* Use of bribes widespread in Mexico
* Weak justice system encourages corruption
* Leftist candidate slams government after revelations
By Dave Graham
MEXICO CITY, April 22 Whether you are the
world's No. 1 retailer or a humble street vendor, paying public
officials a bribe may be the quickest way to get your business
growing in Mexico.
The New York Times reported this weekend that Wal-Mart
Stores Inc investigators probing its Mexican operations
found a paper trail of hundreds of suspect payments worth more
than $24 million made to grow its business there, and that the
company then quashed the investigation
Wal-Mart said it was "deeply concerned" about the
allegations, which have lifted the lid on a culture of
corruption in Mexico that many of its residents take for
One global study said Mexican firms were perceived to be the
third most likely behind those in China and Russia to pay bribes
When 40-year-old market stall owner Adrian Martinez decided
to open a second spot to sell his wares in Mexico City, he said
he figured it was better to pay a bribe to a "gestor", or
intermediary, to get a permit than wait for authorities to
process his request.
Martinez paid the equivalent of several hundred dollars for
the permit, a fraction of the sum the New York Times said
Wal-Mart de Mexico - the country's top retailer - had given to
middlemen to help it get permits to build and open new stores.
"I greased his palm," said Martinez, who said he earns about
400 pesos ($30) a day selling clothes and cosmetics. "Lots of
others do the same here. If you want to do things by the book,
you'll be waiting a long time."
According to the New York Times, Wal-Mart came to the same
conclusion as it rapidly expanded its business from an initial
joint venture in 1991 to becoming Mexico's top retailer and
biggest private employer, with a network of more than 2,000
stores and restaurants.
"This is really no surprise to Mexicans," said John
Ackerman, a legal expert at the National Autonomous University
of Mexico (UNAM). "It's a surprise that it's so well documented,
but it's no surprise to read this story about Wal-Mart."
Paying bribes has a long tradition in Mexico dating back to
the colonial era, and Wal-Mart is not the first company to come
under scrutiny for allegations of illicit payments.
In May 2011, a U.S. court handed down guilty verdicts
against executives at a California company who were behind a
cash-for-contracts scheme involving Mexico's Federal Electricity
Commission, a utility known as CFE.
The temptation to skirt red tape in Mexico has been
encouraged over time by a weak justice system and the relatively
low salaries of many lower-level public sector workers.
Mexican police often earn well below $1,000 a month.
Mexico's biggest daily newspapers gave scant coverage on
Sunday to the Wal-Mart story, with most relegating it to their
back business sections. Only one newspaper, Reforma, put the
story on its front page, but even then it only summarized the
article's allegations and gave the company's response.
However, leftist presidential candidate Andres Manuel Lopez
Obrador, who has long railed against corruption in Mexico and
almost won the last election in 2006, said the reports provided
fresh evidence of the "rotten" state of government in Mexico.
It was particularly illuminating that the investigation
about Wal-Mart had been launched abroad, and "not from Mexico",
said Lopez Obrador, who accused President Felipe Calderon of
rigging the vote to defeat him in the 2006 election.
Recent polls suggest Lopez Obrador may be moving into second
place in this year's race, behind favorite Enrique Pena Nieto of
the opposition Institutional Revolutionary Party (PRI), Mexico's
longstanding rulers whose name became a byword for corruption.
Javier Oliva, a political scientist at UNAM, said payment of
corporate bribes began to increase after the North American Free
Trade Agreement (NAFTA) came into force in Mexico in 1994.
"Foreign companies in the main started to look for ways of
speeding up official procedures," Oliva said. "Regrettably, this
is how it works in much of Mexico."
And Mexicans are used to it.
A study by anti-corruption watchdog Transparencia Mexicana,
the local arm of Transparency International (TI), showed
Mexicans in 2010 paid a bribe to deal with more than one in 10
items of official paperwork or access to public services.
Illicit payments cover everything from connecting a
telephone line to obtaining a driver's license and average
around 165 pesos, Transparencia Mexicana said.
That figure leaps when big corporations try to operate in
Mexico's capital and 31 different states, each of which has its
own set of rules on how to set up a business or lease property,
the watchdog's director Eduardo Bohorquez said recently.
On top of this come payments made by victims of extortion
attempts to criminals, which TI said accounted for nearly one in
four of bribe demands made in Mexico between 2007 and 2010.
A 2011 TI study of 28 major economies gauging perceptions of
how likely companies were to pay bribes abroad put Mexican firms
third behind those in China and Russia.
All told, corruption costs Mexico around 1.5 trillion pesos
($114 billion) annually, or about 10 percent of gross domestic
product (GDP), according to an estimate this week from the
Private Sector Center for Economic Studies think tank.
To small businessmen like stall holder Martinez, who said he
had saved himself up to a year's wait by paying a bribe, the
system is able to flourish because it stems from above.
"It's all come down from the politicians," he said.
Corruption allegations have helped bring down figures right
at the top of the political establishment in Mexico.
Raul Salinas, brother of former President Carlos Salinas,
the architect of NAFTA in Mexico, served 10 years in prison on
corruption and murder charges until 2005.