubt upon the administration's initiatives. "We felt that Brazilian society was changing with modernization and was no longer willing to accept such behaviors," said Cardoso's chief of staff, Pedro Parente.

Cardoso appointed Luiz Carlos Bresser-Pereira, a well-known Brazilian economist, to spearhead broad civil service reforms and amend the human-resource rigidities of the 1988 constitution. In May 1995, Bresser-Pereira formed the State Council of Reform to devise options for public-sector reorganization. João Geraldo Piquet Carneiro, a former minister in charge of a large-scale de-bureaucratization effort in the 1980s, was one of the earliest council members. Piquet approached like-minded members on the council and quickly brought the issue of officials' conduct onto the agenda. He then created a small team within the council to work on a code of conduct.

The team faced a daunting task. They sought to create a code that could reach and influence a large number of public officials at a reasonable cost. (Brazil's civil service consisted of nearly 600,000 people.) Second, the team members realized they would have to set benchmarks for situations in which officials' personal interests clashed with their public roles. Senior civil servants, accustomed to significant freedom in decision-making, were likely to offer the most resistance. Third, the code needed to specify reasonable parameters of behavior when the issue involved shades of gray. For example, when it came to the acceptance of gifts, at what monetary amount or under which circumstances was a gift considered improper? How long should a public official reasonably wait after leaving public office to accept a private-sector post? Finally, the code required an enforcement mechanism.

The issue fell to the back burner, but during a television interview in early 1999, a journalist asked President Cardoso about the code of conduct, sparking sudden media and public interest and bringing the code back into the limelight. Cardoso issued a presidential decree forming a new advisory body, the Public Ethics Commission, to work on ethics-related issues and implement the code of conduct, with Piquet as its first president.

All commission members were unsalaried volunteers appointed by Cardoso, and were prominent Brazilians who enjoyed reputations for integrity and efficiency. Few had government experience: Piquet believed that a team with no direct ties to the Cardoso administration would earn credibility for being independent of partisan interests. With a limited budget, they decided to target only senior government officials: presidential appointees, ministers within the Civil Cabinet, managers, and directors of public organs and companies, with the hope that senior officials could set an example for the government and potentially improve public opinion of civil servants.

Studying other countries' codes of conduct, the final code set guidelines on receiving perks, reporting assets, investing in assets while in office, maintaining shareholder stakes in companies while in office, leaving public office for private positions, and publicizing conflicts of interest. The team also began to work on an enforcement strategy. Piquet organized a seminar for the drafting team, officials from the civil service, and international organizations to share ideas and models that could work well for Brazil. "Given the traditions and realities of the Brazilian political system, we wanted to see what could be adjusted and innovated for Brazil from international experiences," explained commission member Lourdes Sola.

In August 2000, another presidential decree established the code of conduct. Piquet's team now faced six tasks: developing institutional capacity, communicating and publicizing the information among civil servants, monitoring whether individuals were following the code, establishing procedures to deal with violations, facilitating understanding and clarity of the code, and developing a system of ethics that would extend beyond high public officials.

The six commission members quickly realized the need for staff support; they all lived in different parts of the country, and their monthly meetings were not sufficient to enforce a code intended for all senior civil servants. They selected Mauro Sérgio Bogéa Soares, a former tax auditor and public servant known for his attention to detail, as their secretary. "Any successes we had ... were mostly due to him and to Piquet, and a very motivated board," said commission member Roberto Teixeira da Costa. Soares meticulously conducted an informal count of officials who were covered by the code, and within two months of his appointment, identified 787 officials. He set about publicizing the commission's work and inundating ministers and officials with copies of the code. He also met with ministries to explain the code, portraying it as a source of guidance rather than as a regulator of behavior.

The commission then devised ways to enforce the code. Civil servants who were already in office were to sign and submit the code within 30 days; Incoming hires had to submit the signed code within 10 days of their appointment. Failure to comply could result in the commission recommending their removal. A Declaration of Confidential Information required officials to submit details of their finances with the signed code. Senior government officials tended to bring "private baggage" when they entered office -- many were former chief executives of companies or public banks. The commission would work with officials to untangle their private and public interests if conflicts arose. The staff studied the declarations meticulously and became adept at detecting conflicts of interest -- and also uncovered attempts to subvert the process.

Informing officials about the code and the declaration was a difficult task. Many accused the commissioners of mistrusting the president's judgement, as many senior officials were presidential appointees. But President Cardoso and Chief of Staff Parente stood firm, encouraging all ministers to comply. Piquet and Soares would also meet with non-cooperative ministers, explaining the consequences of failing to comply. "It was a very difficult public position [for senior ministers] to hold, to say that you did not want to behave in a proper manner," Sola said.

Reports of infractions could come to the commission either through a complaint from an official's colleague or, more often, through the media. As soon as the commissioners discovered a violation, they collected as much information as possible on the situation, and would then issue a warning to the official involved and request an explanation. If the official's explanation was satisfactory, the case was closed; if not, the commission took disciplinary action, sometimes making an official donate to charity or reimburse public coffers. If the official ignored the initial notice, the commission issued a more stringent warning and informed the president's chief of staff. If the official ignored the commission a third time, the commission advised the chief of staff and the president to dismiss the offender; presidential support was thus vital to the model's success.

From the start, the commission faced a dilemma. If it was too strict, it would alienate civil servants, but if it was too lenient, it would lose purpose and efficacy. It had to balance the roles of watchdog and collaborator. Piquet stressed the importance of building respect through a flexible, low-key approach of consultations and conciliation. "It was important for the authorities to perceive that we were not witch hunters, [and] that they would have the support of the commission if something happened," he said.

Piquet arranged several highly publicized demonstrations of how individuals complied with the code. One such case involved the president of the Central Bank of Brazil, Arminio Fraga: His position was fraught with potential conflicts of interest because he had advance knowledge of economic indicators like inflation and exchange rates. Fraga volunteered to transfer management of his financial assets to an independent third party. This public display of a high-profile financial management agreement set a standard for how economic decision-makers could separate their public and private interests; it was also the first time that a Brazilian minister discussed the management of his own assets.

Piquet looked to Brazilian culture to illustrate why a conciliatory system enforced by social pressure worked better than rigid legal enforcement. He referred to Rio's famous Samba dance halls, where rowdy behavior evoked warnings from both hall officials and dancers. If the misdemeanor persisted, fellow dancers ejected the offender. This shared enforcement system effectively suppressed misbehaviour better than rigid laws; it was a way of changing behavior by taking a middle path, acting as a mediator rather than an enforcer.

Much of the commission's enforcement system hinged on trust: The commissioners had to demonstrate a degree of trust in officials' compliance. Piquet felt that this trust-based system generated mutual respect, but critics doubted its stability and said it created room for duplicity. The team largely overcame this challenge with the support of the president and the chief of staff, as well as the media's watchdog role as an indirect enforcer of the code.

The Public Ethics Commission set a clear precedent in the Brazilian political system, eliminating a gray area in officials' duties and holding those in the upper echelons of the civil service more accountable to the public. During the first three months after the ethics code's adoption, over 40% of the 787 officials failed to submit their financial declarations. Instead of issuing stern warnings, the commission sent reminders to the defaulters and arranged face-to-face interviews with the few individuals who repeatedly ignored the code. Within six months, the level of missing financial declarations fell to a rate below 1%.

The commission spread ethical standards by encouraging decentralization, routinely meeting with heads of government agencies to encourage them to set up their own internal control mechanisms, codes of conduct, and ethical panels. Ethical behavior became the norm as opposed to the exception among the upper echelons of the civil service: By 2010, commission members and officials acknowledged that gifts and perks were universally frowned upon in Brazilian political culture. Fernando Neves da Silva, who served as the commission's president after Piquet, said, "The commission can really be an entity that bothers politicians, like a mosquito buzzing in your ear."          

While enthusiastic about the commission's overall impact and the endurance of its early successes, several former commissioners expressed disappointment regarding its operation under Cardoso's successor, President Luiz Inácio Lula da Silva. At the beginning of President Lula's tenure, the commission was still operating strongly under Piquet's leadership. After Piquet left in 2004, however, it lost momentum. From 2006 to 2008, the commission operated with only three members; Lula claimed that he could not find people willing to take the unsalaried positions. Additionally, there were cases where the president was not supportive of commission decisions, causing commissioners to resign in protest. The commission regained some momentum in 2009, but the divergence in its performance between the Cardoso and Lula administrations highlighted the critical importance of a strong working relationship between the president, the chief of staff, and the commission.

Piquet offered a modest but positive assessment of the commission's impact: "We kept worrying about very ordinary things, which doesn't compare to some of the large scandals in Brazil," he said. "But if you have a government function and don't regulate the gray areas, your area of contamination becomes a lot larger. Nobody had done it before ... but we did a little bit. That's certainly better than nothing. We created a background reference that is still important today."

Photo by PEDRO LADEIRA/AFP/GettyImages

Democracy Lab

The Anti-Godfather

How a mayor set out to save a Sicilian city from neglect and Mafia influence.

Note: This article is an abridged version of three longer historical case studies about Palermo (about reclaiming the city, reforming city hall, and strengthening municipal services) produced by Innovations for Successful Societies, a research program at Princeton University.

In 1993, Palermo residents elected Leoluca Orlando mayor with 75 percent of the vote. A series of assassinations of high-level anti-Mafia leaders had left the city reeling, and Orlando's election affirmed that voters wanted him to continue policies he had begun during his first mayoral term in the 1980s: To purge the government of Mafia influence and to help restore Palermo's cultural and economic vibrancy. By the time Orlando (shown in the photo above) left office in 2000, his administration had collaborated with civil society and business leaders to reclaim the city by creating public spaces, improving services, and promoting a "culture of legality." Although subsequent city administrations abandoned or rolled back many of the reforms, Orlando's administration from 1993 to 2000 helped define and lead what is known as the "Palermo Renaissance."

Reviving Palermo was a formidable task. For decades, the Sicilian Mafia held a strong political, cultural, and physical grip on the city, while city mayors either tolerated or assisted Mafia activity. Violence was endemic. Orlando initially entered politics in 1980 when the Mafia assassinated his boss, Sicilian President Piersanti Mattarella. Known for his anti-Mafia stance, Orlando required multiple bodyguards protecting him at all hours. Palermo had approximately 100 Mafia-related assassinations per year, not counting disappearances. Sicily's killing peak was in 1991, when there were 718 Mafia-related murders, accounting for 37.5 percent of the total number of murders committed in Italy that year.

Against this backdrop of violence, the city was hobbled by a host of critical challenges. City spaces such as parks, historic buildings and squares, theaters, monuments, and schools were either dilapidated or owned by Mafia-affiliated groups. An urban plan written in 1963 (by politicians aligned with Mafia interests) deliberately deferred urban maintenance, so that new, large, and lucrative building projects would be contracted to construction firms with ties to organized crime.

Concurrent with the dilapidation of public spaces was the decline of Palermo's arts and cultural life. The Teatro Massimo, Palermo's once-elegant opera house, was a searing emblem of this deterioration. The opera house was shuttered in 1974 for "urgent repairs" as city officials awarded a multimillion-dollar renovation contract to a Mafia-affiliated company; the repairs were never carried out. By 1993, 60 to 70 percent of Palermo's 240 historic buildings were in decay. There were no thriving cafés, common spaces, pizzerias, bars or shopping centers. Without a cultural base, public life waned and crime peaked.

As a result of rampant organized crime, economic and touristic activity also suffered: Businesses were wary of investing in Palermo because the rule of law was uncertain and government workings were opaque. The state of education was similarly dismal. Deteriorating school buildings necessitated that classes be convened in private buildings, many of which were Mafia controlled. High dropout rates -- up to 40 percent in poor and Mafia-controlled neighborhoods -- created another barrier to expansion of the formal economy.

Moreover, city government was rife with inefficiency and mismanagement; nepotism and patronage, rather than skills and talents, determined who ran the city. Orlando noted that, before him, every Palermo mayor save one had had affiliations with Mafia bosses -- and the lone exception was a Mafiosi himself. Municipal offices lacked adequate records, and information retrieval was difficult and time-consuming. City finances were in shambles. Citizen disaffection mounted as city services verged on collapse. Garbage and trash lined the streets of the city. Natural gas for cooking and heating was available only intermittently, and public buses rarely ran on time. The municipality rationed water during the day.

Orlando started by appointing a talented team of commissioners and municipal company leaders with strong professional credentials to tackle the city's ills. He emphasized qualifications over connections when assembling his team, and commissioners had to be free of Mafia affiliation. The team worked to fulfill Orlando's campaign pledge of a "safe and normal city." Mafia influence and corruption were tightly woven into Palermo's government and culture; the job was to disentangle the two. Cosimo Scordato, a Roman Catholic priest and anti-Mafia activist in Palermo, described the mayor's thinking: "Orlando wanted people to think Palermo was a normal city and functioned like a normal city, one that did not work through clientelistic networks [and] where you don't have to call friends or neighbors to pay bills or get the buses to run or turn on the lights. That's a true antidote to the Mafia -- to make the city work by itself." 

Historically, Sicily has been known for its ornate, two-wheeled, horse-drawn carts -- a bit of local folklore that Orlando seized upon to describe his governing philosophy: "An image that occurred to me early in my own fight against the Mafia was of a cart with two wheels, one law enforcement, and the other culture," Orlando said. "If one wheel turned without the other, the cart would go in circles. If both turned together, the cart would go forward." Italian courts and police began cracking down harder on the Mafia during this period, so Orlando claimed primary responsibility for the cultural wheel.

Reclaiming Palermo from the Mafia meant rehabilitating public spaces, arts and cultural activities, opportunities for entrepreneurship and tourism, and schools. Such investments would help restore a sense of community or civic identity, foster business confidence and job creation, enhance public safety, and help reduce the criminal network's revenue streams.

Spearheading a culture of legality meant cutting relations with the Mafia at every turn. Orlando's team did this in part by adopting hiring and bidding practices aimed at limiting nepotism, patronage, and collusion, and by making their opposition to the Mafia clear and public. In addition, the members of his government made themselves easily accessible to citizens by engaging in frequent dialogue with civil society and religious groups, as well as scholarly and business communities. Orlando and his team also borrowed ideas liberally, pushing company heads and commissioners to learn from other parts of Italy and Europe, and importing innovations that would make Palermo comparable to other well-run European cities.

A number of initiatives were advanced to enact the vision of a "safe and normal city." Orlando commissioned a restoration plan for Palermo's historic city center to counteract the physical decay of the city. To pay for these projects, his administration attracted many European grants and also used national, regional, and city funding. Important public spaces were no longer in the hands of the Mafia, and illegal construction subsided. Led by the Historic City Center Commission, the government renovated or reacquired 158 churches, 400 old buildings, 55 monasteries, and seven theaters, many of which had been marked for demolition -- the most notable of the Commission's projects was the restoration of the Teatro Massimo. Orlando's administration supported many other cultural improvements, such as restoring a 16th-century Gothic church, creating a new cultural and performing arts center, and organizing a series of open-air concerts, called Café Concerto. The concerts were extremely popular and attracted thousands of residents onto Palermo's streets at night, bolstering the administration's progress in "taking back" the city after dark.

The administration's education reforms focused on moving classrooms out of Mafia-owned property and strengthening the curriculum to enhance students' and parents' civic consciousness and city pride. In one innovative program, "Adopt a Monument," students received "adoption" certificates for each monument they agreed to restore and maintain. Students interviewed local experts and residents about the monuments' histories, designed brochures, produced videos about the monuments, and offered tours. More than 25,000 students adopted 160 churches, castles, public and private historic sites, villas, towers, schools, cemeteries, theaters, railway stations, private chapels, fortresses, parks, fountains, streets, and neighborhoods. By the time Orlando's administration ended, about 60 percent of the monuments had been restored and reopened, and 20 percent were under restoration.

To bolster tourism -- and thereby encourage economic growth -- the city's team of commissioners created new coalitions with Palermo's private sector to highlight native crafts. The transportation commissioner also worked to improve parking availability, bus routes, taxi lanes, and to install credit card machines in taxis. City officials lobbied shops to expand their hours of operation, improved pedestrian-only zones in the city, and renovated public beaches. Finally, the commissioner for tourism forged alliances with tour operators, cruise liners, and airlines, encouraging them to view Palermo as a destination rather than a byway to other locales. From 1993 to 1999, the number of foreign tourists more than doubled.

To clean up the administration in city hall, Orlando cut the Mafia out of government transactions, transitioning from norms of secrecy and bribery to norms of transparency, accessibility, and respect for rules. He opened the doors to city hall and gave citizens his personal phone number. His commissioners held public meetings and also created special forums where citizens could scrutinize the city budget (and ask questions about it). City records were computerized, which allowed the administration to begin reforming financial procedures, such as creating a one-stop shop for business licenses. The new system managed to eliminate a multi-year backlog of license applications.

Orlando also worked to turn around the four municipal companies that provided the city with waste disposal, natural gas delivery, public transportation, and water, which suffered from a combination of inefficiency, structural defects, and sometimes outright abuse. For each company, Orlando appointed presidents with strong professional credentials who in turn hired people with specialized skills in order to boost internal technical capacity. They worked to change corporate culture in their companies, instituted yearly planning to cut down on wasteful emergency purchases, established comprehensive cost-monitoring to enhance financial decision-making, created clear job designations to spur accountability, and cracked down on illegal usage of services by citizens.

Company presidents also invested in infrastructure and durable goods: For example, the gas company invested in a new, energy-efficient methane gas network and the transportation company doubled the number of city buses, buying new electric or hybrid buses. By the end of Orlando's term in 2000, provision of transportation, natural gas, water, and waste management services had become reliable, accessible, and cost-efficient. Palermo could now be said to resemble Orlando's vision of a "safe and normal city."

In 2000, Moody's Investors Service assigned Palermo its first Aa3 rating, putting the city on a par with Barcelona, San Francisco, and Stockholm in creditworthiness. The positive rating was attributed to an improved city administration, high revenues, and low debt during the second half of the 1990s. The new technology in municipal offices, the one-stop shop for business start-ups, better hiring practices, transparency in budget, and improvements in assessing and collecting taxes all had contributed to a vastly improved investor forecast.

Palermo's renaissance was noticed and emulated by others as well, especially the Adopt a Monument program and one-stop shop. Delegations traveled to the city to learn lessons from the Palermo Model. Orlando and several of his commissioners shared success stories at conferences throughout Europe, and aspects of the Palermo model were adapted in Colombia, Mexico, and Georgia. In 2000, Palermo was chosen as the city to host representatives from 143 countries for a conference of the United Nations Convention Against Transnational Organized Crime.

In 2000, with a year remaining in his term, Orlando resigned as mayor to run for president of the autonomous region of Sicily (an election he lost to Salvatore Cuffaro, who was later convicted and jailed for aiding and abetting the Mafia). Most of the commissioners and managers resigned with him. Many of the remaining key personnel were dismissed by the succeeding administration. Although some improvements stuck, many initiatives faltered under the new leadership. Diego Cammarata -- a top aide to former Prime Minister Silvio Berlusconi -- succeeded Orlando as mayor. During Cammarata's tenure from 2001 to 2012, the political culture shifted. Palermo lost its Aa3 rating, and by 2012, city hall was no longer an efficient and accessible institution. Public services declined considerably as garbage piled up on the streets because of striking employees. The garbage and transportation companies were once again in dire financial straits. The Adopt a Monument program lost momentum, and the Café Concerto series ended.

Some blamed Orlando's early departure for the lack of sustainability, while others blamed his administration for not taking more steps to institutionalize the reforms and nurture a next generation of leaders. Franco Nicastro, a journalist and anti-Mafia activist, cited lack of sustainability as a critical problem: "[Orlando] started the new process, but he wasn't able to carry it out to the end... He built a new administration locally. He gave us hope, but then the most difficult part wasn't completed." And although during Orlando's term the Mafia shifted strategy away from high-profile violence, it still continued to operate.

In January 2012, Cammarata resigned as mayor in the midst of several investigations of fraud and abuse of office. Orlando ran again, and in June of 2012, began his fourth term as Palermo's mayor after receiving 72 percent of the votes in a run-off election.

MARCELLO PATERNOSTRO/AFP/GettyImages