Bribery cartels between officials and local leaders hide corruption. Bribery cartels operate around the world: della Porta and Vannucci (1999) document cartels of businesspeople and politicians in Italy who collude to keep influence and money circulating between cartel members. Ufere et al. (2012) and Fisman and Gatti (2002) found similar collusion in Nigeria and Indonesia’s business sectors. In 2015, investigators uncovered bribery arrangements between FIFA representatives and officials from dozens of countries that featured cartel-like behavior. In the FIFA scandal, officials colluded to keep contracts and kickbacks within a circle of corrupt associates, and taxpayers footed artificially high bills. Itikawa (2006, 2010) documented an arrangement between street vendor leaders and city bureaucrats in São Paulo, which street vendors called a bribery mafia: the city government extorted street vendors in downtown São Paulo to the tune of roughly 500,000 U.S. dollars a month. Street vendor leaders collected the money, took large cuts, and delivered the rest to the mayor’s reelection slush fund.
In a forthcoming research article, I use the case of street vendor unions and bureaucrats in La Paz, Bolivia to develop the concept of bribery cartels and document how bribery cartels perpetuate corruption. Bribery cartels are informal and illicit agreements within a small network of bureaucrats and local leaders. The defining features of a bribery cartel are that participants 1) collude to extract bribes; and 2) restrict who collects and receives bribes to a small group of people who know each other. Informal agreements between officials and local leaders take on cartel-like features where they restrict access to officials and the services that they are supposed to provide to the public. In La Paz, the municipal Markets Office grants licensing requests and a few bureaucrats within the office approve or deny applications for over 50,000 street vendors. These requests are brought to them by a small number of street vendor union leaders, and together they form a bribery cartel.
In Bolivia, corruption is routine: the Latin American Public Opinion Project found that 30% of Bolivians reported paying a bribe in the last 12 months, despite decades of celebrated transparency and accountability reforms. Many Bolivians engage in corruption through middlemen, like civil society leaders and lawyers, instead of paying officials directly. People vocally resent that middlemen add an extra layer of costs and opaqueness to corruption, but still choose to pay bribes through middlemen that knowingly take advantage of them because they have no better option.
I did research with one of La Paz’s four street vendor federations from August 2014 and May 2015, where I observed meetings, engaged in conversations, interviewed 43 vendors and bureaucrats, and worked as a street vendor in an open-air market. I also helped out around the office and in the markets where possible, primarily by running errands, watching stalls, and babysitting, and occasionally by translating or teaching English. The forthcoming research article uses the data I collected during this time.
Observers should be aware that bribery cartels can operate under what appears to be successful reforms. The La Paz Markets Office looks like a success story: the Transparency Unit inside the office is fully staffed, prominent posters state which services are free and what the official fees are and list numbers for anonymously denouncing corruption, and the well-educated bureaucratic staff is fluent in the international discourses around reform, transparency, and accountability. Yet Markets Office employees enjoy a standard of living well above their official salaries and the public they serve complains of rampant corruption.
In sum, people like street vendor union leaders become middlemen in corruption when the role advances their careers and brings in extra income. Middlemen collude with officials to channel bribes through a bribery cartels that enables both leaders and officials to manipulate their public positions for private profit. Bribery cartels hide and perpetuate corruption, making it difficult for citizens to hold either civil society leaders or public officials accountable. Middlemen’s strategies protect officials while extracting money and power from ordinary citizens.