For a map, click here For additional updates on this story see today's sidebar: More Coahuila state and private officials named in debt scandal
By Chris Covert
Humberto Moreira Valdes' role in the public debt scandal became clearer -- and his crisis deeper as Mexican press reports revealed Wednesday that a top official in Moreira's state government not only knew about fraudulent loans, but also signed off on them as well.
Until last Wednesday Moreira contended he had no role in the acquisition of public debt for the northern Mexican state of Coahuila. At the time of his protestations, two minor officials had been arraigned for their role in illegally contracting new debt for the state by using false or non-existent documents.
Despite public and repeated calls for him to explain his role or for him to step down, Moreira had resisted describing his side of the contracting of public debt for the state he presided over for three years, instead insisting he was too focussed on winning elections for the Partido Revolucinario Institucional (PRI), Mexico's largest and most politically powerful political entity, which he now heads.
According to El Universal daily newspaper posting last week, on November a complaint was filed by the Procuraduria General de la Republica (PGR) or national attorney general's office with the Procuraduria Fiscal de la Federacion, a general counsel of the Mexican national treasurer's office, that debt acquired by the state of Coahuila in 2009 was done so illegally. Named in that complaint was Jaime Rene Jimenez Flores, formerly head of Deuda Pública de Entidades y Municipios of the Coahuila state Secretario de Hacienda y Credito Publico, or state treasurer's office.
According to press accounts the loan in question was for MP $550 million (USD $38,907,770.00) and was contracted with BVVA Bancomer bank. According to the complain, Jimenez Flores used a registration for a loan in another state, San Luis Potosi, and has falsified the document to make it appear genuine.
The report also said that Jimenez Flores had left his MP $94,000 (USD $6649.69) a month job, and that Jiminez Flores also owned a home in Mexico state. Mexican news reports provide every reason to believe that Jiminez Flores skipped town once the shenanigans became public.
As of the date of this posting no Coahuila state attorney had yet to move against Jiminez Flores. To date only two individuals have been implicated in the false contracting of debt for Coahuila, in per capita and as a percentage of the state's gross domestic product, Mexico's heaviest.
That, however, may be changing.
The Coahuila state Chamber of Deputies has recently passed changes to the state Revenue Act which will raise user fees, some more than 200 percent. Included in the fees hikes are:
- Charges for birth registration goes from MP $19 (USD $1.35) to MP $60 (USD $4.25).
- Marriage and divorce registrations will rise from MP $194 (USD $13.74) to MP $520 (USD $36.84).
- Certified copies of marriage and divorce decrees go from MP $19 (USD $1.35) to MP $70 (USD $4.96).
- Entrance to parks and museums go to MP $5 (USD $0.35), which were previously free.
- Automobile license plates go from MP $552 (USD $39.11) to MP $600 (USD $42.51).
- Motorcycle license plates go from MP $58 (USD $4.11) to MP $70 (USD $4.96).
The timing of those hikes are critical, as close to the end of the quarter, the total of public debt of Coahuila is set to rise from MP $33 billion (USD $233,785,530.00) to MP $37 billion (USD $262,123,170.00), which is an annualized rate of more than 40 percent. The increase is due to the downgrading of the Coahuila public debt this past fall, and the failure of state negotiators to bring all 14 banks owed money to terms for better rates and higher bond/debt rating.
| If comments in the news articles about the fees hikes are any indication, Coahuilans are angry at PRI for the coming user fee hikes. They shouldn't be. The party was going real good while Moreira was governor with numerous and popular income support/transfer programs funded by the bulging state treasury and fuelled by a populist facade. Parties such as the one going on in Coahuila since the election of Moreira are almost always good until a bad guy takes away the punch bowl. |
The news article does not make clear when the fees are set to go into effect. but the speed at which changes were announced seems to indicate Coahuila's fiscal condition is dire. Nor does the article address a proposed payroll tax hike from one percent to three percent, a sure job killing measure. It is entirely possible the state payroll tax hike was killed in favor of increased user fees.
Politically, no change has occurred in Coahuila since the July elections. Moreira was a PRI governor who went on to lead the PRI while his brother won a crushing victory over the two other major political parties, Partido Accion Nacional (PAN) and Partido Revolucion Democratica (PRD). The overwhelming victory of PRI and its coalition partnets in the state Chamber of Deputies is telling having won 58 percent of the vote.
If comments in the news articles about the fees hikes are any indication, Coahuilans are angry at PRI for the coming user fee hikes.
They shouldn't be. The party was going real good while Moreira was governor with numerous and popular income support/transfer programs funded by the bulging state treasury and fuelled by a populist facade. Parties such as the one going on in Coahuila since the election of Moreira are almost always good until a bad guy takes away the punch bowl.
Unfortunately for Moreira, the bad guy in this case is Moreira's very party, the PRI.
Defending Actions as Performance Art
Last Thursday Moreira gave a television performance finally explaining where all the money went his government borrowed during his tenure as governor: roads, hospitals and the state health care system infrastructure.
In a summary of his interview with Milenio TV's Carlos Marin on El Asulto a la Razon or The Assault on Reason, Moreira reiterated his innocence and instead of throwing unrelated charges back into the face of his PAN rivals, -- as he has done in previous interviews -- he said he doubted that Ernesto Cordero did anything illegal as well.
Cordero was formerly Secretaria de Hacienda y Credito Publico (SHCP) or treasury ministry and current presidential contander. Cordero was SHCP at the same time Moreira was governor of Coahuila.
"It is absurd to think that the actual governor (Ruben Moreira), the previous, namely myself, or the previous Secretary of Treasury, namely the current aspirant to be candidate for the National Action Party (PAN) would put himself in this.
I am sure of myself, as also you can tell, that the current aspirant goes to be placed in this, either," he told Milenio TV.
Moreira's discussion was disingenuous at best because since it wasn't the SHCP that contracted the loans and spent the money, but it was Moreira himself.