Corruption and Capital Flight Rob Mexico of Needed Funds

Recently it was disclosed how Citibank helped Raul Salinas de Gortari (brother of the former Mexican president) hide a fortune in "safe havens." CBS's "60 Minutes" said June 23 that the hidden assets could be worth more than $300 million.

While Raul is charged by the Mexican government with the crime of "illicit enrichment," he is hardly alone in removing his assets from Mexico. The New York Times provided a bar graph with its story on safe havens to show how considerably more money leaves Mexico as six-year presidential terms conclude. This should come as no surprise. A lack of fiscal controls and a constitutional ban on the reelection of public officials means little accountability to constituents.

The Times graph indicates that about $76 billion has been removed from Mexico in the last 15 years. Of that amount, Raul's loot amounts to a mere 0.3 percent. Now, $76 billion is an enormous amount of money for a country of 92 million people with a small internal economy - smaller than that of the city of Los Angeles.

If the money had stayed and been used wisely, many schools, hospitals, and factories could have been built. Salaries might have been raised. The latest, reported June 19 by the reliable Mexico City daily, La Jornada, is that US dollar deposits from Mexico are double those of a year ago.

The consequences of capital flight must be followed to their logical conclusions: When so much wealth leaves Mexico, it becomes even poorer. When it loses resources, there is less to invest and, therefore, little job creation. With fewer opportunities at home, Mexican workers must go where work is available - which leads to the illegal immigration that so upsets many in the United States.

Time for critical thinking

So why is US policy so tolerant of - even cozy with - Mexican administrations that make little or no real attempts to fix, but, in fact, intentionally perpetuate a corrupt system? Mexico - the neighbor that shares a 2,000-mile border, NAFTA, and US taxpayers' loans - simply must be afforded more critical thinking.

When Presidents Bush and Clinton have lauded Carlos Salinas de Gortari and current President Ernesto Zedillo Ponce de Leon, they have ignored warning signals of political and moral weakness. It is well documented that all recent Mexican presidents have left office far more affluent than their salaries would justify. As Luis Echeverria Alvarez was leaving office in 1976, the French magazine Paris-Match called him one of the world's five richest men. Washington columnist Jack Anderson estimated that Jose Lopez Portillo (who served from 1976 to '82) amassed billions. An architect wrote that the family compound Mr. Lopez Portillo built at the end of his term cost 95 times his total presidential salary. In a subscription TV interview June 11, former Mexican Assistant Attorney General Mario Ruiz Massieu, now in hiding in the US, asserted that it is a common "amoral" Mexican practice for the government to give public officials huge sums. He was persuasive - naming names, quoting official salaries, and describing properties owned and opulent lifestyles.

Yet Raul Salinas is the first top official and the first presidential family member to be prosecuted under the "inexplicable enrichment" law. And under present circumstances, it appears that Raul will also be the last during this century.

Above the law

In spite of President Zedillo's proclamation at the time of Raul's arrest in March 1995 that "no one is above the law," apparently almost every other past corrupt official is, in fact, immune from prosecution. The congressional committee investigating Raul's activities has prohibited investigators examining his conduct from uncovering other officials' wrongdoing. Presidential fiscal accountability is still lacking - and the "bonuses" continue - despite Zedillo's commitment to create auditing positions.

During the Salinas years, key economic areas were privatized. From the sale of such assets as the telephone company, the banks, and the state television network, it is estimated that revenues of some $26 billion were realized. Where's the money? Without accountability, no one knows. And now there are proposals to sell the state petrochemicals industry.

Promised political reform still isn't happening. The ruling Institutional Revolutionary Party (PRI), which retains a stranglehold on television to the masses, is blocking key media reforms. One simple example shows the attitude of the PRI, which has been in power for the last 67 years. The colors of the Mexican flag are green, red, and white. The Mexican law says only the PRI can use those colors; opposition parties cannot. When a typical Mexican voter sees the colors of the flag on the ballot, there is a strong tendency to vote patriotically. Proposals have been made that either all or none of these parties should be able to have such an advantage. The PRI won't agree.

An undemocratic system breeds instability and uncertainty. Even those who make their fortunes honestly take them out of the country. Undercapitalization and devaluations have been the predictable results. Only a truly democratic system with strict accountability at all levels will lead to Mexico's emergence as a prosperous neighbor that can retain its capital funds.

*Richard Seid, an American who has lived in Mexico for 24 years, writes on Mexican politics and society.