Blog dedicated to reporting on Mexican drug cartels
on the border line between the US and Mexico

Friday, November 9, 2012

Corruption: Edomex, the Example Everyone Follows

by Rodrigo Vera Proceso

Translated by un vato for Borderland Beat

[Translator's note: Although not directly related to the narco war, this article helps explain the political context in which the war is being fought. The information in the article has been reported in other journals, but this is a convenient synopsis. -- un vato]

Enrique Pena Nieto was shaped in a school of corruption that promotes nepotism and favors oligarchic interests, asserts the president of the College of Architects and Urban Planners of the State of Mexico, Arturo Chavarria Sanchez. According to the specialist, who claims he was imprisoned for denouncing the alleged bad actions of Mexico's next president, the so-called Golden Boy devoted himself to benefiting large enterprises such as Grupo Carso and OHL, among others, and award them juicy public works contracts.

TOLUCA, MEX. (Proceso).--President elect Enrique Pena Nieto "is today the best representative of the corruption and nepotism that, for decades, the oligarchy that controls the State of Mexico has promoted," states Arturo Chavarria Sanchez, president of the College of Architects and Urban Planners of the State of Mexico.

He adds: "Pena Nieto was educated in the school of corruption. That's where he came from. He was trained so that the PRI oligarchy to which he belongs can do business from government posts. Governing for profit! That was his true platform when he was governor of the State of Mexico. Imagine him now as the president of the Republic."

-- Do you think he will have the same attitude?

-- Most probably, because the boy doesn't kinow how to do anything else. It's almost certain that he will repeat at the federal level the same oligarchic scheme, corrupt and repressive. Through him, the small group around him will assume power. Pena Nieto is a real risk for Mexico. Our future is very dark.

-- Can anything be done at this point?

-- For the moment, it's urgent to form an investigative commission to review all the corruption and abuses that he committed in the State of Mexico during his administration, as well as the multimillion (dollar) public works contracts that he awarded his friends. It's got to be an independent commission, above all, with no ties to the PRI. We Mexicans have the right to know the kind of politician who is going to govern us.

Through his College of Urban Planners, Chavarria has been denouncing for several years the acts of corruption allegedly committed by the so-called Atlacomulco Group and by Pena Nieto. He has also legally defended farmers, communal landowners (ejidatarios) and colonists affected by that group. This opposition to the State of Mexico political class has caused him to suffer harassment and even imprisonment.

"I know very well the dirty tricks that the Atlacomulco Group uses to do business and to perpetuate itself in power. I have analyzed multimillionaire contracts that the state's government awards  them. I have every case documented here," says Chavarria, pointing to the files placed on shelves in his roomy office and the folders lying open on the round table where he is seated.

-- Which businessmen did Pena Nieto benefit during his administration?

-- A small group of magnates including Juan Armando Hinojosa Cantu, Carlos Hank Rhon, Carlos Slim, Olegario Vazquez Rana,  the Azcarraga family and the Spanish company, OHL, which builds large transportation works in partnership with the Atlacomulco Group. They are all part of the corrupt oligarchy that I was mentioning and that will continue to benefit with Pena Nieto as president of the Republic, of that I don't have the least doubt.

"For example, the northern (Mexico) businessman Hinojosa Cantu began to climb during the Arturo Montiel administration, when they began giving him construction (contracts) for public buildings and important urban development, leaving out mid-size and small Mexico state builders.

"He quickly built a group of companies that worked in construction and urban planning, among them Teya and the Higa Group. These are companies that were formed overnight to obtain multimillionaire concessions from the government. They have built hospitals, highways, bridges and several other works."

-- And what's improper about that?

-- "They are projects that are awarded at will, they increase their original costs, they do not respect existing land uses, they run over the rights of third parties... in short, they are inflated projects that systematically violate the Public Works Law of the State of Mexico. They are created to enrich the political business group to which Pena Nieto belongs.

Let me give you an example: When young Pena Nieto was still the Secretary of Administration in his uncle Arturo Montiel's government, (Montiel) ordered the construction of a huge, highly specialized medical center. It was a Pharaonic construction project that Montiel used as a model in his presidential aspirations. The construction (contract) was illegally awarded to a consortium headed by Hinojosa Cantu. That hospital ended up costing three times more than originally projected. And it was built in a Metepec zone whose land use is incompatible with the construction.

"In his out of control megalomania, the governor brazenly christened it with his name: Arturo Montiel Medical Center, which is also illegal. He then place Pena Nieto as president of the hospital's administrative council. I protested because that project from the beginning violated all the rules. I wanted them to explain why the construction got so expensive and why the (contract) was awarded selectively."

-- What response did you get from Montiel and Pena Nieto?

-- The only response was repression. First, they sued me, accusing me of defamation. I wanted to meet face to face with Pena Nieto. But they didn't let him confront me. They protected their golden boy because they knew he didn't have any arguments. To silence my criticism, in 2002 they imprisoned me in the Almoloya de Juarez prison. This is the way I suffered this brutal abuse of power. But a federal judge exonerated me, finding that I was arrested as a result of misconduct by the  government of the state.

"Obviously, Pena Nieto was behind my imprisonment. His uncle Montiel, in addition to making him an administrator in his government, was already training him in illegal business deals, corruption and use of the club, which he later wielded very well when he was governor in the repression in San Salvador Atenco.* Therefore, the construction of the Arturo Montiel Medical Center illustrates very well the favoritism shown to that group of businessmen."

-- In what way did Pena Nieto show favoritism to Carlos Hank Rhon?

-- Well, because he is the son of Professor Carlos Hank Gonzalez, one of the emblematic figures in the Atlacomulco Group, Hank Rhon has always enjoyed many privileges. his bank, Interacciones, is the state's bonding agent. In addition, Hank carries out important government projects through two of his companies, La Nacional and La Peninsular.

"One of the most important projects today was awarded specifically to Hank Rhon; the modern highway that runs from Lerma to Tres Marias, which connects at that point to the Mexico-Cuernavaca highway. Its a toll highway approximately 67 kilometers long (40 miles) which cost about 2,600 million pesos (about $200 million). The project began during the Montiel administration and continued throughout Pena Nieto's government."

Deals with Televisa

With respect to Carlos Slim, Chavarria notes that he also has ties to the Atlacomulco Group, because his companies Grupo Carso and La Ideal have also been awarded important projects, like the the northeast expressway from Toluca.

Another favored businessman is Olegario Vazquez Rana, who, through his Construction company, Prodemex -- says Chavarria--built the Las Torres avenue, more than 12 miles long, in Toluca. "Just for this avenue alone, Mexico state residents are paying Olegario 250 million pesos (approximately $20 million) per year for 20 years," he states.

He also point out that Vazquez Rana was awarded the concession for maintaining 70 highways in the State of Mexico, among them important avenues such as Paseo Tollocan, Gustavo Baz Avenue  and Lopez Portillo (Avenue).

He says that the relationship that Pena Nieto has with the Azcarraga family is not simply the publicity contracts with Televisa to promote his image. "No. there are other deals in there. For example, the father in law of Emilio Azcarraga Jean, Marcos Fastlicht, is a very powerful businessman who was given wide latitude to negotiate juicy real estate contracts in Huixquilucan," he says.

But without  doubt -- he adds -- it is the Spanish company OHL "which has been awarded the great Pena Nieto superprojects": it built the Circuito Exterior Mexiquense (CEM: Exterior Mexico City Loop), the Toluca International Airport and he is now building the Bicentennial Viaduct, the stretch of the Periferico (highway)  known as "the second floor", which runs from Cuatro Caminos to Cuautitlan.

Notes Chavarria: "It is not coincidental that the president of OHL-Mexico happens to be Jose Andres de Oteyza, who was Secetrary of  Inheritance and Industrial Promotion (now Ministry of Energy) during the Jose Lopez Portillo administration. At that time, Oteyza was the Presidency's go-between with the Atlacomulco Group. Since that time, he has maintained those good relationships on his own, which have resulted in business deals with Pena Nieto.

"However, OHL's projects have caused a lot of damage to ejidos (communal villages), communities and towns through which they are built. They haven't paid all the indemnifications. And the few that have been granted are laughable. Many farmers and communal land owners have been stripped of their lands. Some filed denunciations against the company and Pena Nieto. The litigation continues."

As governor of the State of Mexico, Pena Nieto never tired of preaching that the CEM was the most important highway project in the nation and he used that to secure his campaign for the presidency. But he built it arbitrarily. That wide asphalt strip, which loops around a part of Mexico City, was built without the (appropriate) expropriation procedures (eminent domain) in the communal properties that the project cut through, such as the Tultepec, Huehuetoca, Coyotepec, Zumpango, Melchor Ocampo, Jaltengo and Nextlalpan, among others.

In addition to Pena Nieto's highway, which is bordered by metal barriers and tall embankments, (the highway) also cut off large population centers such as Ciudad Nezahualcoyotl, Chimalhuacan, Texcoco and Tultepec. There were civil resistance protests by residents and mayors who saw their lands mutilated. 

The protestors point out that the CEM -- which is 133 kilometers long (approximately 120 miles) and cost 24 billion pesos (almost US $2 billion)-- was not even suitable for public use, but was more a "private deal" that Pena Nieto delivered to OHL as a concession that they could exploit for 40 years, currently charging each driver two pesos for every kilometer traveled (Proceso 1802).

Divestiture of ejidatarios (communal landowners)     

The Toluca International Airport also represents a profitable business deal for OHL and the Atlacomulco Group, since they own a 99 year concession, beginning in 2005. Chavarria specifies that, formally, OHL owns 49% of the concession. Another 26% is in the hands of the state government, and the rest is owned by the federal government.

He mentions other businesses that are tied to the airport: the parking concession, taxicab areas, land transport companies that pick up passengers in Mexico City, shopping centers, luxury hotels and restaurants, etc.

"The Toluca airport quickly became a high demand international airport because it takes air traffic previously captured by the Mexico City airport. In effect, it is an alternate terminal.

"The Atlacomulco Goup's projections are that , in 20 years, the Toluca airport will have the same flights capacity as that of the Mexico City airport," says Chavarria.

For that reason, the Pena Nieto government projected increasing the airport area by 400 additional hectares (900+ acres) which, little by little, it started to take by force from the only place available: the ejido (communal township) of San Pedro Totoltepec, located on the east side of the air terminal. 

The government began by cutting off water and electricity from the communal landowners to force them to leave. Then, it began to pressure them to sell their properties, even using death threats. Some of them chose to sell their properties cheap, selling at 400 pesos per square meter when the value of the land there is now 18 thousand pesos per square meter.

But other landowners did not give in to the threats and, in September, 2009, assisted by the College of Architects and Urban Planners of the State of Mexico, they filed a lawsuit against Pena Nieto and some of his officials involved in the wholesale looting. In response, the airport manager, Alexandro Argudin, threatened the communal landowners, warning them that if they did not sell, the government would expropriate their properties. (Proceso 1816).

"The conflict is ongoing. The Atlacomulco Group and OHL are bent on seizing the San Pedro Totoltepec communal lands (ejido). We wil keep on fighting, although we'll have a harder time of it with Pena Nieto in Los Pinos (the presidential palace)," says Chavarria.

He indicates that another large business deal of the Pena government was the construction of the so-called Bicentennial Cities, "large urban centers that began to be built in six counties (municipios) --Atlacomulco, Almoloya de Juarez, Huehuetoca, Jilotepec, Tecamac and Zumpango-- so that building contractors could build thousands and thousands of very small "public interest" homes -- from 30 to 60 meters square--. The same (sic), so that the big department stores would locate there and have captive consumers, and industries, which they plan to build there, (to have) cheap labor."

To this day, he adds, those cities designed to exploit the poor have been a failure because they do not have streets, transportation or adequate public safety, not even sources of employment, as was planned. All they're doing is creating an "ecological disaster" and a "total chaos."

And he adds: "Pena Nieto was characterized by awarding public works concessions on all sides to give a false impression of progress and thus promote his presidential ambitions. He awarded those public works arbitrarily to his close friends in private industry, through a dangerous scheme titled Projects for Providing Services (PPS; Proyectos para Prestacion de Servicios), which consists of saying: 'You, businessman, build the public work, exploit it with a 20 year concession, enjoy doing a great business during that period by charging interest, then you turn it over to the state.'

"In reality, the PPS (concessions) are a scheme to create debt for the public, which must ultimately pay the costs and high interest rates for several years. It's the same as paying for a bank loan. The PPS's that Pena Nieto awarded -- highways, hospitals, schools, etc.-- had an average term of 20 years. So, in fact, he left a substantial debt to the four state administrations that came after his. The citizens will have to pay for it."

As an example, he points to the Regional Hospital of High Medical Specialization (Hospital Regional de Alta Especialidad) at Zumpango, which cost 800 million pesos ($64 million), but which will have a final cost of 5,146 million pesos ($411 million), since Pena Nieto financed the project for 23 years. Each year, (the public) has to pay 300 million pesos.

Or, the Texcoco East Cultural Center, which cost 700 million pesos ($56 million) , but which will eventually cost 5,436 million (pesos) ($435 million), since it was financed for 21 years, with annual payments of 180 million pesos ($14.5 million). 

And there are a lot of projects like these.

On another matter, Chavarria warns about the "strong culture of nepotism" from which Pena Nieto drank.

"He is a genuine product of nepotism; he grew up in that school. His uncle Arturo Montiel gave him a high position in his administration so he could later inherit the governorship. Once he became governor, and without any problem, Pena Nieto repeated the scheme to distribute government jobs among his relatives, in violation of Article 42 of the Law on Responsibilities of Public Servants of the State of Mexico, which prohibits those practices."

He details how, as governor, Pena Nieto gave his cousin Alfredo de Mazo Maza the Tourism Secretariat. He appointed his aunt Marcela Velasco Gonzalez Secretary of Urban Development. His cousin Carolina Monroy del Mazo he put in charge of Mexico State Radio and Television, and then appointed her Secretary of Economic Development. He appointed his cousin Gustavo Cardenas Monroy Secretary of Environment. He made his uncle, former governor Alfredo del Mazo Gonzalez, president of the State of Mexico Council of Infrastructure. He gave his cousin Ernesto Monroy Yurrieta the post of Deputy Secretary of Education. He appointed his uncle Arturo Lugo Pena Deputy Secretary of Public Highways of the Communications Secretariat.

Chavarria reiterates: "Pure corruption and nepotism! All of Pena Nieto's political career is characterized by those practices."

*Translator's note: The Atenco tragedy took place during Pena Nieto's administration. He sent police and military forces to suppress ejidatarios protesting the expropriation of their communal lands to build the airport. Some sources reported that dozens of protestors were killed and several women raped. The government tried to cover it up, but it has been widely documented.-- un vato.


  1. Mexican people deserve what they elected into power. It is well known this party and its leaders are corrupt. ALL this proof of corruption yet everyone sits back and takes it. You deserve what you get mehico

  2. when the people elected the pri government the forgot . this is how they do business . so what they got is a pig with a ribbon .

  3. Gracias un vato for all the work that you do for BB! ...-CHIVO

  4. I'm sure the mexican cartels are in on most of the important deals, they'll not forget their power/share. But I don't want to believe that a one party has more moral than the other. May Mexico get an honest chance some day!

  5. If in fact this is true, I am fearful for all in Mexico. Who is going to protect the people? Given the corruption of the police, I was naive to think the next President would do more for the country. If he's ad corrupt as stated, it is yet another nightmare for this wonderful country and it's people. He appears to be another Putin. God bless Mexico, your neighbor in Texas.

  6. Wow. EPN's hair looks immaculate. That's why we vote for politicians, right? Todavia podemos votar?

  7. Good story,just a glimpse into the abuses of power elected representatives perform routinely.
    These kind of people see everyone else as the"lumpen proletariat"the kind of people who call the majority"plebs"These are the oligarchic family's and groups who essentially control a country,not just Mexico in a lot of countries you could pinpoint certain groups who are in the same kind of position.In our so-called democratic countries,we get to elect people we do not want to elect,we get to vote on these important issues every few years(if people vote)and each time they pass new laws into effect that are usually slightly repressive or invasive?The greatest weapon of politicians is voter apathy,but who do you have as a choice when you vote?Democracy is a great illusion,there is not a better way without becoming idealistic.This is why we have revolutions,precisely because of people like EPN and his clique,is it any wonder you get voter apathy with choices such as this.At least with a public voice Arturo Chavarria Sanchez is saying something about all this hypocrisy.

  8. Look at what Kim Il-sung and his clique did to North Korea?Just an example of what a few human beings can do to a whole country of millions?It is scary.

  9. Sounds like Obama.

  10. "Sounds like Obama"
    Not hardly like the Bushes and Reagan's then?

  11. the mexican people preffered this going on instead of them being killed by the masses like the pan was doing.... Atleast they elected their president not like in the USA the preseident is selected by the elite.

  12. Great story un vato. It addresses the number one issue facing Mexico - corruption. Clean up the corruption and in time violence and drug trafficking will decrease. They cannot exist without corruption.
    Senor Chavarria said " For the moment, it's urgent to form an investigative commission to review all the corruption and abuses that he committed in the State of Mexico during his administration,"
    My first reaction to that was that his call for an investigation was about 6 months too late, but then when I read that he had been imprisoned for attacking the corruption, I saw that he was not part of the blame for EPN getting elected.
    There have been some others over the years that tried to call attention to the problem of the small group of elites with ties to the drug traffickers that control Mexico.
    Eduardo Valles Espinoza, a deputy to two Mexican Attorney Generals in the PGR; In his published letter of resignation from the PGR in May 1994 he wrote: "I ask: When will we have the courage and political maturity to tell the Mexican people that we are living in a narco-democracy. Will we have the intellectual capability and ethical strength to say that Amado carrilo, Arellano Felix and Juan Garcia Abrego are, inconcievably and degradingly, the promoters and even the pillars of our socioeconomic growth and development... Nobody can conceive of a political project in which the narco-trafficking lords and financiers are not included, because if he does so he is dead."
    Why do the Mexican people tolerate it? In a large part because of the educational system and poverty. In a country where it is estimated that 1% of the people read a daily newspaper, and Televisa (its owners being part of the above referenced elite) controls 70% of television broadcast, the narcos own or control a large percentage of radio stations, the masses never see or hear information such as you presented here.
    Yet in a country of 112,322,757 people there are 92,900,000 cell phones, but only about 1/3 of the people have connections to the internet (compared to 85% in US). If technology could link the masses (of which 50% live in poverty) to the internet, maybe they could access alternative news and know what is really going on in their country.

  13. As I always said the oligarchs are the biggest criminals. See what happened in Chiapas and other parts of Mexico when socialism threatened the thieving oligarchs--lots of murders and disappearnaces by the death squads. And Of course america never complains about these type of purges by their neopetic capitalist friends.
    Same as the crony capitalism in america.

  14. arriba chiltepec estado de mexico fuck peña nieto

  15. Do you Mexicans know how negative it is bringing the US into every fuckin argument or story on here?
    Like me,i didn't want to start saying this shit,but every story you got some whining bitch hating on the US,do you people ever learn?Its your life,not the US,not ours,not anyone's,if you must whine and blame,,,,blame yourselves?
    What has the US got to do with this?

  16. You ask WHY Mexico has elected a person Toxic to the best interest of Mexico, just look at what happened in the USA, THE SAME THING, Humans are deaply flawed, there are 100 idiots for every person with knowledge,property,a tax burdon and a sustantial stake in society, So what can you expect??

  17. Follow the money, it comes from PEMEX. It is the source of all the money the politicians give to their friends. When the oil is gone in a decade or so, then there will total chaos. Why do you thing EPN's number one priority is PEMEX. The cartels are on their out for a variety of reasons, mainly legalization of drugs.

  18. "there are 100 idiots for every person with knowledge,property,a tax burdon and a sustantial stake in society, So what can you expect"
    So by your giant intellect,anyone who does not own property,house,car,job,savings,,,these people are no good?Of course everyone who has a"substantial stake in society"be that presidents,mayors,councils,police,civil service,all these people are above board and completely honest and law abiding?Some of the worst criminals are the law makers and politicians.Who has has greater"sustantial stake in society"(sic)than they?So basically your great contributors and you are talking utter shit and hypocrisy,,what do you think?
    By the way,you didn't happen to want good old 20 mil a year Mit to win did you?He knows a lot about job losses and struggle,yes i agree people are sheep.

  19. PRI is about as trustworthy as your friendly local thief. Before you know it, your pockets will be picked and your PRI neighbors will be out shopping for a shiny new pickup.

    I loved it when Calderon's forces would exterminate the cartel thugs. I saw the remnants a few times. Now only if Mexico would muster up the courage to round up and dispatch the "family" of so-called legitimate oligarchs (ie, rich crooks).

    Mexico doesn't know what it has done by electing this pretty boy - but it will find out soon enough. The cartels are a birthday party compared to what will arrive with this joker.


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