How a Mexican condition siphoned off hundreds of thousands – and a reporter risked her lifetime to expose it

How a Mexican condition siphoned off hundreds of thousands – and a reporter risked her lifetime to expose it

It was a muggy summer months day when the veteran reporter María Teresa Montaño Delgado drove virtually 450 miles from Toluca, money of the point out of Mexico (Edomex), to a rundown neighbourhood in Coatzacoalcos, an oil metropolis on the Gulf coastline.

Montaño carried with her a $35m deal for “specialist human funds management” with the federal government of Edomex – the last bastion of ability for the Institutional Innovative Get together (PRI) which has ruled the point out uninterrupted for virtually a century.

She double-checked the enterprise tackle, which turned out to be a 2nd-flooring apartment in a pastel-pink residential building, on an unremarkable avenue with boarded-up bars and empty a lot.

The corporation, a person half of a consortium with contracts with a few companies well worth about $55m – existed on paper, but there was no signal of any business enterprise operations or workforce.

“I was stunned by the crumbling developing, but it confirmed my suspicions: the deal was wholly illogical,” stated Montaño, founder and editor-in-main of the independent information web-site the Observer. “This was a fake corporation, component of a plan to embezzle massive amounts of community funds … Which is why they experimented with to silence me.”

Mexico map

Coatzacoalcos appeared an unlikely area for a human methods corporation with multimillion-greenback contracts on the other side of the nation. All the contracts were signed on 29 December 2018, at a time when a vicious turf war concerning rival cartels had helped make the port town a single of the most violent sites in Mexico.

When the Guardian visited in January, the seafront boulevard was lined with burned-out lodges, abandoned procuring malls and decrepit housing blocks, and the streets patrolled by marines. A couple courageous women have been out promoting seafood cocktails and coconuts, but it appeared like a hurricane experienced swept through downtown.

The $55m contracts weren’t the only questionable offers that Montaño experienced uncovered when trawling as a result of the government’s details portal. In early 2021, Montaño had found other contracts truly worth hundreds of thousands of dollars with organizations and people today throughout Mexico – lots of for vaguely described products and expert services obtainable regionally these kinds of as cleansing, office environment home furnishings, development and laptop application.

On paper, the providers and contracts appeared authentic but there were being many “red flags”, according to Muna Dora Buchahin Abulhosn, a forensic accountant who has led investigations into point out-operate embezzlement schemes.

A cursory lookup on Google Maps located firms awarded rewarding contracts ended up typically situated in residential streets, abandoned a lot and browsing malls. Some addresses have been joined to a number of businesses – or didn’t exist other businesses experienced no working web page irrespective of multimillion dollar contracts.

Montaño’s reporting was perhaps embarrassing for the PRI, which is determined to maintain on to the state in elections on four June. But investigating corruption can be deadly in Mexico, especially for area reporters.

Past calendar year 15 journalists have been killed in Mexico, producing it the most dangerous country for the media aside from Ukraine. The violence – and the impunity that fuels it – has a chilling outcome, with reporters routinely silenced by threats, bribes and blacklists blocking access to work opportunities and information.

María Teresa Montaño writes on her laptop.
María Teresa Montaño writes on her personal computer. Photograph: Ginnette Riquelme/Ginnette Riquelme for The Guardian

“The contracts were signed with corporations considerably away to make it practically unachievable for community journalists to physically confirm. The authorities has so considerably regulate but I stored asking questions and downloading paperwork,” reported Montaño. “That’s why I imagine I was kidnapped.”

On 13 August 2021, Montaño’s auto broke down en route to a professional medical appointment in Toluca. She left it parked at a benefit keep and took a bus to the clinic, close to the state congress setting up which is surrounded by surveillance cameras.

By the time she was concluded it was just soon after seven.30pm. A huge rainstorm had damaged and Montaño was soaking moist, when a white car that looked like a shared taxi signalled for her to get in.

Nearly promptly, a skinny male in the passenger seat pulled out a revolver. “Don’t scream and you won’t die,” he claimed. In the again, a 2nd person included her eyes with her Covid mask and pulled up her jersey to expose her abdomen and upper body.

The driver included: “You’re the journalist, are not you?”

Fearing for her daily life, Montaño denied she was a reporter, but the kidnappers realized where she lived and even wherever she’d still left her motor vehicle.

“Is your son house?” the driver asked as they pulled up at her gated housing complicated.

A household setting up in Coatzacoalcos, at the deal with on 3 contracts well worth $fifty five for ‘specialist human funds management’ signed by the govt of the condition of Mexico.
A household setting up in Coatzacoalcos, at the handle on a $35m contract for ‘specialist human funds management’ signed by the federal government of the state of Mexico. Photograph: Nina Lakhani/The Guardian

The two assailants ransacked Montaño’s very small residence, just before leaving her blindfolded on a dusty lot a couple miles absent at about 11pm. She had no cellular phone and no funds, but adhering to a distant light-weight, she found her way to a buying mall and referred to as her relatives.

She described the kidnapping to the authorities quickly. It was only afterwards that she realised the assailants experienced taken her laptops, phone, voice recorder, digicam, notebooks and paperwork – but not the Tv or other valuables.

“They stole my entire investigation. The information was clear, but I survived – and this information and facts is way too vital to continue to keep to myself. Prior to the individuals go to vote, they need to know.”

Around the previous 6 months, the Guardian and Structured Crime and Corruption Reporting Job (OCCRP) have labored with Montaño as aspect of an initiative by the Paris-centered non-revenue Forbidden Stories to go on the function of threatened and murdered journalists.

The group analysed dozens of point out contracts issued through the present administration led by Alfredo del Mazo Maza – whose spouse and children has ruled Edomex for 29 decades – frequented each corporation deal with and consulted professionals on corruption and politics in Mexico.

As Edomex prepares to go to the polls on 4 June, the investigation can expose that the outgoing federal government issued at minimum 40 contracts involving at least 15 front and shell organizations value a lot more than $300m.

In some circumstances there was no business at the detailed tackle: no indicator, no personnel and no infrastructure. In many others, real providers were being contracted for goods or companies they had no expertise in. Many organizations shared the exact same deal with and/or legal associates. Unusually, quite a few ended up awarded at the end of the year when most govt staff members are on go away. Flexibility of data requests for evidence on each procurement was disregarded.

The Del Mazo govt explained that it complied with the regulation at all periods and all contracts ended up awarded by competitive tender to the “best provider” it reported it highly regarded press flexibility and journalists, and experienced no prior expertise of Montaño’s kidnap.

All the contracts have been approved by the office of finance, which coordinates the state’s procurement process. Approached by the consortium for comment, the section stated it was obliged by regulation to open up tenders to organizations throughout the state, and provided a dossier of photocopies of undated photographs and documents purporting to demonstrate that all the contractors had been respectable.

But more investigation unveiled a number of inconsistencies and irregularities in the government’s proof, together with offices which ended up seemingly not in use, or addresses in use by seemingly unrelated corporations.

Alongside one another, the contracts illustrate a pattern of “acts and omissions” that propose an embezzlement plan involving general public officers and private folks, in accordance to Buchahin, the forensic accountant.

  • In Monterrey, a city 600 miles north of Toluca, the corporation Sevacom was contracted to deliver products for workshops – this kind of as jewelry-earning, balloon decorating and dressmaking – by 6 various government companies, such as the governor’s place of work and division of rural affairs. The consortium identified twelve similar contracts well worth virtually $five.2m. There is a enterprise called Sevacom at the address on the contract, but it is a retail retail store providing residence cleaning merchandise. The owner denied acquiring any community contracts or any know-how of workshops. A web-site for Sevacom was made just after the very first contracts had been awarded, but telephone calls, letters and messages to the get hold of information it incorporates went unanswered.

    In its file, the Edomex authorities presented photocopied photos of an unidentified warehouse and ladies getting bins of government assist, as nicely as photocopies of a social safety letter and documents offered by two industrial certification businesses. It furnished no evidence that any workshops had taken place.

  • The tackle detailed on a fifty percent-million-greenback outsourcing contract with a meant building corporation in Edomex was actually a tiny residence belonging to a lady with a makeshift neighbourhood nail salon, who stated she had never ever heard of the deal. In an additional situation, a nearly $a hundred,000 agreement for elevator upkeep was awarded to an audiovisuals firm. The mismatch in between the firm’s specialism and the contract it won was yet another crimson flag, explained Buchahin

  • The intended HR firm in Coatzacoalcos, Instituto C&A Clever, was awarded another three contracts value $67m with an tackle in Edomex that doesn’t exist. The corporation was mentioned on the internet at a diverse but close by place – an business office creating on which the corporation brand has appeared and disappeared a number of times this year. A cell phone range mentioned for the corporation is out of support, emails to its address bounced back again and the enterprise web page is defunct.

    The Edomex governing administration presented copies of images exhibiting folks standing outside the developing. Consortium reporters visited the site four times in excess of the past year, but saw no indicator of exercise in the building. On Monday, a neighbour reported he observed staff reattaching the business indicator to the building’s facade past week, including that the developing was largely vacant apart from a number of household renters.

  • The handle for a organization awarded four contracts for office furniture well worth a total of $two.4m is an unattended office in a strip shopping mall on the outskirts of the town of Querétaro, 120 miles north-west of Edomex, with no answering device. The government furnished photocopies of pictures showing stacks of furnishings ostensibly taken at a enterprise warehouse in the state of Puebla. The consortium frequented the deal with, and located a modest metal workshop, whose employees mentioned they experienced no information of the organization.

The conclusions suggest a new edition of an aged embezzlement scheme.

María Teresa Montaño, smokes a cigarette although strolling all through a crack.
María Teresa Montaño, smokes a cigarette even though walking through a crack. Photograph: Ginnette Riquelme/Ginnette Riquelme for The Guardian

In 2017, the Federal Audit Business (ASF) and investigative journalists uncovered an alleged multimillion-greenback embezzlement company involving at minimum eleven federal govt businesses, 8 public universities and extra than 120 bogus firms registered in several states. The situation, acknowledged as La estafa maestra or the grasp swindle, took place during the presidency of Enrique Peña Nieto, former governor of Edomex – and Del Mazo’s cousin.

No a person was at any time billed more than the allegations, which implicated quite a few institutions and PRI officials in Edomex. Peña Nieto has denied any wrongdoing.

Erick Sevilla.
Eric Sevilla. Photograph: Future Publishing/Getty Photos

These impunity has allowed the “modus operandi” to carry on, stated Buchahin, who formerly led the ASF forensic accounting device. Some of the businesses implicated in the estafa maestra keep on to receive federal government contracts, although officials suspected of wrongdoing were basically moved to new roles.

Alejandra del Moral.
Alejandra del Ethical. Photograph: Marco Ugarte/AP

9 of the 40 contracts analysed by the Guardian included the Edomex office of social progress. Alejandra del Moral, who led the office in 2022, is jogging for governor. Eric Sevilla Montes de Oca, the 2018-2020 director, is currently president of the PRI in Edomex and operating the governor’s election marketing campaign. Neither Sevilla nor Del Moral responded to the allegations.

“This is a community of powerful senior officers who simulate contracts and payments which are supported by legal but unsupported invoices in get to get dollars out … It proceeds simply because they know absolutely nothing will come about, impunity is generalised. All people is aware of and no one does anything at all. The state of Mexico is the most corrupt in the country, it is where by they get revenue for all the other people,” mentioned Buchahin.

Edomex is Mexico’s largest state by population, with 17 million people: a sprawling conurbation of dormitory communities, industrial sites and colonial pueblos wrapping around the funds town. It is home to members of the political, economic and prison elites, but includes some of the country’s most dangerous municipalities – primarily for women and ladies.

Del Mazo Maza – whose grandfather, father and uncle have also governed the state – eked out an election victory in 2017 amid prevalent allegations of fraud. Up coming week’s election issues simply because Edomex is the only condition that the PRI – which ruled the nation uninterrupted in between 1929 and 2010 – has clung on to.

Alfredo Del Mazo Maza.
Governor Alfredo del Mazo Maza. Photograph: Mario Guzman/EPA

“The state of Mexico has each wonderful political and symbolic price for the PRI – and their opponents,” stated Rogelio Hernández, a political scientist at the College or university of Mexico. For the PRI, retaining the condition would verify that it is nevertheless applicable as a bash for Morena – the celebration which is in governing administration nationally but in opposition in the condition – a victory would be a substantially-desired token of assist for President Andrés Manuel López Obrador.

PRI’s good results in Edomex is partly down to its control of the media. Most news stores – and quite a few journalists – depend on the state federal government for promoting and off-the-textbooks monthly payments, acknowledged as chayotes, in trade for non-critical coverage.

“Intimidating journalists has been a constant for lots of decades in the point out of Mexico – just like chayotes. It’s how the PRI has been in a position to continue to be in energy, and why there is just about zero impartial and investigative journalism in the point out,” explained Lenin Martell, media experiments professor at the autonomous college of the state of Mexico.

Journalists who reject the status quo typically fork out a great private and specialist selling price.

Montaño has used her full job reporting on politics, crime and corruption in Edomex, typically as a correspondent for countrywide newspapers, and has a keep track of history of irking strong individuals.

But just after refusing to acknowledge an envelope of dollars in early 2018, she commenced acquiring force from editors to send out much less flexibility of information requests. Colleagues and sources slice her off and it grew to become more difficult to make finishes fulfill.

Soon after the kidnap, she left Mexico for many months but returned decided to continue the investigation. Irrespective of CCTV footage of at minimum just one assailant withdrawing funds applying her lender card, no one has been arrested. Prosecutors investigating the case have denied that the kidnapping was associated to her journalism.

A spokesperson for the Del Mazo government reported that it entirely “complied with the legislation at all instances with its transparency and accountability obligations” and that procurements for all items and services experienced been consolidated beneath the finance division “to attain technological and financial advantages”. The government did not respond to specific inquiries about the investigation’s conclusions, or the use of threats, publicity and payments to regulate the media.

The finance division mentioned that all contracts ended up awarded by means of competitive tender to the “best provider” no matter of their area, taking into account elements including selling price, excellent and financing, and that the method was supported by an oversight committee.

“It’s a miracle that María Teresa has ongoing reporting in a condition completely managed by mafia politicians, where federal government publicity is disguised as journalism and independent reporters are isolated and punished, leaving the public with a massive black information gap,” reported Marcela Turati, co-founder of investigative news web page Quinto Elemento Lab. “The violence carries on simply because impunity is certain.”

Reporting crew, María Teresa Montaño Delgado (El Observador), Lilia Saúl Rodríguez (OCCRP) and Nina Lakhani. More reporting by Aïda Delpuech and Paloma Dupont de Dinechin (Forbidden Stories)

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