Magazine article SourceMex Economic News & Analysis on Mexico

Congress Approves Measure to Reimburse Some Funds Lost by Depositors Defrauded by Savings Scheme

Magazine article SourceMex Economic News & Analysis on Mexico

Congress Approves Measure to Reimburse Some Funds Lost by Depositors Defrauded by Savings Scheme

Article excerpt

The Chamber of Deputies has approved legislation to restore some funds that low-income depositors lost to fraudulent credit unions. These informal credit unions, known as cajas de ahorro, are said to have defrauded depositors of billions of pesos in savings (see SourceMex, 2000-10-04).

Through the legislation, approved in mid-December, Congress proposed creating a special agency, Fideicomiso de Sociedades y Cooperativas de Ahorro y Prestamo y de Apoyo a sus Ahorradores.

The agency was allocated 2.785 billion pesos (US$295 million), much of which will be used to repay tens of thousands of retirees, homemakers, street vendors, small- business owners, and others who lost their savings in fraudulent schemes promoted by businessman Jose Cirilo Ocampo Verdugo and others in 1998 and 1999. The Congress said the agency will cease to exist after two years or after all its funds are exhausted, whichever comes first.

The owners of the informal credit unions would attract customers by offering high interest rates on deposits. Since these funds were not guaranteed or insured by the federal government, many depositors lost their money when the credit unions either failed or the owners absconded with the money, as was the case with Ocampo.

The plan would cover all depositors who lost up to 190,000 pesos (US$20,148). This would cover roughly 97.5% of those who lost money under the schemes. The remaining claimants would have to wait until a federal court auctions off Ocampo's assets to claim their funds.

The congressional bill, which passed by a vote of 447-1, created a special agency to administer the funds. …

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