Corporate Corruption News in Brief

SourceMex Economic News & Analysis on Mexico, July 16, 2003 | Go to article overview

Corporate Corruption News in Brief


Political corruption has dominated the Mexican news headlines in recent months, but several high-profile cases of corporate corruption have attracted the public notice. These include the Spanish government's decision to extradite the former director of construction giant Tribasa to face charges of tax evasion and fraud, charges against a federal judge of accepting bribes for improperly favoring the financially ailing transportation company Transportes Maritimos Mexicanos (TMM), and accusations of tax evasion against giant retailer Walmex, a subsidiary of US-based Wal-Mart Corp.

Ex-Tribasa official to face fraud, tax-evasion charges

In early July, the Spanish government extradited David Penaloza Sandoval to Mexico to face charges of tax evasion and fraud while he was director of the giant construction company Grupo Tribasa. Prosecutors allege Penaloza defrauded the Mexican government of at least 90 billion pesos (US$8.65 billion) through a fraudulent stock-market scheme designed to avoid payment of a loan to government lender Nacional Financiera (NAFIN).

Penaloza fled the country in 2001, when Tribasa was facing extreme financial difficulties. The company's precarious financial position forced Tribasa to relinquish its share in the southeast airport-management unit Grupo Asur and to sell its holdings in railroad venture Ferrosur (see SourceMex, 2000-05-31 and 2000-10-04).

Because of the debts during Penaloza's administration, Tribasa suspended most payments to creditors in March 2002 (see SourceMex, 2002-04-24).

Penaloza was arrested in Spain in August 2002 as he attempted to cross the border into France. Spanish authorities immediately froze Penaloza's Spanish bank account, which contained about US$28,000.

As recently as 1994, Forbes magazine listed Penaloza's fortune at US$1 billion. He made his fortune in Mexico through privatizations of government properties and concessions for a variety of public-works projects during the administration of former President Carlos Salinas de Gortari (see SourceMex, 1993-08-11, 1994-02-09 and 1994-03-23).

Penaloza is also in trouble with the Chilean government after failing to pay US$1.5 million to subcontractors who participated in concessions to Tribasa (see SourceMex, 1999- 07-28). Chilean legislator Victor Perez told the Mexico City daily newspaper El Universal that his government would follow the Penaloza case very closely. "We have the hope that any decisions made by the Mexican justice system will open the possibility that Penaloza will pay the debts owed in Chile," said Perez.

Still, Mexico has a history of leniency toward high- profile perpetrators of white-collar crimes, including bankers Carlos Cabal Peniche and Angel Rodriguez. Cabal was extradited from Australia in 1991 to face charges of fraud and embezzlement (see SourceMex, 2001-08-15). Rodriguez, known as El Divino, was extradited from Spain to face fraud accusations involving millions of dollars (see SourceMex, 1999-09-09).

Cabal and Rodriguez both managed to avoid a prison sentence after paying millions of pesos in fines, taking advantage of a provision in the Mexican Constitution that allows suspects to file for appeals that grant them prior protection against arrest. According to the official news agency Notimex, Penaloza has also filed for these appeals. In the meantime, the former Tribasa executive was released upon his return from Spain after posting bail of 28 million pesos (US$2.69 million).

Federal judge accused of accepting bribes to favor TMM

A superior court in Mexico City has removed a federal judge accused of accepting bribes in exchange for a ruling favoring transportation company TMM.

In early July, the Tribunal Superior de Justicia del Distrito Federal (TSJDF) removed Judge Hugo Muniz Arreola from his post to allow him to prepare a defense against the charges. Arreola is accused of taking money to issue rulings that made it easier for TMM to suspend payments to creditors, including CitiBank, the Bank of New York, and Maple Trade Finance.

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