The National Defense Ministry’s outlay on contracts awarded without a competitive tendering process increased 64% in 2020, data shows.
Data collected by the Mexican Institute for Competitiveness (IMCO), a think tank, and compiled in its Corruption Risk Index shows that the National Defense Ministry (Sedena) spent 6.33 billion pesos (US $304 million) on contracts awarded directly last year.
The ministry’s total outlay on purchases was also up, rising 62% to 17.46 billion pesos (US $838.6 million). That means that 36% of its total expenditure was via directly awarded contracts.
The newspaper Reforma said that Sedena awarded contracts directly to companies that had recently been created and/or with addresses where there is no sign of commercial activity.
It said that Angar Azcapotzalco and Soluciones Integrales en Gestión de Riesgo de Desastres (Comprehensive Risk Disaster Management Solutions) stand out among Sedena’s five biggest suppliers since the current federal government took office in late 2018.
The former company was directly awarded a contract in October 2019 to supply 2,200 pickup trucks for 1.21 billion pesos (US $58.1 million), while the latter won a 1.17-billion-peso contract to supply ventilators during the coronavirus pandemic.
According to information on CompraNet, the government’s online transparency platform, the ventilator contract awarded directly to Soluciones Integrales is the only pubic contract the company has received.
According to Mexicans Against Corruption and Impunity, a non-governmental organization, the company is owned by former Institutional Revolutionary Party Senator José Maria Tapia Franco.
IMCO said that Sedena awarded contracts worth 199 million pesos last year to companies that were less than one year old.
Reforma reported that Distribuidora Yovic was established at the end of June 2020 and went on to win 10 contracts worth 1.9 million pesos in the second half of the year. It was invited to participate in a restricted tendering process that sought to find a supplier for heavy machinery parts just three weeks after it was established. Reforma said it visited its tax address in Tlalnepantla, México state, and confirmed there is no company there, only a private home in a working class neighborhood.
Losequi, a company directly awarded a 10.4-million-peso contract to supply protective equipment and other contracts worth some 15 million pesos, was also formed just before it began doing business with Sedena, and its tax address is an apartment complex in the Mexico City neighborhood of Del Valle.
The recent formation of companies that won contracts and the lack of commercial premises in some cases raises questions about their legitimacy. Front companies and shell corporations have been used before to divert government resources, such as the so-called “Master Fraud” embezzlement scheme in which 11 federal agencies diverted over 3.4 billion pesos in public money during the administration led by former president Enrique Peña Nieto.
The current government, however, has eliminated corruption from within its ranks, according to President López Obrador.
With reports from Reforma