As COVID-19 spread around the world last spring, El Salvador joined the dozens of countries that were appealing for urgent humanitarian assistance. Hundreds of millions of dollars rapidly flowed into El Salvador’s coffers from bilateral donors, private lenders and international financial institutions, including a $389 million loan from the International Monetary Fund that was approved in April.
Flush with borrowed money and facing an unprecedented public health and economic crisis, the Salvadoran legislature approved a $2 billion emergency fund to combat the pandemic—equivalent to nearly 8 percent of the country’s GDP. But the sudden inflow of cash has also created ample opportunities for corruption. In recent months, journalists, prosecutors and opposition lawmakers have uncovered evidence of misallocated funds, bloated procurement contracts and other financial impropriety. The scandals have even implicated senior officials in President Nayib Bukele’s government, threatening to undermine his popularity ahead of key legislative elections next month.
El Salvador is not the only country to face a spike in reports of graft during the pandemic. Health care sectors around the world are especially vulnerable, partly due to the outsized role they play in the economy. In El Salvador, annual health budgets average around 7 percent of GDP.
There are also numerous opportunities to siphon money away during public procurement processes for health equipment and services. These opportunities have rapidly expanded amid the pandemic to include large shipments of personal protective equipment. What’s more, the need for a rapid response to COVID-19 means that standard anti-graft protocols, such as budget tracking and competitive procurement, are often relaxed. According to a recent report from the U4 Anti-Corruption Resource Center in Norway, “In many countries, responses to COVID-19 have seen breaches of anti-corruption standards such as cutting corners in procurement processes, or persons in power taking advantage of the crisis to increase their private benefits.”
Before the pandemic, El Salvador seemed to be making progress on anti-graft efforts after years of scandals at the highest levels of society. A crackdown on corruption was the focal point of Bukele’s campaign platform leading up to the 2019 election. Only 37 years old at the time, he fiercely criticized the country’s two main political parties, the leftist Farabundo Marti National Liberation Front and right-wing National Republican Alliance, gaining the largest vote share for a third-party candidate in Salvadoran history. In September 2019, he followed through on a pledge to create a new, independent anti-corruption commission, modeled after the now-defunct International Commission Against Impunity in Guatemala, or CICIG. El Salvador’s version, the International Commission Against Corruption and Impunity in El Salvador, or CICIES, is backed by the Organization of American States and has a mandate to investigate high-level corruption allegations.
But with the increase in pandemic-related public spending last year, reports of impropriety quickly surfaced, calling Bukele’s anti-corruption promises into question. In May, five people resigned from a special committee appointed by the legislature to oversee the special $2 billion pandemic response budget, claiming they were being bypassed in spending decisions. Then, in November, the attorney general conducted a series of raids on the Health Ministry and Finance Ministry, to investigate dubious transactions involving pandemic-related contracts to businesses owned by the relatives of public officials at both ministries. Significantly, the initial reports of alleged misspending were sent to the attorney general from CICIES. It was the first time that information from the agency, which seemed to exist only on paper for its first few months in existence, was used in a high-profile corruption investigation.
The list of alleged abuses is long and wide-ranging, and implicates members of Bukele’s Cabinet. Between March and April, Salvadoran officials paid more than $800,000 to a hotel chain that authorities had earlier seized from an accused drug dealer, in order to use the hotels as quarantine centers. A government audit found that amount excessive. Another suspicious case concerned a procurement contract for $225,000 worth of rubber boots, granted to a company owned by the aunt of Health Minister Francisco Alabi. And the government purchased 300,000 masks from a firm linked to Finance Minister Alejandro Zelaya, for $750,000—double the manufacturer’s price.
With Bukele’s government likely to come under increasing scrutiny over allegations of corruption and abuse of power, the scene is set for an acrimonious election battle.
On Dec. 8, Bukele’s chief of police and deputy security minister, Mauricio Arriaza, resigned from his latter position in response to allegations that he conspired to conceal financial wrongdoing by the government. He had come under immense pressure from opposition lawmakers due to his alleged failure to make Zelaya comply with a legislative order to explain government spending in response to the COVID-19 crisis. Arriaza remains chief of police. Throughout the pandemic, the Bukele administration has repeatedly refused to provide details on transactions made by the government as part of COVID-19 relief efforts.
For his part, Bukele has moved away from his anti-corruption rhetoric in recent months, and appears focused on cracking down on independent media outlets that expose instances of suspected government malfeasance. In September, tax evasion and money-laundering investigations were launched against El Faro, an online news outlet that has published accounts of government corruption. The probes came on the heels of an explosive report in El Faro that Bukele’s government had negotiated with leaders of the MS-13 gang in order to secure a reduction in violence and political support for Bukele’s party, Nuevas Ideas, or New Ideas. El Faro denies any wrongdoing and contends the government’s actions are retaliation for its critical reporting.
This troubling trend has not gone unnoticed in Washington. Ten Democratic members of Congress sent a letter to Bukele in September, expressing “deep concern” about the Salvadoran government’s apparent hostility toward the media. They cited the treatment of El Faro in particular, noting that such actions “follow a pattern of attacks on the Salvadoran press.” A separate letter days later, from six Republican lawmakers, warned of El Salvador’s “slow but sure departure from the rule of law and norms of democracy.”
Bukele has courted controversy in the past by undermining the rule of law and seeking to erode checks on his power, including by ordering the military to briefly occupy the legislature over a budget dispute in February 2020. Yet he remains tremendously popular, with approval ratings consistently near 90 percent.
It remains to be seen whether the recent corruption allegations will dent his political armor ahead of legislative elections that are scheduled for Feb. 28. It will be a critical test for Bukele, who lacks a base of support in the Legislative Assembly, and Nuevas Ideas’ candidates are campaigning energetically.
Despite Bukele’s enduring popularity, frustration could mount in the coming weeks as the pandemic lingers, in El Salvador. While the rate of infection slowed after hitting an initial peak over the summer, new cases have since begun to tick up again. The country has recorded more than 47,000 cases, including nearly 1,400 deaths. The sustained spread of the virus will continue to strain El Salvador’s limited public health capacities.
The country is also facing a steep recession due to the pandemic, with its economy contracting by 9 percent in 2020, according to the IMF, and unemployment expected to rise to 9.4 percent, up from 6.7 percent in 2019. The dour economy could weigh on Bukele’s approval rating. Moreover, his increasingly authoritarian tendencies are prompting pushback against his rule from traditional political parties. As the Salvadoran economist Antonio Barrera recently said of Bukele, “He’s a profoundly manipulative leader and is backed by the military. The development of his dictatorship is not something that will happen in the future, it’s an ongoing process.”
Still, Bukele’s sky-high approval ratings have held steady over his year-and-a-half in office, and his party is likely to gain a significant number of seats in next month’s polls. If it captures a majority of the 84 seats in the Legislative Assembly, it could further enable Bukele’s worst instincts, boding ill for El Salvador’s democracy. With his government likely to come under increasing scrutiny over allegations of corruption and abuse of power, the scene is set for an acrimonious election battle.
Robert Looney is a distinguished professor at the Naval Postgraduate School in Monterey, California. He specializes in issues relating to energy security and economic development in the Middle East, Africa, South Asia and Latin America.