/Users/cvr34/Desktop/The_Lobby_of_the_House_of_Commons,_1886_by_Liborio_Prosperi_('Lib').jpg

Source: Liborio Prosperi [Public domain], via Wikimedia Commons

The Influence of Lobbying in Chilean Politics[1]

This case study provides an analysis of the implementation of the Lobby Act in Chile and its potential to serve as an instrument to reduce lack of transparency and enhance public trust.

In recent years, Chile has faced political and financial scandals that have affected public trust and highlighted the need for stronger frameworks to regulate relationships between government and businesses.

In September 2014, for example, political scandals were discovered by the press involving congress members and various high-profile corporations in the banking, retail, finance, and mining sectors. The investigations, some of which are still ongoing, and the indictments that followed implicated several members of Congress, as well as former and current cabinet ministers. The scandals revealed a system in which meetings between corporate executives and politicians are frequent and allowed the exchange of influence and campaign resources outside of public view.

Unfortunately, these situations were no isolated incident. Because several sectors that have considerable impact on the Chilean economy–including energy, environment, and capital markets–are heavily regulated by the state, there is a long history of private-public sector collusion. In the absence of regulations on lobbying, public officials have faced little accountability for the meetings they held with these groups or for their outcomes.

Since 2004, successive governments in Chile have launched legal initiatives to improve transparency, probity, and principles of good government, including the Transparency Act, the Government Procurement Act, the Declaration of Assets and Interest Act, and the Civil Service Reform Act. Recently, President Michelle Bachelet created the Anti-Corruption Council in order to propose initiatives to reduce the number of scandalous actions in public campaign financing.

The Lobbying Act of 2014, a reform 10 years in the making, and the commitments of the Chilean government in its Open Government Partnership (OGP) National Action Plan (NAP) to adopt and implement the legislation, must be situated in the wider context of reforms designed to combat corruption and promote transparency.

A 10-Year Campaign Bears Fruit

There have been several earlier attempts to regulate lobbying, with a lobbying law in discussion for almost a decade prior to the commitment being made in Chile’s OGP action plan. The 10-year struggle to pass this bill was given a boost by the explicit commitment to move on the agenda in Chile’s NAP. The government of Sebastian Piñera introduced the bill in 2012.

A coalition of diverse civil society organizations of more than 40 NGOs and dozens of public intellectuals played a key role in advocating for the law to be passed. The campaign combined social media campaigns and web-based advocacy, setting up the portal leydelobby.cl, with traditional advocacy, including working with the Secretary General of the Presidency, the State Modernization Unit, and the Citizens’ Defense and Transparency Unit of the Ministry of the Presidency.

The coalition took a pragmatic stand in its advocacy. Rather than aiming for a perfect piece of legislation, they pushed for the passage of the bill which, though imperfect, would become an important first step towards lobby regulation not only for Chile, but also for Latin America. When the Lobby Act was approved on March 8, 2014, days before President Piñera’s term ended, Chile became the first country in Latin America with legislation on lobbying disclosure.

The main provisions of the law include:

• The establishment of legal definitions for lobbying, active subjects (paid lobbyists and unpaid interest managers), and passive subjects (ministers, vice ministers, heads of departments, regional directors of public service, mayors and governors, regional ministerial secretaries and ambassadors, and other public individuals and entities).

• Creation of public registers where authorities must disclose information regarding regular meetings and individuals/lobbyists who attended those meetings.

• Sanctions and fines for the infractions.

• A mandate for the Council for Transparency to consolidate data on lobbying activities and make that information public via a website. The InfoLobby platform was established to publish periodically the number of meetings, travels, and donations to authorities subject to law, both in aggregate and by public agency. The platform also contains the registration of all lobbyists.

Assessing Progress

The information available through the InfoLobby platform has allowed the development of a general perspective on the implementation process of the Lobby Act and on how different active and passive subjects are adjusting their work to fulfill the requirements of the law. Initially, there was a positive trend towards the formalization of the activities of authorities. However, the implementation has been uneven among authorities; it relies heavily on the political will of authorities or elected officials. That said, both the data that are published and the data that aren’t can become powerful tools for public accountability of authorities.

/Users/cvr34/Desktop/Screen Shot 2017-03-03 at 9.48.10 PM.png

InfoLobby platform, available at http://www.infolobby.cl

 

The latest information available for this report (January 2017) indicates that the total meetings by authorities registered in the Lobby platform since November 2014 is 137,792; the total travel undertaken amounts to 146,395 trips; and the total registry of donations reached 15,869. However, there is no registry of rejected meetings or, of course, of meetings that take place without being reported on the InfoLobby Platform and therefore, limiting the scope of the information.

The Council for Transparency recently reported that 60 mayors have not registered meetings in the Lobby platform. On a similar note, by analyzing the data provided by InfoLobby,,we find significant differences in the number of meetings reported by ministers and congressman, suggesting that not everybody is adequately following the law.

/Users/cvr34/Library/Containers/com.apple.mail/Data/Library/Mail Downloads/9E755BD8-2E0F-45A8-9344-CC9F033A2E99/Infographic.png

Source: http://www.infolobby.cl

 

In the case of the ministries, 2,264 meetings have been reported on the platform as of January 2017. Over the almost 30 months since the Lobby Act was implemented, each ministry has had, on average, 98 meetings with agents of lobby. However, only eight ministries report 100 or more meetings, and 15 ministries report less. For example, the Ministry of Women and Gender Equity, which has been active in the recent year with the discussion of the new the Abortion Act and other critical legislative issues, has only reported twenty meetings in the past 30 months.

In a similar vein, Congressional data show significant differences among representatives. Three congressmen, in the last 30 months, have not reported any meetings. The total meetings reported through the platform sum up to 2,722. The average of meetings per representative is 23 during the almost 30 months of the Lobby Act’s implementation. However, only 40 representatives report 20 or more meetings; 80 representatives report fewer.

Observance of the Lobbying Act has been greater in central government than local governments. According to the Council for Transparency, among 44,649 officials obliged to register their meetings, only 15% have reported meetings to the public.[2] However, given that the law is at an early stage of implementation, there has been some resistance to fulfilling its obligations fully.

It is clear from the data that implementation of the law is providing more information than was available before, but there is still a long way to go before that information becomes comprehensive.

Democratizing Effect of the Lobby Law

The majority of the actors interviewed for this case study indicate that – in addition to the formalization of the relationships between public and private actors – there is also a democratizing effect in the implementation of the Lobby Act.

As María Jaraquemada, from the NGO Espacio Publico, recalls: “Before the Lobby Act, you needed a contact, an email, or the telephone of somebody to get near an undersecretary, a minister, a mayor, or a congressman. Nowadays, any person can enter the web platform or fill out a form to ask for a meeting.”[3]

The data confirms the potential democratization effect and suggests that the scope of the relationships between private and public interests has broadened as an effect of the implementation of the Lobby Act. More organizations, big, medium and small corporations, and neighborhood councils, among others, have been able to ask for meetings and meet with authorities. Before the enactment of the law, usually only big corporations and influential interest groups had the means and contacts to access authorities.

As of June 2016, however, more than 16,000 people, entities, and organizations, have been represented in meetings under the Lobby Act. These meetings have included corporations, universities, neighborhood councils, professional and commercial societies, labor unions, NGOs, foundations, and schools.

Source: http://www.infolobby.cl

While many of these organizations may have been granted meetings before the law, they now have the right to request a meeting, and in many cases those requests are granted, formalizing access and (in many cases) broadening it as well. Before the passage of the law, citizens needed a personal contact in order to approach a public authority. The latter has changed and now the challenge is to determine how small groups, grassroots organizations, and advocates can harness the opportunities provided by the Lobbying Act.

While access has certainly opened up, personal contacts still facilitate access to public servants. As Alberto Precht from Transparent Chile notes, “These laws are not going to resolve the issues of access to authorities. What the Lobbying Act allows is to make this access more transparent. I do not imagine a normal citizen waking up in the morning to check transparency or lobby data.”[4]

More broadly, the law has contributed to shaping a new standard in public-private relations in Chile, setting rules and a framework to promote interests before public authorities. Its main long-term impact will be seen in how it manages to further democratize access to authorities by citizens.

Increased Accountability and Oversight

Prior to the Lobbying Act, since there were no data on how many meetings authorities held–except for the information voluntarily registered by public officials or representatives–there was no evidence allowing citizens to demand compliance from authorities on commitments agreed in meetings. Since the law establishes a registry for lobbying companies and requires officials to report meetings, travels, and donations, today the activities, arrangements and communications between the public and private sectors are available for public and media scrutiny[5]. According to the Transparency Council, the platform lists an average of 8,000 visits per month[6].

Before the enactment of the Lobbying Act, there was no information about countless activities, communications, and meetings between authorities with various groups. José Miguel Wilson, a journalist from the newspaper La Segunda, says: “The main effect of the Lobbying Act is to allow the disclosure of a series of occupations and activities that were done in the name of lobby.”[7] Indeed, Raul Ferrada, executive director of the Council for Transparency, affirms the power of that disclosure in reporting that “in Chile today, there are more than 4,017 registered lobbyists – people that declare they do lobby (…) Before the law came into effect this data was not available, providing an outstanding tool for public oversight.”[8]

However, there have been a number of news articles denouncing noncompliance with the lobbying rules. La Segunda, for example, has published several articles using the information available from InfoLobby, naming and shaming legislators and government officials. Finally, greater levels of transparency and accountability have set more limits about what groups can and cannot do. As Gonzalo Cordero, a founding partner the lobbying agency Azerta, says: “The Lobbying Act has allowed more public debate over the relationships between the public and the private sector. There is more transparency, public meetings, and issues being discussed.”[9]

The Lobbying Act has also served to bring more transparency and information about preliminary negotiations into government procurement. The law allows companies interested in making their products known or positioning their brands to set up meetings with potential public sector clients, making those preliminary contacts more transparent[10]. New companies may offer their products through ChileCompra, the public platform for government procurement.

The Beginnings of Cultural Change

The introduction of the law has gradually changed the rules of the game for interest groups approaching authorities, and it is changing the public perception of lobbying, leading companies to design strategies and take more seriously their relationships with decision-makers (e.g., health-care companies, insurance corporations, pension funds, energy corporations). Companies are thus adjusting their strategies for approaching authorities and are providing transparency and information regarding activities that were opaque in the past.

According to Cordero and Ian McKinnon of Azerta: “Before the enactment of the law, there was no clear assessment by businesses of the costs and benefits of meetings with authorities. They were used to asking for meetings and using them as relationship-building with authorities. After the law, there is a thoughtful decision on whether you require or not to contact the authority. This is a direct effect of transparency, as you have to acknowledge that your meeting will be public and known by other actors and the market. In summary, the Lobbying Act causes a change in the strategy of businesses with the state and regulators.”[11]

To the extent that lobbying is done transparently, the law is progressively legitimating that activity, and thus Chile is seeing a shift in paradigm, a professionalization of politics. For instance,, the Housing Committee now uses the Lobbying Act to inform applicants and beneficiaries of subsidies. This is critical for Sebastian Soto, former head of the Legal Division of the Ministry of the Presidency. “In first place,” he says, “there has been a formalization of the relationship between the state and businesses. By formalizing, I mean the incorporation of transparency and a formal process of contact between them. Secondly, there is a higher standard of what can and what cannot be done, that is clearer than before.”[12]

Challenges to Reaching Full Potential

The differences in the implementation of the law by various public authorities is no doubt an impediment to realizing the full potential of the Lobbying Act’s social benefits. Some of the ministries that work in some of the most regulated activities are ones that report low numbers of meetings.

The ignorance among certain local governments, members of Congress, and other public servants about the way the law works and how to manage it has led to the law being seen as an administrative burden rather than an opportunity to improve the quality of services to citizens. Grassroots organizations still do not understand the advantages the law offers for enhancing their access to authorities and formulating their concerns, limiting the capacities of the law to include all organizations. As Senator Felipe Harboe says: “The essence of government is to listen to all the sectors. Some sectors are wrong if they believe they are exempt from the Lobbying Act – for example, the unions. The role of the legislator is to listen to the unions but also to other sectors that oppose them. Then, after considering all the facts, he makes a decision.”[13]

Finally, currently there are few formal activities intended to disseminate the law, and more training programs are required. Because of the negative perception of lobbying activities, especially after decades without a legal framework, public opinion tends to associate lobbying with influence-peddling and other illegal behaviors. As a result, many authorities and organizations have tried to avoid registration. An important issue for the current implementation of the law is the refusal of some civil society organizations to abide by the law, arguing that they engage in advocacy activities, not lobbying. For example, ANEF, the public employees’ union, argue that they are not subject to the Lobbying Act since they promote collective, not private interests. The general comptroller has stated that any activity intended to influence the design, implementation, or evaluation of policies, projects, or programs is subject to the Lobbing Act, without regard to the nature of the organization.

Also, there has been limited interest from citizens in monitoring and evaluating effective compliance of the law. According to Wilson: “The law is less known than other transparency regulations, by citizens, media and some NGOs. More active promotion by authorities of the opportunities and benefits of the law is essential.”[14]

The media and NGOs are gradually increasing their use of the platforms and information provided, but the impact of those shifts is not significant yet.

Toward Greater Compliance

Although the law has passed and implementation has begun, it will be important to consolidate the early gains and ensure progress remains on track for full implementation of the law. It is crucial that the Ministry of the Presidency promote the law and require agencies to implement it. At early stages, this kind of law requires strong commitment from authorities.

“The success of these laws rely on the political will of the actors obliged to follow them,” says Alberto Precht of Chile Transparente. “For example, the Minister of Health has one of the most detailed agendas in government and has registered hundreds of meetings. On the other hand, some ministers or congressman appear to have no meetings. That is a breach of the obligations of the law, because that is clearly not possible.”[15]

Building off Precht´s views, it is necessary to give more domestic visibility to the Lobbying Act. The law represents an opportunity for NGOs, grassroots movements, and other groups to get formal access to authorities. Lobbying is not only a matter involving big companies. It is fundamental to change the negative perception that some public agencies and authorities have, moving from the fear of being exposed as carrying out lobbying activities (a legal undertaking) to seeing the law as an opportunity to promote equal treatment among citizens, to democratize access, and to manage performance.

The increasing commitment of NGOs, unions, and civil society organizations in adopting the law will improve its standing as an agent of influence as there is a broader reach of the law´s prescriptions. As more organizations that advocate for collective or private interests are willing to act under the law, the Lobbying Act will gain further legitimacy. At the same, civil society organizations can play a crucial role as data intermediaries in helping citizens understand the significance of the information being released (or not) and using it in their advocacy activities. Similarly, the media can play a crucial role in influencing public opinion on the decision-making process and the factors that influence authorities by showing how the regulation of lobbying activities is working out. Reports on the law’s enforcement, the rankings of authorities for best implementation, the number of reported meetings, and other news about the law will contribute to creating more awareness among citizens.

The potential of the law to democratize access to authorities even further is infinite. Chileans are demanding more transparency and accountability from public officials, and this law stands to enhance good governance and level the playing field for actors in their relations with government. Could this have an impact on Chile´s chronic high inequality? Only time will tell.

Notes:

  1. Part of this work was originally part of a report made by the authors for the Open Government Partnership (http://www.opengovpartnership.org) and a summary presented as one of the early open government partnership initiatives at the OGP 2016 Summit in Paris, France.
  2. Assessment of the Lobbying Act, Council for Transparency. June 2016.
  3. Interview with Maria Jaraquemada, incidence director, Espacio Publico, performed by the authors on June 16, 2016.
  4. Interview with Alberto Precht, executive director, Chilean Chapter of Transparency International, performed by the authors on June 24, 2016.
  5. Interview with Jose Miguel Wilson, journalist , La Segunda, performed by the authors on June 24, 2016.
  6. Interview with Raul Ferrada, executive director, Council for Transparency, performed by the authors on June 25, 2016.
  7. Interview with Jose Miguel Willson, journalist of La Segunda, perfomed by the authors on June 24, 2016.
  8. Interview with Raul Ferrada, executive director, Council for Transparency, performed by the authors on June 25, 2016.
  9. Interview with Gonzalo Cordero and and Ian Mackinnon, lobbyists, Azerta Consultores, performed by the authors on June 17, 2016.
  10. Interview with Rodrigo Mora, chief of division, Citizen’s Defense Unit and Transparency, Ministry of the Presidency, performed by the authors on June 17, 2016.
  11. Interview with Gonzalo Cordero and Ian Mackinnon, Lobbyists, Azerta Consultores, performed by the authors on June 17, 2016.
  12. Interview with Sebastian Soto, Senior Advisor, Libertad y Desarrollo Institute, performed by the authors on June 17, 2016.
  13. Interview with Senator Felipe Harboe, performed by the authors on July 4, 2016.
  14. Interview with Jose Miguel Willson, journalist of La Segunda, perfomed by the authors on June 24, 2016.
  15. Interview with Alberto Precht, executive director, Chilean Chapter of Transparency International, performed by the authors on June 24, 2016.

 

Cristian Valenzuela

Written by Cristian Valenzuela

Cristian is from Chile and he is a 2017 CIPA Fellow studying government, politics, and policy issues. Prior to Cornell, Cristian worked as Coordinator of the LLM Program in the Catholic University in Chile, and served as Chief of Staff of the Minister of Energy and the Undersecretary of Finance,...
Read more
Jorge Sahd

Written by Jorge Sahd

Jorge Sahd is the Director of the Center for International Studies at the Pontificia Universidad Católica de Chile. Jorge is assistant professor of Economic Law and Government and Business at the Pontificia Universidad Católica´s School of Law. Additionally, Jorge is the academic coordinator of the Probidad, Transparencia y Buen Gobierno...
Read more

Leave a Reply

Your email address will not be published. Required fields are marked *

Time limit is exhausted. Please reload CAPTCHA.