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Adding details to the exact crime committed by Villareal, provided by Milenio
You can read about the evolution of the Moreira debt scandal here, here, here,
here and here
By Chris Covert
In a stunning turn of events Javier Villareal, former head of the Coahuila state tax service was imprisoned Friday on charges of fraud and falsification of documents, according to Mexican news accounts.
Reports say that Villareal was arrested and taken to court in Satillo, the capital of Coahuila, where he is said to be imprisoned.
The incarceration comes fast on the heels of Mexican senate resolution approved Thursday calling for the Procuradura General de la Republica (PGR), the Mexican national attorney general's office to investigate irregularities in the tremendous run up of public debt of Coahuila state between the years 2007 and 2010.
That public debt of almost MP $34 billion (USD $258,254,960.60) is the fourth largest debt load of any Mexican state and the largest in per capita terms
Villareal is at the center of the storm surrounding Coahuila's debt crisis while he was the head of Coahuila's Sistema de Administracion Tributaria del Estado de Coahuila (SATEC), or tax authority responsible for providing up to date documents on the state's finances.
Numerous press reports since the debt scandal became front and center for Humbero Moreira, governor of Coahuila until he took the reins of the Partido Revolucionario Institucional (PRI), said the Villareal may have committed fraud in his failure to provide up to date documents on the amount of debt Coahuila had contracted.
Charges are that that failure led banks to post bonds based on false information. Several Mexican national governmental bodies, including Ministerio de Hacienda dn Credito Publico, the Mexican national treasurer and Secretaria de Gobernacion SEGOB) or Interior Ministry, have posted formal requests for investigations by PGR into how Coahuila not only posted falsified documents, but also how several high profile supporters of Moreira had themselves acquired newfound wealth or income during the time of the debt run up.
Milenio reported in a Saturday morning article that Villareal had sent notifications to two banks, Bajio and Santander, in which he reported to them additional debt totalling MP $ 2 billion (USD $153,403,600.00) had been approved by the Coahuila state Chamber of Deputies.
In fact the two decrees authorizing debt were in fact minor routine decrees which had nothing to do with debt or finances of the state.
It should be noted that the political problem for Moreira was not what Villareal did --- by the time Villareal had falsified documents Moreria had already been installed as leader of PRI --- but rather the sheer amount of debt taken on during Moreira's administration.
The debt crisis came to a head last month when at least two bond ratings agencies including Fitch's, downgraded Coauila's bonds to less than investment grade, forcing the state to scramble to finance the increased coupon for the bonds.
A refinancing deal was finalized in Mexico City with the seven banks holding most of the debt only three weeks ago after Coahuila pledged 100 percent of the proceeds from its payroll income tax as collateral for refinancing the debt.
Villareal's role concerns only about 10 percent of the debt contracted. Various charges have circulated since the scandal became public including Villareal backdating documents which show a different and false description of Coahuila's total debt.
Under Mexican law every state in Mexico is required to post on the internet up to date electronic document which show everything about a state's finances. This activity is watched closely by any number of Mexican national government agencies. When an irregularity is noticed, audits and investigations are supposed to begin.
Pushing the scandal front and center has been leader of the Mexican conservative Partido Accion Nacional (PAN), Gustavo Madero, like Moreira newly appointed to his position in 2011. By many accounts, PAN fortunes for the 2012 election for president are falling, while PAN's closest rival's fortunes, PRI, are rising.
Madero's continual pressure on Moreira over the scandal has been a fairly effective way of placing the PRI at the center of another scandal, this time financial, which could potentially wreck PRI's plans to return to Los Pinos.