NEWS AND ANALYSIS JANUARY 30 - FEBRUARY 5, 2012

1 - OECD REPORT CRITICIZES PHONE INDUSTRY
2 - NEARLY $1 TRILLION LOST TO CORRUPTION AND CRIME
3 - POLITICAL CLASS FULLY ENGAGED IN FIGHT FOR POWER
4 - JUAREZ POLICE TAKE REFUGE IN HOTELS
5 - HUMAN RIGHTS ACTIVIST ATTACKED AGAIN
6 - ACTEAL ASSASSINS RELEASED FROM PRISON

A report issued this week by the Organization for Economic Cooperation and Development (OECD) criticized Mexico's telephone industry for monopoly pricing that overcharged consumers US$13.4 billion per year from 2005 to 2009, leaving many families unable to afford telephone or internet service. Carlos Slim, the world's richest man and owner of TelMex and America Móvil, rejected the report, accusing authors of "pulling data out of thin air." Slim's companies control about three-quarters of Mexico's telephone industry. The Mexican government commissioned the study as part of an ongoing battle between Slim and the National Action Party (PAN). Mexico's telephone industry generates over US$30 billion in sales per year, but the OECD report concluded companies missed out on an additional US$12.4 billion in sales because of high prices.

 

2 - NEARLY $1 TRILLION LOST TO CORRUPTION AND CRIME

Mexico lost US$872 billion from bribery, kickbacks, organized crime (not including illegal cash drug sales), and tax evasion over the past four decades, according to a study by Global Financial Integrity. The illegal outflows, representing 5.2% of GDP with a peak of 12.7% of GDP in 1995, increased from US$1 billion in 1970 to US$91 billion in the 2007 before declining slightly over the past three years. Many of the illegal outflows end up deposited in US banks. The study found a correlation between the size of illegal outflows and periodic economic crises suffered by Mexico. NAFTA was responsible for covering many of the illegal transactions as increased cross-border trade led to trade mispricing and use of false export documents to hide monetary transactions.

 

3 - POLITICAL CLASS FULLY ENGAGED IN FIGHT FOR POWER

On Tuesday, federal prosecutors announced an investigation into three former PRI Governors from Tamaulipas, one of Mexico's most violent states. State officials long favored the once-powerful Gulf Cartel, which in recent years finds itself on the losing end of a battle with the Zetas for control of lucrative drug transportation and human trafficking corridors leading into Texas. The unusual public announcement came as Mexico's political class enters the final months of politicking in advance of the July 1 presidential elections. Federal prosecutors are under the direction of PAN President Felipe Calderon, while PRI presidential candidate Enrique Pena Nieta leads polls by double digit margins. PRIistas Eugenio Hernandez, who left the Governor's office in 2010, Tomas Yarrington, whose term ended in 2004 and is one of the PRI's most powerful political leaders, and Manuel Cavazos, who left office in 1999, all confirmed they are under investigation.

 

Official investigations, even when following real crimes, are often politically motivated. On Tuesday, police confiscated US$1.9 million in cash from a suitcase and backpack carried by a PRI official from Veracruz who was traveling on a private plane to Toluca, home of Pena Nieto's campaign office. There was no immediate explanation why passengers on this particular flight were searched. The PRI official claimed the money was a rush payment to an advertising agency hired to promote tourism at local festivals, but was unable to explain how a plane flight and personal delivery could be faster than a wire transfer. The advertising agency confirmed the contract but refused to comment on the peculiar money delivery. Mexico has strict campaign finance laws that limit presidential candidates to US$38.4 million, but campaigns regularly violate the law without consequences. Federal authorities refused to return the money until state officials can document the source and destination - and until the news story runs its course. Consultancy and advertising contracts are often used to conceal illegal use of state funds because it is difficult to prove the services were not done.

 

4 - JUAREZ POLICE TAKE REFUGE IN HOTELS

Some 2,000 police from Ciudad Juarez are spending evenings in the city's downtown hotels after local organized crime figures threatened to kill an officer a day if Chief Julian Leyzaola, a former army officer infamous for his human rights abuses when he served as police chief in Tijuana, refused to resign. Eleven officers, including four commanders, have already been assassinated.   Mayor Hector Murguia set aside US$1.5 million to pay for at least three months of hotel stays, presumably accompanied by maid and room service. The Nuevo Cartel de Juarez, presumably aligned with the established Gulf Cartel, posted banners around the city last week threatening to kill police and charging Leyzaola of protecting the Generacion Nueva, a gang of enforcers aligned with the Sinaloa Cartel. The two groups are fighting for control of local drug transshipment routes.

 

5 - HUMAN RIGHTS ACTIVIST ATTACKED AGAIN

Norma Andrade, founder of the Ciudad Juarez-based Bring Our Children Home (Nuestras Hijas de Regreso a Casa), was attacked by a knife-wielding assailant on a Mexico City street after leaving her temporary apartment. Andrade moved to Mexico City from Ciudad Juarez after suffering a similar attack in December. Mexico City authorities ordered police protection for the human rights defender.

 

6 - ACTEAL ASSASSINS RELEASED FROM PRISON

Seven Tzotzil Indians, in jail for the 1997 massacre of 45 indigenous in Acteal, were released on Wednesday pursuant to a Supreme Court order. They join 45 others convicted of the massacre and released over the past three years. The Supreme Court found the federal Attorney General fabricated evidence. The families of the victims, many of whom identified and personally know the accused, have rejected the Supreme Court decisions as miscarriages of justice.

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