All posts by Diane

How to tackle corruption in Mexico

From The Financial Times

The problem of corruption in Mexico has become remarkably more widespread and in all likelihood deeper, mainly because of the way its democratic transition has ensued. The key culprit behind its current corruption crisis is Mexico’s campaign finance system.

What makes Mexico’s current political turmoil unique is that it has put the problem of corruption front and centre of the social agenda. Streets, schools, homes, corporate offices, union meetings and workplaces are teeming with a mix of anger and concern. There is an underlying feeling that it is corruption that lies at the root of our inability to protect the innocent from murder and abuse; that it is corruption that could derail the future promised by the remarkable reforms of the past few years.

As Mexico’s leading public intellectuals have argued, its current crisis, a crisis of corruption and rule of law, calls into question its very viability as a democracy. Yet its political elites have yet to grasp the depth of the problem. The government’s leadership style has pushed social allies away. Opposition parties, mired in their own decomposition, have not served as a channel for social outrage, and players on all sides of the aisle seem way too eager to look past their lamentable wrongdoings.

Explanations behind the problem of corruption abound these days, broadly following a narrative of a “bad” type of culture and a “weak” set of institutions. These explanations are wrong.

The problem of corruption in Mexico has become remarkably more widespread and in all likelihood deeper, mainly because of the way its democratic transition has ensued. The key culprit behind its current corruption crisis is Mexico’s campaign finance system.

It is commonplace to fault modern democracies for an increasing gap between politicians and citizens, but Mexico’s democratic transition since 1997 has achieved the inconceivable. At the same time as it has expanded openness, pluralism, transparency, freedom of the press and social participation to unprecedented levels, it has made its rule of law ever more vulnerable to the plague of political corruption. In fact, the country is witnessing its most vibrant political protests in decades right after Congress has displayed an astounding capacity for transformative reform.

The reason behind this is that Mexico’s campaign finance system has directly generated an exponential and seemingly uncontainable growth of cash-based clientelism, which is at the origins of its current legitimacy crisis.

After 1994, in order to extirpate the PRI from the direct and arbitrary financial support of the government, Mexico began the design of a generous system of public funding for political parties. This was done alongside the creation of a strong, autonomous electoral body in charge of organising clean elections, disbursing these funds, and auditing political spending and contributions.

This electoral authority has been a major institutional success in Mexico’s contemporary history and a key to its political alternation. Over the years INE (formerly known as IFE) has been strengthened in authority and charged with increasing tasks, nearly all of which it has performed brilliantly, and served as an international example. The set of campaign finance regulations it enforces has also been sophisticated and expanded systematically, in the name of equality among political parties and in order to shield them from ‘undue’ private influence.

In addition to vast funds for campaigns and permanent party bureaucracies, and in order to eliminate the media’s ‘excessive’ influence in elections, in 2007-2008, a near unanimous constitutional reform was passed that cancelled parties’ (and private citizens’) ability to legally buy any kind of exposure on radio and television for campaigning purposes. Since 2012, INE has organised the distribution of tons of free media time among political parties, in a staggering display of bureaucratic achievement.

Also for the sake of protecting the integrity of public representation, very small and sternly enforced limits have been placed both on total private contributions to political parties, and on campaign spending overall.

A congressional campaign in Mexico in 2012 lasted 90 days; each electoral district comprised an average of 281,000 voters. If you happened to run the finances of such a campaign you would have to make do with about 950 dollars a day in order to stay within the legal spending limit. If you also had to run the presidential campaign in that same district, you could feel free to add another whopping 950 dollars a day.

Needless to say, you might look for options beyond the legal framework to give your candidate a chance to win. But since INE has developed an increasing ability to monitor all kinds of formal spending, you might be left with no option but to use cash for every transaction that might go above your few hundred dollars a day.

And that’s where the crux of the corruption problem lies: Mexico’s elections have become completely dominated by a black market of political support, precisely because of a set of absurd campaign finance regulations. If one were to design from scratch a system that would most enhance the ability of criminal organisations to infiltrate politics, particularly at the local level, one could argue that Mexico’s model might be the best place to start.

Its emphasis on minimal campaign spending limits, minimal legitimate outlets for spending, and minimal limits on total private contributions puts honest politicians completely at the mercy of cash-generating and spending experts, who will be able to compete effectively in a black market of political support.

It also makes it impossible for well-meaning supporters to contribute even small amounts to their desired candidates unless they are willing to do it through informal channels.

In short, Mexico’s campaign finance system has created a massive black market for political support that is fueled by cash-hungry incentives ready to infiltrate every single competitive political race, both on the demand side (parties and candidates) and on the supply side (supporters of competitive contenders).

This is the reason behind Mexico’s current crisis of corruption and legitimacy. It is not our ancestral disposition to graft or our inability to build competent bureaucracies. It is that we have effectively created a massive black market for political support from which no one seems immune.

This is the first order of business to be addressed. Mexico’s political elites are caught in a fortress originally built to strengthen representation. But this fortress has mostly served to protect parties from the public and force candidates to depend upon those literally willing to devote their lives to working in the shadows, a dependency ironically subsidized with taxpayer moneys.

It is time we opened that fortress up, and let the myriads of hard-working, honest politicians currently caught in it appeal more directly to citizen demands as leverage for true, long-lasting change.

Alejandro Poiré (@AlejandroPoire) is Dean of the School of Government and Public Transformation at Tecnológico de Monterrey. He has been a visiting professor at Harvard and Stanford, and in public service he has worked at INE and served as a minister of governance in President Felipe Calderón’s administration.

New ties emerge between high-ranking Mexican officials and builder

By Juan Montes / Wall Street Journal

Mexico’s finance minister bought a home from a prominent government contractor who is at the center of influence-peddling allegations roiling President Enrique Peña Nieto ’s administration, documents viewed by The Wall Street Journal show.

Property records show that the minister, Luis Videgaray, widely seen as the driving force behind Mexico’s recent economic overhauls, bought the house in an exclusive golf resort outside the picturesque town of Malinalco, in the central State of Mexico, from Bienes Raíces.

Bienes Raices, commercial records show, is owned by Juan Armando Hinojosa, whose companies have won hundreds of millions of dollars’ worth of public-works projects during Peña Nieto’s time as governor of the State of Mexico and during his current administration.

Videgaray isn’t accused of an illegal act. But the transaction adds to the appearance of conflicts of interest that have damaged Peña Nieto’s credibility and popularity after he came to office promising a break from the clubby practices of his ruling Institutional Revolutionary Party’s past.

It also is a fresh example of the extensive business and personal links between the contractor and senior government officials.

Videgaray, in written response to questions from the Journal, said that he bought the house from Hinojosa in October 2012, a few months before Peña Nieto’s administration took office on Dec. 1. By then, Videgaray was widely tipped as the next finance minister.

“There was no conflict of interest. I did the deal when I was not holding public office, and the deal was within market parameters,” Videgaray said.

http://www.wsj.com/articles/new-ties-emerge-between-mexico-government-and-builder-1418344492?KEYWORDS=mexico