How to Subvert Democracy

How much do you offer for our co-operation, Mr Montesinos?Democracy is such a wonderful thing. All those checks and balances. The myriad political parties, a free press, independent judiciary, the works. But which of these checks and balances is the mightiest? Is it at all possible to rate them in any way?

Actually, it is. Just apply a bit of that other superb companion to democracy, free markets, arm yourself with a shopping bag and a well-stocked wallet, and set about trying to stop these checks and balances by simply buying them off. The more effective ones are bound to be the ones with the greater market value, i.e. the highest asking price.

Of course, it is a bit tricky to put this approach to the test without landing yourself behind bars. The next best thing is to do what John McMillan and Pablo Zoido did for one of their recent CESifo Working Papers: they studied closely what a remarkably successful subverter of democracy, Vladimiro Montesinos, did in Peru in the late 1990s.

Montesinos was the intelligence chief and local Rasputin to Peruvian President Alberto Fujimori. An obsessively secretive character, Montesinos got some kudos for defeating the Sendero Luminoso Maoist guerrillas and their slightly less gruesome cousins, the T˙pac Amaru rebel movement. What he also did was systematically buy off politicians, legislators, judges and journalists to make them do his bidding, keeping the fašade of democracy but draining it of its substance.

With commendable scientific foresight, Montesinos kept immaculate records of all his bribery undertakings. He made recipients sign contracts detailing their obligations and how much they received in payment, had them sign receipts for the bribes given, and he even videotaped each of his transactions. In other words, he created a reliable database with which interested researchers could undertake thorough empirical analyses when a suitable moment presented itself.

A side effect, of course, was that this "database" had many Peruvian politicians, judges, journalists and businessmen shaking in their shoes once Montesinos was finally brought to trial. When some of the vladivideos were aired, a bout of avid TV-watching by Peruvians ensued —but alas, none of the people portrayed in those videos wanted to be a TV star anymore. Talk about reality TV.

Montesinos unwittingly wrote a tome on how democratic institutions can be subverted, laying bare where the weak points are and how the parts of the system interact with each other. Montesinos's bribes, as the authors point out, reveal which of the checks is the hardest to undermine.

The study covers the last three years of the Fujimori regime —1998-2000—, when Montesinos strived to get Fujimori re-elected to a third term. The total number of vladivideos is still unclear. Peru's Congress holds some 1,600 at present; Montesinos himself claims there are 30,000. Given that only a fraction have been made public, to carry out their research the authors resorted as well to journalistic, legal, and academic sources in Peru.

Why did Montesinos tape all his meetings? Perhaps, say the authors, to have proof of the others' complicity, acquiring thereby a sort of insurance against anyone turning against him.

So, what was the going rate for a politician, a judge or a TV channel? Politicians' bribes were mostly between US$5,000 and US$20,000 per month. A congressman, at the time, earned some US$9,000 in the form of official monthly pay and expenses. Three documents were typically signed: a receipt for the bribe, a letter asking Fujimori for admission into his party, and —on congressional letterhead— a "gentleman's agreement" binding the congressman to act in close collaboration with Montesinos and take direct instructions from him.

A judge, in turn, got between US$2,500 and US$10,000 per month, at the time about one-and-a-half to six times their official salary. Farther up the ladder, Supreme Court Judges got around US$25,000 per month, and the Supreme Court president a regal US$35,000 per month. But judges on the National Elections Board got up to US$50,000, reflecting their ability to thwart Fujimori's bid to a third term.

Bribes to the press were an order of magnitude higher. Newspapers got anywhere between a US$1 million lump sum, to content-based "contracts" amounting to some US$ 1.5 million paid out over a couple of years, whereby a front-page headline fetched around US$4,000, a full-page article US$5,000, and a shorter one, US$500. Those who refused to enter into such arrangements were harassed thoroughly.

Then came the television quantum leap. Montesinos paid TV-channel owners about 100 times what he paid judges and politicians. As the authors point out, one single channel's bribe was four times larger than the total of the opposition politicians' bribes. TV-channel bribes ranged from US$500,000 to US$1.5 million per month, enabling Montesinos to review each day's news programmes before they were aired and to make sure that the channels did not broadcast anything political without his written approval. The above sums do not include further money channelled to the TV stations through government advertising. It was no trifling sum: in those years, the state was Peru's biggest advertiser.

The "bribe scale" suggests that television had more bargaining power, but also that it is a more fundamental constraining mechanism than politicians or judges. For one thing, Montesinos needed to bribe only some politicians and some judges to obtain the majorities he sought. By contrast, he had to bribe all of the widely watched TV channels. On top of that, there were supply issues at play: the stock of corruptible politicians and judges exceeded Montenisos's demand.

For another thing, there is the fact that the most potent check on any democratic government is a well-informed citizenry. Here, the news media play a crucial role. And in Peru the citizenry got their news overwhelmingly from television.

Fittingly, and tellingly, it was also television that finally brought down Fujimori's regime: that bit of Peruvian-style reality TV showing Montesinos bribing one congressman after another did the trick.


Note: This text is the responsibility of the writer and does not necessarily reflect the opinion of either the CESifo Working Paper author(s) cited or the CESifo Group Munich.

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