Category Archives: Corruption

Mexico’s States Gained Power and Money; Then Came Corruption

The sudden disappearance of Veracruz governor Javier Duarte, leaving behind nearly empty state coffers, shows how the dispersal of political authority to the states made them vulnerable to graf.
The sudden disappearance of Veracruz governor Javier Duarte, leaving behind nearly empty state coffers, shows how the dispersal of political authority to the states made them vulnerable to graf.

By Jose de Cordoba and Juan Montes /  Wall Street Journal

One day last October, the governor of Veracruz state was scheduled to appear on a morning news program. He never showed up.

Instead, Javier Duarte disappeared, the same day authorities asked a judge for a warrant to arrest him. Many in Mexico think he was tipped off.

Duarte has since been charged with racketeering and using illegally obtained funds. Investigators believe he used front men and a web of phantom companies to divert public funds and acquire real estate in Mexico, Houston and Miami. With Veracruz state’s affairs in disarray, federal and state auditors said $2.5 billion spent by his administration was unaccounted for.

Duarte, who before vanishing denied wrongdoing in a series of media interviews, has become the public face of corruption in Mexico and an embarrassment to the ruling Institutional Revolutionary Party. Its hopes for retaining power in elections next year are hampered by the alleged financial malfeasance not just of Duarte but of half a dozen other former state governors.

On Sunday, the acting governor who filled in after Duarte’s disappearance was detained and accused of helping him flee.

The mystery of Duarte’s disappearance has riveted Mexicans’ attention even with the strong news focus this year on issues that could affect their lives and economy: the trade and border policies of U.S. President Donald Trump. Long after those controversies have receded, many in Mexico say, their country will still need to get a handle on its deep-seated corruption problem if it is to become a fully modern country. Prince-like state governors often answerable to no one pose a continuing threat to Mexico’s economic health and struggle to establish universal rule of law, political analysts say.

https://www.wsj.com/articles/mexicos-states-gained-power-and-money-then-came-corruption-1489432708

Giant aluminum stockpile shipped from Mexico to Vietnam, possibly to avoid tariffs

An aerial view of the aluminum around Aluminicaste Fundición de México's San José Iturbide plant before the stockpile was shipped to Vietnam.
An aerial view of the aluminum around Aluminicaste Fundición de México’s San José Iturbide plant before the stockpile was shipped to Vietnam.

By Scott Patterson, Biman Mukherji and Vu Tron Khanh / Wall Street Journal

One of the world’s largest aluminum stockpiles, which until a few months ago was stored under hay and plastic tarp in a Mexican desert, has been moved to a remote port in southern Vietnam.

Starting early this year, 500,000 metric tons of aluminum has been trucked out of the Mexican city of San José Iturbide and shipped to Vietnam, according to shipping records and people familiar with the matter.

Much of it now sits under black tarps, guarded by baton-wielding men on motorcycles, at a factory and waterfront complex in the South China Sea port of Vung Tau, about a two-hour drive south of Ho Chi Minh City.

The unusually large shipments have captivated traders and aluminum-industry experts and sparked worries about what it means for global markets and aluminum prices. According to Global Trade Information Services, which tracks world-wide trade, Vietnam was the destination of 91% of Mexico’s aluminum-extrusion exports this year—a rarely used trade route for aluminum in recent years.

The Mexican stockpile, now in Vietnam, had been traced to one of China’s richest men, Liu Zhongtian, chairman of aluminum giant China Zhongwang Holdings.

American aluminum executives accused Mr. Liu of sending his metal to Mexico to disguise its Chinese origins and evade American tariffs—a charge. Liu and China Zhongwang denied.

Mexico finds funds linked to fugitive governor

AP – Mexico’s government has found about 421 million pesos ($20.5 million) linked to the former governor of the Gulf coast state of Veracruz who is sought in a corruption case. The Attorney General’s Office said two businesses that apparently received state funds from people representing ex-Gov. Javier Duarte through “illegal operations” have agreed to return the money.

https://www.washingtonpost.com/world/the_americas/mexico-finds-22-million-linked-to-fugitive-ex-governor/2016/11/29/eb579cb4-b6a4-11e6-939c-91749443c5e5_story.html?utm_term=.a53031f477b5

Prosecuters hunt for ex-Veracruz governor

NYT – A senior Mexican official says prosecutors are trying to detain the former governor of Veracruz state on suspicion of corruption. Interior Minister Miguel Angel Osorio Chong told Radio Formula on Wednesday that officials aren’t sure where Duarte is, but believe he’s still in the country. Duarte stepped down as governor a week ago, saying he wanted to confront the corruption allegations, which he denies.

http://www.nytimes.com/aponline/2016/10/19/world/americas/ap-lt-mexico-ex-governor.html?_r=0

Model transparency law weak in practice

Quartz – Mexico can boast having one of the world’s best right-to-information laws. But that means little in practice, journalists and activists say, because authorities regularly skirt the spirit of the well-regarded law—starting, it is alleged, with the government agency charged with upholding it.

http://qz.com/808618/the-country-with-the-worlds-best-transparency-law-has-a-terrible-record-on-transparency/

Immigration Service fires agents for corruption

AP – Mexico’s National Immigration Institute says it has fired three agents for allegedly shaking down Cuban migrants for bribes, the latest alleged corruption scheme at the agency. The agency said it has fired about 2,500 agents and other employees since 2013 for malfeasance or failing vetting and background checks.

http://abcnews.go.com/International/wireStory/mexicos-immigration-service-fires-agents-corruption-42542572

PRI Suspends Controversial Veracruz Governor’s Party Membership

Veracruz governor Javier Duarte (R) attends the XXXVIII Session of the National Council of Public Security at the National Palace in Mexico City, Aug. 21, 2015.
Veracruz governor Javier Duarte (R) attends the XXXVIII Session of the National Council of Public Security at the National Palace in Mexico City, Aug. 21, 2015.

Reuters

Mexico’s ruling Institutional Revolutionary Party, or PRI, voted on Monday to suspend a controversial governor’s party membership in a bid to root out widespread perceptions of corruption among its ranks.

Citing damage to the party’s image and the strength of corruption allegations leveled against Veracruz state Governor Javier Duarte, the PRI’s seven-member justice commission approved the suspension of him and to six of his aides.

Duarte became the governor of the eastern state, a populous and oil-rich PRI bastion, in 2010 a vote tarred with accusations of electoral fraud.

His time in office became synonymous with widespread drug violence, accusations of graft and multiple journalist killings.

Veracruz is the most dangerous state for journalists in Mexico, with at least 17 journalists murdered there since 2010, Reporters Without Borders says.

http://www.voanews.com/a/reu-mexico-pri-suspends-controversial-governor-party-membership/3526567.html

The missing 43: Unanswered questions 2 years on

BBC – Two years have passed since 43 students went missing on their way to a protest in the Mexican town of Iguala. The violence that night also left three dead and two injured. At the time, their disappearance caused outrage. The anger is still burning at the Raul Isidros Burgos rural teachers’ college in Ayotzinapa, where the trainee teachers were studying.

http://www.bbc.com/news/world-latin-america-37460455

Demand for Inquiry Into Police Abuse of Women Might Embroil Mexico’s President

President Enrique Peña Nietoduring Mexico’s Independence Day parade last week in Mexico City. A crackdown he ordered a decade ago when he was governor of Mexico State is under scrutiny. (Mario Guzman/European Pressphoto Agency)
President Enrique Peña Nietoduring Mexico’s Independence Day parade last week in Mexico City. A crackdown he ordered a decade ago when he was governor of Mexico State is under scrutiny. (Mario Guzman/European Pressphoto Agency)

By Azam Ahmed / New  York Times

International human rights officials are demanding an investigation into the brutal sexual assaults of 11 Mexican women during protests a decade ago — an inquiry that would take aim at President Enrique Peña Nieto, who was the governor in charge at the time of the attacks.

The demand is part of a multiyear examination by the Inter-American Commission on Human Rights into abuses during a 2006 crackdown ordered by Peña Nieto on San Salvador Atenco, a town in Mexico State where demonstrators had taken over the central square. During the operations, which left two dead, more than 40 women were violently detained by the police, packed onto buses and sent to jail several hours away.

The case was brought by 11 women to the international commission, which found that the police tortured them sexually. The women — a mix of merchants, students and activists — were raped, beaten, penetrated with metal objects, robbed and humiliated, made to sing aloud to entertain the police. One was forced to perform oral sex on multiple officers. After the women were imprisoned, days passed before they were given proper medical examinations, the commission found.

“I have not overcome it, not even a little,” said one of the women, Maria Patricia Romero Hernández, weeping. “It is something that haunts me and you don’t survive. It stays with you.”

http://www.nytimes.com/2016/09/23/world/americas/enrique-pena-nieto-commission-human-rights-investigate-rape.html

Pena Nieto sacks federal police chief after scathing report

Galindo has denied any wrongdoing on part of the police.
Galindo has denied any wrongdoing on part of the police.

By Feliks Garcia / Independent

Mexico’s top police chief has been dismissed after a scathing report by the country’s human rights commission alleged the federal police executed at least 22 people on a ranch last year.

President Enrique Peña Nieto decided to remove federal police chief Enrique Galindo after the National Human Rights Commission released their report to allow for a more transparent investigation into the alleged events, the Associated Press reported.

“In light of the recent events and on instructions of the president, Police Commissioner Enrique Galindo has been removed from his position,” Interior Secretary Osorio Chong announced. “That is with the objective of facilitating that the corresponding authorities carry out an agile and transparent investigation in full view of citizens.”

In their report, the NHRC said that Mexico Federal police killed at least 22 suspected drug cartel members in a remote ranch in Michoacan in May 2015. Police then allegedly moved the bodies and planted guns on the victims to corroborate their reports.

“The investigation confirmed facts that show grave human rights violations attributable to public servants of the federal police,” said commission President Luis Raul Gonzalez Perez at an 18 August conference.

http://www.independent.co.uk/news/world/americas/mexico-police-chief-fired-executions-cartel-enrique-galindo-pena-nieto-michoacan-a7215781.html

What anti-corruption law means for business

WSJ – A series of anti-corruption measures approved by Mexico will require companies to show what policies and procedures they had in place at the time alleged wrongdoing occurred, and those controls could be considered when penalties are being weighed against businesses that break the rules, said an attorney. The revised laws will bring Mexico into line with anti-corruption laws in other countries, said Luis Enrique Graham, a partner in the Mexico City office of law firm Hogan Lovells.

http://blogs.wsj.com/riskandcompliance/2016/08/22/the-morning-risk-report-what-mexicos-new-anti-corruption-laws-mean-for-businesses/

Mexico’s president and his wife face new scrutiny over Miami apartment

The first lady purchased her apartment in the wealthy island enclave of Key Biscayne in 2005.
The first lady purchased her apartment in the wealthy island enclave of Key Biscayne in 2005.

By Jose de Cordoba and Santiago Perez / Wall Street Journal

Mexican President Enrique Peña Nieto, whose past two years in office have been shadowed by a conflict-of-interest scandal linked to a Mexico City mansion, is facing new scrutiny linked to the first family’s use of a luxury apartment in Miami.

Ricardo Pierdant, a Miami-based businessman, in 2013 paid close to $30,000 in property taxes on behalf of first lady Angélica Rivera for an apartment she owns in Miami, according to tax records seen by The Wall Street Journal. Pierdant is a close friend of Mexico´s first family, according to Peña Nieto´s office.

Pierdant subsequently purchased another apartment directly above Rivera’s, according to Miami property records.

Eduardo Sánchez, the president’s spokesman, acknowledged that Rivera had used Pierdant’s apartment, but said it was only on rare occasions. He said there was no conflict of interest because the businessman has no contracts with the federal government and isn’t participating in any current bids. He declined to discuss why Pierdant paid property taxes on Rivera’s property.

Links between Mexican businessmen and properties owned by the first couple have been an issue in Mexico since 2014, when it emerged that the first lady had bought a $4 million mansion from a prominent government contractor, leading to allegations by the president’s political opponents and civil society groups of a conflict of interest. She sold the house back to the contractor.

http://www.wsj.com/articles/mexico-president-faces-new-scrutiny-1470965694

Ex-governor to face trial tied to Kia tax incentives

Automotive News – A former governor of Mexico’s northern Nuevo Leon state will be tried for alleged improprieties linked to tax incentives his administration gave to South Korean carmaker Kia Motors to build a plant. In June, an anti-corruption prosecutor accused former governor Rodrigo Medina and 30 others including former officials, family and friends, of corruption that drained some 3.6 billion pesos ($195.87 million) from state coffers.

http://www.autonews.com/article/20160810/OEM01/160819995/former-mexico-governor-to-face-trial-tied-to-kia-tax-sweeteners

First Lady’s Florida home owned by government contractor

The Guardian – Mexico’s first lady is using a luxury property in Florida bought by a company that is expected to bid for lucrative government contracts, the Guardian has learned. Angelica Rivera, the wife of President Enrique Peña Nieto, is using the $2.05 million apartment in Key Biscayne, south of Miami Beach, with the apparent blessing of Grupo Pierdant, which is a contender to run Mexico’s ports.

The arrangements echo aspects of Rivera’s purchase of a $7 million mansion in Mexico City from another government contractor, the so-called Casa Blanca scandal.

https://www.theguardian.com/world/2016/aug/09/mexico-first-lady-florida-property-government-contractor-documents-reveal