Reporting on the Mexican Cartel Drug War

Galloping corruption

Saturday, July 14, 2012 |

Ana Maria Salazar

El Universal. 07-13-2012.

Another case of government officials' corruption came to light in the U.S.: the SEC (Securities and Exchange Commission) revealed Tuesday that the medical equipment company Orthofix International, based in Lewisville, violated the Foreign Corrupt Practices Act (FCPA).

The SEC added that the bribes included cash, laptop computers and television sets, which resulted in illegal profits of $5 million. Orthofix agreed to pay a fine of $5.2 million in exchange for dropping criminal charges and commercial sanctions against the company. In addition, they sought dismissal of charges in the U.S. against their affiliate in Mexico, Promeca, who had bribed officials of the Instituto Mexicano del Seguro Social (IMSS) (Mexico's social security administration) to sell orthopedic medical equipment.

The big question is why these accusations come to light in Europe or in the United States and not in Mexico. Also, why are there mechanisms in place in other countries to prosecute this kind of corruption, but in Mexico, where these acts of bribery took place and where the damage to the public resources and institutions' image actually happened, corrupt officials are not punished? Finally, why has no effort been made to recover compensation for damages from these foreign companies?

Let's look at other recent cases: Siemens entered into agreements with the United States and the European Union to pay approximately $1.6 billion in fines for bribes it paid to government officials all over the world, including bribes paid to Pemex officials. Walmart's Mexican affiliate paid up to $24 million in bribes to obtain licenses and construction permits to maintain its market dominance.

ABB paid more than $50 million in fines for bribes it paid Nestor Felix Moreno, operations director of the Comision Federal de Electricidad (CFE), to obtain contracts that made ABB more than $81 million dollars. Lindsey Corporation was convicted with ABB of conspiracy to pay bribes, also to the FCE, and is appealing the conviction in a U.S. Federal Court.

Early this year, Tyson foods admitted it had paid bribes to Mexican veterinaries for the past ten years and agreed to pay $5.2 million in fines.

Another case is that of Paradigm Geotechnology, which paid a million dollars in fines for paying bribes to a Pemex official.

The U.S. Department of Justice revealed a network of corruption that involves Bizjet and several Mexican government officials, who had received more than $20 million in bribes.

These cases represent more than one billion dollars in fines. Yet, in Mexico, the public agencies charged with obtaining compensation for damages have not received even one peso. Is this a legal problem or (a lack of) will? I would say it's both.

How is it possible that, in every case, the companies admitted publicly that they violated the law in Mexico, and --to reach a settlement-- had to identify the government officials that received the bribes. Furthermore, these fines benefit the U.S. Treasury and not the citizens of our country, who are the real victims of these corrupt practices.

The problem is that this information is located in another country. To be able to prosecute these companies, the Mexican government would have to create mechanisms to allow it to obtain evidence against these companies and prosecute them criminally. On the other hand, Mexico's public institutions must have the political will to prosecute these cases, despite how this may affect the public image of the actual officials involved. And, there is probably a serious problem if one opens this Pandora's box, because it is not known who else, and at what level, could be involved in (public)corruption.

In Mexico, according to Coparmex (Confederacion Patronal de la Republica Mexicana; an industry association), businesses allocate up to 10% of the  Gross Domestic Product (PIB; Producto Interno Bruto) for the payment of bribes. In an interview with Contralinea, Gerardo Gutierrez Candiani, president of Coparmex, pointed out that many businesses "believe, mistakenly, that they have to engage in some issue like this [the payment of bribes], because if they do not, they will not have access, they will not be given an opportunity".

For the new administration, this will be one of the great challenges, because these cases severely impact the international image of Mexican public institutions. But in addition, while it develops international mechanisms to facilitate, prosecute and punish these corrupt companies, this should also be one of the easiest ways to clean up those institutions that are most susceptible to greater corruption in this country.  

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7 Borderland Beat Comments:

Anonymous said...

Why every where specially us not Mexico ,because Mexico is not owned by Mexicans. We have been targeted since the beginning of our history in Mexico by other countries specially the us. Where does the corruption starts ? NORTH! . Who benefits of corporations having a piece of the cake ? The North ! For profit and military resources.
And slot of people wonder why Mexicans doubt want Americans in Mexico. Not because we wony like then but because we knowbwhat kind of shit they bring with then..greed, hypocrisy n mostly death. Is funny howbthe rest of the world thinks the same except Americans. Not hating just stating reality.

Anonymous said...

The PRI made Mexico what it is today,and the idea that a Leopard has changed his spots is a joke. The PRI will take Mexico right back to the traditional Mexican squalor of payola as you go. The truth is this is all Mexicans know and most must be comfortable with it.Same in the US Evidently,there are many people who have chosen entitlments over individual opportunity(socialism) otherwise Oboma would have NEVER been President.

Anonymous said...

Between Drugs and Corruption what % of the Mexican real GDP is represented? Mexico needs a complete Moral/ethical overhaul,we can hold our breath!

Anonymous said...

Paying off officials is a way of life the PRI established and perfected. Now they will soon be back in charge of the country and more PRI officials will become wealthier. Mexico does know what morals and ethics are. Well they do but look the other way.......Mexico got to love it.

Anonymous said...

I'm sorry to hear anonymous above pointing out the deficiencies in gringos visiting Mexico, not because i'm insulted, but because he's right, at least historically.
I can only answer that corruption is global, and that some people here in the US do care about what happens in Mexico. The war on drugs is the root cause of a lot of this - i wish more people here who use methamphetamine or cocaine would take into account the loss in lives their habit results in.....
Not every north American blames Mexico - some of us have traveled there and had wonderful experiences, and have great respect for the couture and people - and most people understand an individual is separate from his country and it's government.
We're all in the same boat these days - as far as i can tell, Mexico and it's over-agressive northern neighbor are more and more alike all the time...i feel sorry for all of us working people!

Anonymous said...

'm sorry to hear anonymous above pointing out the deficiencies in gringos visiting Mexico, not because i'm insulted, but because he's right, at least historically"
IS THAT YOU AGAIN?YOU RACIST BITCH.IF IT WASNT FOR MEXICO MAKING METH AND HEROIN AND MJ,THE US WOULDNT HAVE ALL THESE DRUGS,do Mexicans really care what happens in the US?Sadly i have to say no,the more they can hurt us the better.Mexico should realize the deadly drugs it sends its neighboor is wreaking havoc,but sadly they dont care.

Anonymous said...

That is the perennial Mexican excuse for everything. "The gringos did it - the gringos are to blame". Racism? Absolutely, it's a two-way street and the Mexicans work their side as much as anyone. How have the indigenous people of Mexico been treated by the Mexicans since the conquest?

The fact is that corruption in Mexico exists at levels never even thought of in the US. Mexico's public institutions do not begin to work for the public. Show me one public agency in Mexico that provides service to the Mexican common man. There are none.

When I lived in the DF in the 1960s and 70s I was offered a job with the Industria de Transformacion - registering businesses to pay taxes. The guy that wanted to hire me told me how to take the bribes to not register businesses, how much went to him and how much I could keep and which businesses to register to make it all look good. That I was in the country on a student visa was not an issue.

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