The Latin American Business Style: Common Risks and Challenges to Doing Business in the Region
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Latin America is an exotic and extensive land — full of social and political diversity. Yet, just like anywhere else, it struggles with fraud and corruption. “The Spaniards and Portuguese came to this region to conquer and take away gold and precious metal; in many ways, the culture of Latin America is still the same today,” explained Fernando Cevallos, CFE, LSS, director at PwC in Mexico City, Mexico, today in his breakout session.
When describing corruption in the region, Cevallos departs from the usual definition as the abuse of an entrusted power for private gain. He says the culture of corruption tempts would-be fraudsters when they see opportunities to take advantage of people and situations.
Cevallos examined this culture and many methods of corruption in his session, “The Latin American Business Style: Common Risks and Challenges to Doing Business in the Region.”
“When you want to do business in Latin America, everything, everything is about relationships,” Cevallos told attendees. “This is born from a culture of a ‘today for me, tomorrow for you’ attitude, and macroeconomic initiatives in which there is a high concentration of wealth and widespread distribution of poverty.”
In Latin America, Cevallos said, lawmakers may make public policies with deep reforms that may attract more investors in key areas, but they lack the political will to control fraud and corruption. Weak government control, high statistics of violence and crime, and a business culture that is hierarchical and with no integration process contributes to the troubles that Latin America faces.
He explained that many times, there is no awareness or even an investigation of third parties, i.e. when a CEO involves a spouse or family member.
Cevallos also explained that the risks depend on the country. For example, Uruguay and Chile are less corrupt, while Haiti and Venezuela are the most corrupt, according to Transparency International’s Corruption Perceptions Index.
Cevallos said the bad news for Latin America is that fraud and corruption are rampant in all industries and sectors, and authorities often don’t acknowledge it. However, the good news is that organizations can mitigate both through risk assessments and implementation of compliance programs. And those looking to expand or invest in Latin America can benefit from the massive economic opportunities that the region offers.
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