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Ecuador: State Contracts With President's Brother Raise Concerns

Categories: Latin America, Ecuador, Economics & Business, Governance, Law

Multi-million dollar contracts between the state petroleum company Petroecuador and several private companies raised some eyebrows when it was discovered that the brother of current president Rafael Correa was a member of some of the private enterprises. Fabricio Correa has been part of private companies that had been awarded contracts to provide public works services [es] [1]. Even though Fabricio Correa has been emphatic that the contracts were won legally through a competitive bidding process, many do not believe these claims and believe that it has more to do with the fact that his brother is the country's leader causing the government to look bad in the process.

Aluminum sculpture of the Virgen of Quito at the cuspid of El Panecillo. Photo used under Creative Commons license by http://www.flickr.com/photos/tacvbo/

Aluminum sculpture of the Virgen of Quito at the cuspid of El Panecillo. Photo used under Creative Commons license by http://www.flickr.com/photos/tacvbo/

Fabricio Correa has defended himself by saying that he has been a businessman for 30 years and his brother has only been a politician for only 3 years. [2] However, there are some who saw something suspicious from the beginning, as Santhros tweeted, [3] “New season of ‘Who Wants to be a Millionaire?’ first contestant: Fabricio Correa.”

Many see the problem in Ecuador directly related to the new Constitution and the role being taken by the state. The increase in regulations make things difficult for Ecuadorians to understand. Ecuador Sin Censura [es] comments on a recent speech given by Rafael Correa [4], where he defended his brother and accused the media for distorting the information about the business relationship between the state and his brother. However, it was a comment made by Juan Montalvo who also points to the system as allowing something like this happen:

Mi crítica no es personal, sino ideológica. Los escándalos de Fabricio son la punta de un iceberg inevitable. No es culpa total de Correa, es el sistema. Cuanto más interviene el Estado, cuanto más grande se hace el botín político, más corrupción se produce. Tan exacto como las matemáticas. El Sr. Correa podrá tener todas las buenas intenciones del mundo, pero el sistema que propone siempre derivará en corrupción, quiebra económica, clientelismo y frustración social. Solo un negacionista de la historia se empeñaría en seguir defendiendo lo contrario. Lástima que haya tantos.

My criticism is not personal, rather ideological. The scandals with Fabricio are the tip of the inevitable iceberg. It is not Correa's fault entirely, but rather it is the system. When the State intervenes more and more, when the political bounty is bigger, more corruption happens. As exact as mathematics. Mr. Correa could have the best intentions in the world, but the system that he supports will always result in corruption, economic bankruptcy, clientism, and social frustration. Only a denier of history would dare to continue to defend the opposite. Too bad that there are so many.

The organic law for the public procurement system [5] prohibits any business between the the government and relatives of government officials, as it is established by law in the Official Record No. 395 of August 4th, 2008. Manuel Ignacio Gómez Lecaro of Hoy y Ahora [es] wonders why Correa had not criticized these large contracts [6]:

¿Se imaginan cómo hubiese saltado Rafael Correa en sus épocas de ciudadano común si todo esto hubiese sucedido en uno de los gobiernos de quienes él ahora llama “cadáveres políticos”? ¿Se imaginan el escándalo que hubiesen armado los hoy asambleístas y funcionarios del Gobierno? Pero en estos tiempos socialistas parece que no existe la corrupción, solo la mala fe de los medios empeñados en atacar al Gobierno.


Hasta eso, no hay una sola voz con fuerza en la oposición que diga las cosas como son. Las cortinas y los manteles verdes huelen a podrido, pero pronto se irán olvidando. Correa quedará algo lesionado, pero seguirá avanzando, acaparando poderes, insultando.

Imagine how Rafael Correa would have reacted when he was a ordinary citizen, if all of this would have happened in one of the governments that he now calls “political cadavers.” Imagine the scandal that would have taken place by the members of the Assembly and the government officials? But in these socialist times it appears that there is no corruption, only the bad faith from the media determined to attack the government.


Until then, there is not a single strong voice in opposition that says things like it is. The curtains and green tablecloths smell rotten, but they soon will be forgotten. Correa will be somewhat hurt (by the revelation), but he will continue moving forward, gaining power, insulting.

Yet, some bloggers see the criticism should fall on the brother for not realizing how the situation might be perceived [7]. Andres Contilde of Modestamente Humano [es] writes that such a move gives opposition to his brother much more ammunition for criticism:

Fabricio Correa: este man sí es la auténtica falla. Cómo va a meterse a concursar siquiera en proyectos para el Estado aunque sea legal la figura con la que entró a participar.


Sea lo que sea que sea, así haya sido totalmente transparente la contratación, totalmente legal, sin ningún favoritismo y sin mano negra o palanca ya deja para pensar mal. Deja mucha tela para que alguien malintencionado la corte a diestra y siniestra. Ahora se planea reformar la ley, en teoría Rafael Correa solicitará la nulidad de esos contratos para que se vayan quitando las sombras de duda, pero con el solo hecho de que las sombras hayan aparecido ya se hizo un gran daño

Fabricio Correa: this man is the one truly at fault. How could he get involved in the bidding process for projects with the State even if when he was legally able to participate.


In any case, when the contracts had been totally transparent, totally legal, without any case of favoritism, and with any dark hand or assistance, it still looks bad. It leaves a lot of room for those with bad intentions to cut it both ways. Now there are plans to reform the law, in theory Rafael Correa will solicit the nullity of those contracts in order to remove the shadow of doubt, but with the fact that the shadows have already appeared, it already caused great damage.

After public debate, President Correa has announced that the government will unilaterally cancel the contracts [es] [8] made with companies in which his brother is a participating member. At the same time, he criticized Fabricio for the business indicating that he may not have violated the letter of the law, but he did violate the “spirit” of the law that prohibits this kinds of business. However, as Contilde mentioned, the damage has already been done.