Exposing Corrupt Mayors in Brazil

A recent paper by Claudio Ferraz (IPEA, Brazil) and Federico Finan (UCLA) finds that the disclosure of corrupt practices at the municipal level in Brazil reduced the mayor's likelihood of re-election by 20%, and by nearly 40% in municipalities with local radio stations. The latter effect also helps honest mayors: when disclosures did not identify corrupt practices and local radio reported on this, mayor's chance of re-election shot up.

The program of random auditing of municipal government's expenditure started in May 2003. The findings from each audit are posted on the internet and presented to the media. President Lula, in opening the audit program, remarked: "I think the Brazilian society needs to understand once and for all, that we are only going to be able to truly fight corruption once the civil society, with the instruments made available, can act as a watch dog."

The municipalities to be audited are selected randomly through a lottery, that takes place alongside the national lottery drawings. The press and civil society are all invited at the drawings. The audit last a week, with approximately 15 auditors going through the documentation of the use of government funds.

Corrupt practices vary. In one case, a bid was constructed in a way that only one firm could plausibly qualify - the one that was later discovered to have bribed the mayor. In another case, a $300,000 contract was awarded to a phantom company. In a third case, federal money received for rural road construction was used to build a first-class road ... to the farm of the mayor.

Given the success of the program, the federal government has expanded the draw to 60 municipalities a month. Other countries may want to learn from this experience.