Mexican ex-governor's expensive taste puts corruption in spotlight

MEXICO CITY, June 10 Mon Jun 10, 2013 12:42pm EDT

MEXICO CITY, June 10 (Reuters) - A Mexican politician who is suspected of embezzlement and brags about Beverly Hills shopping sprees and his 1,000 shirts is jeopardizing President Enrique Pena Nieto's ability to stamp out corruption and keep opposition backing for his economic plans.

The corruption accusations swirling around Andres Granier, governor of Tabasco state until his term ended in December exemplify the kind of abuses that marked the president's Institutional Revolutionary Party's long hold on power.

If the PRI fails to hold Granier to account over a black hole in his state's finances, the pact Pena Nieto forged with the opposition leaders when he took office in December may collapse.

"The pact won't be able to survive if things carry on as they were before," Federico Berrueto, director general of Mexican polling firm GCE, said of the Granier case.

Police cited Granier for questioning after 88.5 million pesos ($6.96 million) in cash was found in an office used by his former state finance minister, Jose Manuel Saiz.

The government that followed says Granier left Tabasco 20 billion pesos in debt and that at least 1.9 billion pesos of public funds were embezzled between 2011-2012 - a sum worth nearly 80 percent of the state's 2012 tax take.

Granier, who denies wrongdoing, has vowed to return from Miami to Mexico to cooperate with a probe.

"I have no reason to flee," Granier told broadcaster Televisa on Monday. "I haven't exceeded myself, I led a pretty austere life." He said he had a personal fortune of 25 million pesos ($1.97 million), adding he owns 13 properties in Mexico.

U.S. officials arrested Saiz at the weekend trying to cross into Texas. He was quickly handed over to Mexican authorities, who took him to Tabasco for questioning.

Taking office with no majority in Congress, Pena Nieto's most ambitious reform goals - shaking up the tax system to boost revenues and bringing in more private capital to beef up state oil giant Pemex - depend on support from political opponents.

In exchange, the opposition is pushing for political reforms they hope will let them compete better with Pena Nieto's PRI, which has governed Mexico for most of the past century. Those include stripping immunity from elected officials, toughening sanctions against abuses and ending political patronage.

Known as the Pact for Mexico, the accord between the government and leaders of the conservative National Action Party (PAN) and the leftist Party of the Democratic Revolution (PRD) has produced laws to change the education system and restructure the telecoms industry dominated by tycoon Carlos Slim.

Granier's case has stirred up memories of the PRI's 71-year rule of Mexico, which was heavily tainted by allegations of corruption by the time it was voted out of power in 2000, and he is fast running out of friends within the president's party.

To demonstrate his commitment to cleaning up the PRI, Pena Nieto sent a raft of anti-corruption legislation to Congress after assuming the presidency last year. But the measures to improve transparency and accountability have stalled.

CORRUPTION RIFE

The PRI controls nearly two thirds of Mexico's 31 states, and about a third of the governorships have never been in opposition hands, so if Mexico does go after corrupt officials, it will likely weigh heaviest on Pena Nieto's party.

Aside from Tabasco, former or sitting PRI governors in the states of Tamaulipas, Veracruz and Coahuila have been embroiled in serious allegations of misuse of public funds, though similar claims also dog senior officials from both the PAN and the PRD.

None have been charged yet but the net is closing on Granier. Mexicans had an insight into his expensive tastes last month when a recording of him boasting of shopping sprees in Miami, Beverly Hills and Hollywood was posted online.

"You may not believe it, but I have 400 pairs of shoes, 300 suits, 1,000 shirts, and it's not to show off, it's because I like them and I look after them," Granier said.

He later called a local radio station, said he was drunk and dismissed the allegations against him.

PRI chairman Cesar Camacho said Granier's actions were unraveling the work the PRI was trying to do, and told Mexican radio that the ex-governor's days in the party were numbered.

"It's doing a lot of damage to those who, with great difficulty, are trying to send out new messages about the PRI's own policies," Camacho said.

But PRD chairman Jesus Zambrano, who briefly walked away from Pena Nieto's pact in April when evidence of PRI vote-buying for local elections surfaced, said action was already overdue.

"The Granier case is the crudest example there is of corruption and of impunity up until now," he said.

Gustavo Madero, chairman of the PAN, said the pact was in jeopardy every day because of a failure to stop vote-rigging and corruption by governors in state elections scheduled for July 7.

If electoral fraud is not rooted out, both the PAN and the PRD have threatened to drop the pact with Pena Nieto for good. (Writing by Dave Graham; Editing by Simon Gardner and Doina Chiacu)

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