The National Electoral Institute (INE) has detected an apparent embezzlement scheme in which a minor political party diverted almost 34 million pesos in public money to shell companies.

Fuerza por México (FxM), cofounded by union leader and former senator Pedro Haces and former Puebla state deputy Gerardo Islas, received public funding totaling 136.5 million pesos (US $6.8 million) in 2021 to cover ordinary expenses and campaign costs.

FxM was stripped of its registration as a political party after the elections last June because it failed to attract support from 3% of voters.

In a three-month period after the elections, the party transferred 33.9 million pesos (US $1.7 million) to shell companies posing as suppliers, according to the INE’s auditing unit. The companies don’t have premises and are not engaged in any commercial activity, the unit found.

Due to its deregistration, FxM should have sought authorization to make payments using public money during the second half of last year but did not.

FxM was ordered to pay back the money it allegedly transferred to shell companies by this Friday. If it fails to do so legal proceedings will be initiated against the party’s administration secretary, Pablo Enrique Gutiérrez, its general secretary, Alma Lucía Arzaruz, and Islas, the national president.

The party, which considers itself an ally of the ruling Morena party, has not commented publicly on the INE’s findings.

Neither Haces, who represented Morena in the federal Senate, nor Islas, who served as a minister in the Puebla government before becoming a deputy, has addressed the issue, although both remain active on social media. The former is the chief of the Autonomous Confederation of Workers and Employees of Mexico, a union known as CATEM.

With reports from Reforma