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.