It seems even cows like to take a bit of time off and enjoy a visit to the beach.
A Webcams de México camera caught the vacationing cow at Playa Blanca in San Carlos, Sonora.
The webcast shared by the service on social media shows the cow taking a stroll on the beach and wading occasionally into the shallow waters, perhaps looking for a respite from the heat.
— Webcams de México (@webcamsdemexico) June 4, 2019
“Have you ever seen a cow enjoying the beach? We found an acua-vaca [cow is vaca in Spanish] swimming in the sea off San Carlos, Sonora!” the webcam service wrote on Twitter.
The cow became an instant star on social media, where one commenter asked: “What does a vaca do at the beach? Go on vaca-ción!”
Others gave the beach-going cow nicknames, with the most popular being vaquita marina, in reference to the endangered vaquita porpoise endemic to a small area of the Gulf of California.
San Miguel de Allende, where expats have been victims of a Ponzi scheme.
In San Miguel de Allende, it is said foreigners live here either because they want to be forgotten, or because there’s no one left to remember them.
This small-town alchemy of anonymity and forgettability laid the groundwork for an alleged decade-long Ponzi scheme estimated to have stolen US $40 million from more than 150 Banco Monex accounts belonging to United States, Canadian, British, European and Australian expatriates.
While several local Mexicans were also embroiled in the bank fraud, the vast majority were among the foreigners who make up 10% of the population in San Miguel, a UNESCO World Heritage site known for its historic streets and La Parroquia de San Miguel Arcángel.
As the scope and scale of the fraud begins to unfold, retirees and elderly with little savings and less family support are settling for half or less of their lost funds in restitution, hoping to eke out a life with what little resources they have left.
“People live in San Miguel for two reasons, but whether wanted or unwanted, the result is that they end up forgotten. Banco Monex used this to take advantage of people, and then not act in good faith when the fraud was exposed,” said Arvin Kagan, who moved from Chicago to San Miguel more than two decades ago.
Kagan, who banked with Monex for 15 years, was told earlier this year that his account was closed in 2015, despite the fact he continued banking with them for the following four years.
“Pesos, dollars, stocks purchased through them they were holding — I had all of that. But Monex claims all the documents received from them were fake, and that none were real,” Kagan said.
Kagan is among a small handful of larger account holders challenging Monex’s handling of the fraud in a legal battle that could ultimately play out in the U.S. and is currently being considered by the Banking Commissioner of Texas.
Most prominent among the group is Howard Haynes, an 83-year-old philanthropist from Kansas City who has lived in San Miguel for 22 years, 10 of which he served on the board of the Community Foundation of San Miguel. In 2010, he received Hospice San Miguel’s first community caregiver award for volunteering and financial support.
With his Monex accounts established primarily for these charity donations and philanthropic scholarships, Hayne’s losses were among the largest of all the San Miguel fraud victims. His funds were drained to almost nothing and moved between accounts, without his approval, to and from people he’d never heard of.
Mexico News Daily spoke to more than a dozen victims for this story, half of whom refused to be identified, fearing for their personal safety or reprisal from Monex, which forced them to sign lengthy documents in Spanish in exchange for receiving settlements.
San Miguel philanthropist Howard Haynes: his funds were drained to almost nothing.
“A number of people are very much in fear that if we expose them in a much broader sense they are not going to make good on the losses,” Haynes said. “I’m 83, not 23, I’ve been here a long time so I’m not quite as afraid of speaking out. I firmly believe that people at the top of Monex were very aware of what was going on.”
Banco Monex claims the stolen funds and affected parties are lower than original estimates of $40 million from 158 accounts, and says they have settled about two-thirds of the cases.
“On this matter, a total of 49 complaints have been received verbally and in writing from clients of Banco Monex and Monex Casa de Bolsa, totaling 160 million pesos ($8.2 million), of which 35, that is, more than 70%, have been resolved,” said Banco Monex spokesman Fernando García Velasco in a prepared statement.
Victims dispute this figure, as a small number of the larger account holders claim their losses alone come close to the total amount claimed by Monex. Many of the cases settled are smaller account holders without the resources to challenge the offer.
In other cases, there are disputes over the difference between money that was originally deposited and the allegedly false rates of return being communicated in fake statements to victims.
Banco Monex said additional details of the complaints or settlements could not be disclosed because of legal procedures currently in progress. They were, however, able to disclose the identity of the employee being investigated by Mexican authorities and internally by the comptroller of Grupo Financiero Monex.
“Monex reiterates that, since January, it initiated legal proceedings in relation to Marcela Zavala Taylor, in addition to all the legal actions that correspond to the acts and acts that were generated from this situation, including criminal, civil and labor actions,” Velasco said.
It is understood that Zavala was removed by the company in December 2018. It was around that same time victims first began realizing they had been part of an elaborate Ponzi scheme — funds were siphoned out of one account to cover theft from another — that had been running, at their best estimates, for up to 10 years.
The daughter of former San Miguel mayor Manuel Zavala and Peggy Taylor, a Christies International Real Estate agent originally from Texas, Zavala used her connections to build Monex’s Rolodex.
Haynes began banking with Zavala and Monex over a decade ago at the recommendation of his close friend, former U.S. consul Phil Maher, who personally vouched for Zavala.
Over the years, Haynes developed a close relationship with her. Thinking she couldn’t afford medical bills, he took her to his own eye doctor for treatment of a degenerating eye condition.
“I was beyond trusting and considered her a close friend of over 20 years, I had sent so many people to her as customers because I had nothing but trust,” Haynes said.
Legal proceedings have been initiated against former Monex employee Marcela Zavala.
“She never came to our parties because she didn’t drink, but she would come up in the mornings, we would have coffee and chit chat and gossip and develop a friendship. Every year before Christmas, Marcela would bring a fabulous basket of pastries made by her partner and one of Monex’s beyond spectacular coffee table books. Last December there was no Marcela. There was no book. And there was no pastry, and that’s when we knew something was wrong.”
Marcela was considered extremely bright and clever, but most of the victims interviewed believe she couldn’t have accomplished such a broad scheme and cover-up, involving so much money, alone.
“I know first-hand if someone put something in front of her face she wouldn’t be able to see it. The kind of eye disease she had was too far gone. I suspect she is damn near blind,” Haynes said. “I’m not trying to take the blame off of Marcela, because she was obviously very heavily involved, but there were other elements going much deeper.”
As far back as they can remember, Monex victims report Zavala employing a contractor identified as Juan Tovar who worked directly with her — not Monex — to be a personal courier between the bank and customers. Tovar has not been named by Monex or victims as being involved in the alleged fraud.
Zavala’s pitch to bank with Monex was simple: pick up the phone, say how much money was needed and within two hours, Tovar would turn up on his motorcycle with bags full of Mexican pesos.
For Kathy Machir, 67, and her husband James, 72, this system worked for about nine years. They cashed in their 401K, sold their house, moved to San Miguel and put $242,000 in the Monex Casa de Bolsa to build their dream retirement home.
“At some point we suddenly stopped getting statements. After asking over and over again, we were told the whole computer system was being changed,” Kathy Machir said. “Then all of a sudden we started getting these statements that were weird, but as far as we knew they were Monex statements. Things appeared to be where they should have been.”
In December 2018, Tovar stopped showing up on his motorcycle with the bags of cash needed to pay contractors and finish building their home. With their accounts entirely drained and no offer of full restitution from Monex, they sold their 2012 Subaru in March for $9,300, a fire-sale price compared to the $13,000 Blue Book valuation.
“When that money runs out, we’re done. Everything we have left is in that house, the majority is pretty well under control, but I hope we won’t have to go back to work,” Kathy said. “Anything that we can eke out of our social security is what we will continue to work with.”
In a notarized letter hand delivered to Monex chairman Hector Lagos Donde, San Miguel lawyer Enrique Ramírez outlined 12 different forms in which the fraud was perpetrated against five account holders: Kathy and James Machir, Kenneth Karger and James and Kelly Karger.
The alleged fraud included: forgery, fraud through the misrepresentation of the meaning of documents in Spanish, embezzling funds from depositors’ accounts, unauthorized transfers, unauthorized investments, unauthorized liquidation, unauthorized transfers, diversion of wire transfers, unauthorized changes to names on accounts, unauthorized changes to depositors’ email addresses, unauthorized changes to account passwords, fraudulent statements and account balances.
“Monex and the officers and directors of Monex are financially responsible for the losses that their agents and employees inflicted on my clients,” Ramírez wrote in the letter. “These losses include, but are not limited to, the principal and interest on their accounts and lost profits from unauthorized liquidation of investments.”
James and Kathy Machir were building their dream home when they discovered their account was empty.
While it is unclear when exactly the alleged fraud began, victims report noticing increasingly questionable activity when Monex closed its San Miguel office and moved Zavala to handle their accounts from the Querétaro office in or around 2012.
Around that same time, Bruce Brown and his wife invested their life savings from Australia with the promise of 10% interest rates.
For the first 18 months they received “sketchy” monthly statements, so Brown kept his own spreadsheets using balances supplied by Zavala, with a rough percentage of earnings calculated between 8% and 12%.
Like everyone else, the Browns began to learn of the fraud last year.
“At our second meeting with Monex in Querétaro the lawyer in attendance told us that the money was being illegally removed from the affected accounts very early after the initial investment,” Bruce Brown said. “This means that the figures supplied by the promoter could have had no bearing on reality as they were supplied by her to cover up the fraud and not by the bank.”
Diana Cuevas, a partner at the legal firm Ibanez Parkman Lawyers, is representing up to five of the San Miguel-based victims of the fraud. She said they began losing access to, and control of, their accounts in one of three ways.
“We believe in some cases it was forging a signature. In other cases it was hacking into passwords and changing them. And sadly, clients having fully entrusted their accounts to certain people who worked at Monex,” Cuevas said.
“We’re surprised that the institution has not made their agents more responsible in this matter. We would hope that they make the agents more liable.”
Shortly after the fraud was discovered, executives at Banco Monex held group meetings with victims in January and February to negotiate settlements. Talks broke down almost immediately, victims say, after Monex representatives shifted blame on to account holders for being complicit in their own fraud.
“At the meeting they offered me 50% because they tried to tell me that I was 50% responsible for not looking at my statements,” Haynes said. “I just laughed. I said you must be joking. To tell me I’m 50% to blame is totally inaccurate and inadequate.”
For those unable to hold out for a better deal, receiving a settlement has been a long and painful process. As a condition of settlement, victims were directed to name Zavala in a criminal complaint to the Attorney General’s Office. The office did not respond to a request for comment.
On Monday, February 25, the Browns met with Monex representatives in Mexico City to make their legal statements. “During all the time I spent at Monex HQ I felt I was treated as the criminal and not the victim,” Brown said.
Nearly $400,000 disappeared from Mauri and Kenneth Karger’s account in just four months.
Retiree Cory Gray, 86, moved to San Miguel del Allende from Florida 35 years ago and opened a Monex account in about 2011 to live off her retirement savings. Alone and wheelchair-bound, she was forced to make the extremely difficult trip to Monex’s headquarters in Mexico City.
“They never made good to me at all. I’m not happy, but [based on] the fact that I had anything left to get I decided to settle,” Gray said.
An 82-year-old European retiree who banked with Zavala and Monex since 2005, who did not wish to be named for fear over her safety, said she was not allowed to deviate from the Monex-approved script in her denunciation before the Attorney General’s Office.
“They took me in and the lawyer directed me exactly what to say, and I was not permitted to mention Monex once, only Marcela Zavala, or I would not get my check,” she said.
The next day, she was taken to another authority in Coyoacán for handwriting analysis and other fraud investigation formalities.
After living in San Miguel for 23 years, the woman sold her house in 2016 and fled the city after her son was killed by a local gang while it was stealing his Harley-Davidson motorcycle. Parents of the gang members had blamed her for putting their sons in jail, making it too dangerous to stay in the area.
She deposited the $210,000 from the sale, but it was almost immediately drained to about $5,000, or 100,000 pesos. Statements received from Monex during the investigation showed unauthorized withdrawals from her account for things like “payroll” and “bonuses” to a number of unknown recipients, including Juan Murillo Tovar, Ramon Deanda, José Jamie Torres López, José Manuel Torres López and María Heidi Vazquez López Gómez.
“In the end, I fear I lost about $60,000. I’m missing a lot more, but I just couldn’t take it anymore. I’m 82. If I waited any longer I’d die of a heart attack,” she said. “San Miguel is a dangerous place. The town itself is very Americanized, but it’s very small and all around it is poverty.”
A former president of the Commission for the Protection and Defence of Users of Financial Services (Condusef) said that since Monex is an “international broker” that offered its services in Mexico and is not regulated, it cannot be supervised and regulated either by Condusef or by the National Banking and Securities Commission (CNBV).
“The institution acted in the name of Monex United States and did not operate in the facilities of Monex México, so no regulator has jurisdiction over them and those affected cannot file a complaint with Condusef, so they have to make a criminal complaint for fraud,” Mario di Costanzo said.
For retired Texan dentist Kenneth Karger, 63, this jurisdictional distinction may be the opening they need to hold Monex accountable for the full amount of their losses.
Karger and his veterinarian wife Mauri, 65, had property in Mexico for about 15 years before opening an account with Zavala and Monex. Within about four months, their balance went from about $400,000 down to about $250.
“She wiped everything out,” Kenneth Karger said. “We’d gotten into the Ponzi scheme, where she wiped out somebody, then went to someone else’s account and transferred into other peoples’ accounts to cover the call. Eventually she ran out of money.”
From the Dallas-Fort Worth area, the Kargers are one of the few victims not living in or around San Miguel. They’re also the most proactive in challenging Monex both in Mexico and the U.S.
The Kargers have engaged Mexico City lawyer Antonio Holguin of Bufete Holguín y Abogados to begin criminal and civil proceedings against Monex in Mexico.
In the U.S., meanwhile, they have met with Congressman Ron Wright, a member of the Congressional Foreign Relations Committee, and the Texas Banking Commissioner, Charles G. Cooper, in hopes of initiating an investigation in Texas, where Monex has branches in Houston.
Texas House of Representatives member Tony Tinderholt has been working with the Kargers to refer the case to the banking commissioner, which has the power to consider an investigation.
“Tens of millions of dollars were stolen from Texans and Americans, and it’s pretty disgusting that they said, ‘yes this happened,’ and they haven’t rectified it,” Rep. Tinderholt said.
“I’m pushing for investigations, legal action and to potentially shut them down in America. And if I have to I’ll go to the top levels of the United States; contact my congressman, my senator, we’ll go all the way to the president of the United States if we need to.”
In a statement of support to the Kargers, Texas state Representative Bill Zeder said he agreed with Rep. Tinderholt that the matter should be escalated publicly if not resolved promptly.
“To think that a bank would allow its employees to systematically rob accounts with impunity, and not make them whole immediately, is beyond belief,” Rep. Zeder said.
“Crime, corruption, cartel activity, money laundering might be common banking procedures at Grupo Financiero Monex in Mexico, but I will not let them bring those practices to Texas. We have zero tolerance here.”
A piece of performance art by Argentine-Mexican artist Mercedes Aquí is attracting criticism from many who say it shows a lack of respect for Mexico’s cultural heritage.
Titled Ancla, the piece is a photographic record of a performance by Aquí in which she is seen urinating on a petroglyph in General Cepeda, Coahuila, in order to dilute natural pigments and make a print of the petroglyph on her buttocks.
The photo series was exhibited in the Museum of Graphic Art in Saltillo from May 30 to June 1 of this year.
Aquí staged her performance in El Gavillero, where there is nothing stopping visitors from touching the ancient petroglyphs.
In a Facebook post, Aquí wrote that the piece “speaks about identity, memory, roots, the body and territory,” and said she was not aware of any requirement to get official permission for her project.
The imprinted petroglyph on the artist’s derriere.
But not everyone agreed. In an interview with Milenio, art critic Avelina Lésper blasted the piece, calling the artist a vandal and an exhibitionist.
“What she did isn’t art,” said Lésper. “It’s the same thing that always happens with these artists, that their arrogance and despotism makes them feel entitled to commit vandalism and disguise it as art with their explanations.”
Francisco Aguilar Moreno, delegate of the National Institute of Anthropology and History (INAH) in Coahuila, told the newspaper Vanguardia that the INAH is investigating whether Aquí damaged the petroglyphs to decide whether to file a formal complaint against her.
“I’m not against art projects, what I am against is vandalism and damage to our heritage,” he said.
Aquí welcomed an investigation, saying that the natural inks she used could not have damaged the petroglyph. She also said that many of the criticisms directed against her are products of sexism and xenophobia.
“Marking a territory with liquid is usually associated with men, not women,” she wrote. “Exhibiting an apparent urination has provoked violent reactions.”
Born in Argentina, Aquí has lived in Mexico since 1978.
'El Ray,' whom authorities fear will be released for insufficient evidence.
The government of Morelos has asked for public assistance to ensure that a suspected cartel boss is kept behind bars.
State Interior Secretary Pablo Ojeda Cárdenas yesterday urged anyone who has been a victim of crimes perpetrated by Raymundo Isidro Castro Salgado, suspected leader of the Jalisco New Generation Cartel (CJNG) in Morelos, to provide evidence to strengthen the case against him.
The Morelos government said it will offer special protection to anyone who steps forward.
The call for assistance came a day after state Security Commissioner José Ortiz Guarneros said that Castro, commonly known as “El Ray,” could be released from preventative custody due to a lack of evidence.
On May 13, a judge ordered the suspected plaza chief to stand trial for express kidnapping and set a period of two months for authorities to build the case against him.
If Castro is freed due to insufficient evidence, Ortiz said, he could seek revenge or attempt to retake the local leadership of the CJNG, both of which would represent a danger to society.
In that context, Ojeda stressed the importance of preventing the release of the suspect, warning that he is one of the main people responsible for the wave of violence in the east of the state.
The interior secretary acknowledged that “some people are afraid” of reporting crimes but explained that “we’re working to provide them with security.”
He also said that authorities are looking at a mechanism that would allow people to provide evidence safely and securely.
Castro has been sought by federal and state authorities since 2014. He was arrested in Puebla on May 7.
The incidence of high-impact crimes soared in Morelos in the first four months of 2019. The CJNG is one of five organized groups that operate in the state, according to the Morelos government.
A Mexico City party bus: authorities want them gone.
Party buses could soon be a thing of the past in Mexico City if authorities in the capital have their way.
City official Avelino Méndez announced on Thursday that the city will crack down on party buses and illegal house parties that sell alcohol without the necessary permits.
Méndez said that two houses that hosted illegal parties have already been shut down in the borough of Gustavo A. Madero, while one party bus has been taken out of commission.
“We know that there are party buses in various places around the city,” he said. “And it’s openly illegal, because the Secretariat of Mobility and the Secretariat of Communications and Transportation don’t give permits for this kind of thing. Buses should only be for the transportation of people, not for parties and selling alcoholic drinks.”
Méndez asked citizens to help the effort by reporting party buses and illegal house parties to the authorities.
According to El Universal, the proliferation of party buses in Mexico City started around 17 years ago. There are at least two companies that offer the service: Party Bus México and Fun Bus Café.
Both take their clients around the city’s tourist attractions, escorted by private security. The buses, which hold 40 passengers, are equipped with lighting and speakers for the clients to play the music they choose, as well as a seating area and a bar.
The companies charge between 10,000 and 25,000 pesos (US $509-$1,273) for five hours of mobile fun which often includes an open bar.
According to the Party Bus México website, the party bus concept arose in Europe in the 1990s, and arrived in Mexico in 2002 when Juan Carlos Zazueta founded Party Bus México.
Zazueta is described as a “publicist dedicated to tourism and entertainment” who had years of experience managing tourism and transportation brands before entering the mobile entertainment business.
Party Bus México claims to be the country’s largest purveyor of fiestas on wheels, and also offers service in Acapulco, Ixtapa, Cancún, Guadalajara and Monterrey.
It also claims that it has all the necessary permits to operate.
Rising violence and threats from gangs demanding extortion are closing down tortilla makers in Acapulco — and not for the first time.
At least 20 tortillerías have decided to suspend operations instead of making expensive extortion payments and facing constant threats of violence from the gangs.
One tortilla maker, who asked to remain anonymous, told reporters that extortion charges that businesses pay for the right to sell products, known as derecho or cobro de piso, have risen rapidly over the past few months.
“In December they asked me for 5,000 pesos (US $254), then they came back in February and asked me for 15,000, and now they’re asking for more, and honestly I can’t do it anymore,” he said. “They say that if I don’t pay the charge they’ll burn down my business, like they’ve already done to other businesses in Acapulco.”
Derecho de piso fees can be as high as 100,000 pesos, and gangs sometimes threaten to kill tortillería employees if payments are not made, tortilla makers say.
The threats have been made in the Acapulco neighborhoods of Libertad, Real Hacienda, Ciudad Renacimiento, Postal, Emiliano Zapata and others.
The tortilla makers have reported the crime to the Guerrero state prosecutor, but the businesses remain closed.
Acapulco’s tortillerías have been targeted by extortionists for years. The owners are usually willing to make the payments to stay in business, but that doesn’t always protect them from violence.
In 2015 and 2016, another period of rising extortion demands left 20 tortillería employees dead in clashes with organized crime.
The beginning of the rainy season in the Michoacán capital spelled tragedy for a young boy and his family.
Nine-year-old Christian Alberto was killed instantly by a bolt of lightning yesterday afternoon outside his school in Morelia.
According to witnesses, the third-grader and several other students had taken shelter under a large tree on the school grounds during a sudden rainfall.
Lightning struck the topmost branches of the tree before striking Christian.
Another student who took shelter under the tree said the lightning “set the sky on fire.” When the bolt struck, he ran to inform a teacher, who called the police.
Teachers attempted to resuscitate the victim without success. According to the emergency responders, the child was killed instantly.
State Civil Protection services issued a warning yesterday that this year’s rainy season promises heavy rains and hurricanes, bringing hail, high winds, flooding and electrical storms. The agency urged residents throughout the state to take appropriate precautions and to stay tuned to weather alerts.
Lightning is one of the leading causes of weather-related fatalities, according to the United States Centers for Disease Control and Prevention. An average of 33 deaths a year were caused by lightning in the U.S. between 2204 and 2013.
AccuWeather advises seeking shelter indoors if at all possible during a lightning storm, and avoiding trees and tall structures. Water is also to be avoided. The weather forecaster urges taking shelter immediately upon hearing thunder at the beach, in the pool or in a lake.
The Secretariat of Finance (SHCP) has spoken out against the decision by Fitch Ratings to downgrade the credit ratings of Mexico and the state oil company, describing the move as “unfortunate” and stating that the government strongly disagrees with it.
Fitch said that Pemex’s deteriorating credit profile posed an increased risk to public finances and that there is “ongoing weakness in the macroeconomic outlook, which is exacerbated by external threats from trade tensions.”
The ratings agency said that downgrading Pemex’s credit rating from BBB- to BB+ – junk status – was due to its weak financial position and “slow action” by the government to strengthen its capital structure, among other factors.
But the finance department said “it’s unfortunate the Fitch Ratings agency is doubly penalizing the country’s balance sheet.”
“On the sovereign side, they argue that the risks to public finances have increased because Pemex’s debt represents contingent liability for the federal government, assuming imminent support to the entity. At the same time, the agency penalizes Pemex’s rating because it considers that the federal government’s support is moderate or insufficient. The government expresses its strong disagreement with the perspective applied by this ratings agency.”
The SHCP pointed out that the ratings cuts occurred “even as the federal government has demonstrated its total support for [Pemex] and is working to provide a solution to its structural and financial problems.”
It added that the government will continue to support Pemex “through structural measures and liquidity” in order to make it an “efficient and profitable company in the medium and long term.”
In addition to Fitch’s cut, Mexico’s sovereign rating was also dealt a blow this week by Moody’s Investor Services, which cut its outlook for the country from stable to negative but maintained its rating at investment grade A3.
The company said in a statement that “the Mexican government’s increasingly unpredictable policy-making is undermining investor confidence and medium-term growth prospects.”
Jaime Reusche, a Moody’s vice president and senior analyst, said that institutional weakness as a result of decisions taken by the government is also a concern.
“We’re seeing a deterioration in what was before a very important strength for Mexico . . .” he said.
Reusche also said that for “many years” corruption has been a factor that has weighed on Mexico’s sovereign rating.
President López Obrador, who has made combating corruption a central crusade of his administration, today repudiated the new credit ratings assessments.
“We don’t agree with the opinions of the ratings agencies,” he told reporters at his morning press conference.
“I again reiterate that they’re using an outdated methodology from the neoliberal period . . . Pemex doesn’t have any problem to restructure its debt. There are more than enough offers.”
Specifically referring to Moody’s assessment that corruption has limited the possibility of an upgrade to Mexico’s credit rating, the president declared that corruption is no longer tolerated.
López Obrador also charged that his government has stabilized production at Pemex “in record time” and once again accused ratings agencies of failing to act when the state oil company’s finances and productivity deteriorated during the terms of previous federal administrations.
“They weren’t objective or professional because they turned a blind eye to the downfall of Pemex, to the debt, to the corruption. Where were they? Did they just notice now?”
Mexico has pledged to deploy up to 6,000 National Guard troops to the southern border in an attempt to reach a deal to avoid a tariff on all exports to the United States, TheWashington Post reported.
Mexican officials told United States government representatives in Washington today that the large security deployment will bring an immediate reduction to the large number of Central Americans traveling through Mexico to the U.S. border.
Foreign Secretary Marcelo Ebrard is leading a Mexican delegation in talks with White House officials aimed at reaching an agreement to prevent escalating tariffs announced by President Donald Trump last week.
The U.S. president said that 5% blanket tariffs will be imposed on June 10 and that the duties will increase by an additional 5% at the beginning of subsequent months if Mexico doesn’t take “action to dramatically reduce or eliminate the number of illegal aliens crossing its territory into the United States.”
According to the Post, Mexican officials said that 10 National Guard contingents of 450 to 600 troops each will be assigned to the border with Guatemala by September. The deployment would represent a fourfold increase on the 1,500 federal forces currently patrolling the border.
A further three units will be deployed to the Isthmus of Tehuantepec in southern Mexico to set up roadblocks and checkpoints to stop the movement of migrants.
“That’s a remarkable and significant commitment of resources beyond what they’ve previously dedicated to countering human smuggling,” an unnamed U.S. official said.
However, there was also pushback from the United States during today’s meeting, the Post reported.
Mexican officials said that its increased security measures would reduce migration to levels seen last fall when arrests of undocumented migrants in the United States averaged 60,000 per month.
But U.S. officials said the White House will only be happy when monthly arrests fall to less than 20,000, as occurred in the first months after Trump took office in January 2017.
In addition to discussions about border security in Mexico, both a Mexican and a U.S. official told the Post that the two countries are negotiating a plan to overhaul asylum rules across the region.
Under the plan, Central Americans would be required to seek asylum in the first country they reach after leaving their homeland, meaning that the United States could deport Guatemalans who enter the U.S. to Mexico, and Hondurans and Salvadorans to Guatemala.
Mexico has said repeatedly that it will not enter into such a “Safe Third Country” arrangement as the United States has with Canada, but the unnamed Mexican official said the government is prepared to make changes in order to have a coordinated regional approach.
But he said Mexico would withdraw the offer if Trump goes ahead with his plan to impose the tariffs.
The Post said the asylum notifications would likely face challenges in United States courts but noted that legal efforts had not stopped the Trump administration from returning thousands of Central Americans to Mexico as they await the outcome of their asylum claims in the U.S.
The two officials stressed that a deal between the two countries is not finalized and warned that even if one is reached, Trump might not accept it. However, they both expressed optimism that an agreement was attainable.
Talks are to continue tomorrow.
Arrests of undocumented migrants in Mexico have significantly increased in recent months but in the same period the number of migrants apprehended by U.S. Customs and Border Protection (CBP) has also risen substantially.
Trump railed against the arrest numbers for May on Twitter yesterday – at more than 144,000, CBP said that they were the highest in 13 years – and told reporters in France today that “we’ve told Mexico, ‘the tariffs go on.’ And I mean it too.”
However, there is doubt that the tariffs can be introduced as quickly as the U.S. president has announced.
The Pacific Coast Council of Customs Brokers and Freight Forwarders Association said in a letter to the U.S. government that introducing the new duties by “June 10 or even before the increase planned for July 1” will be impossible.
The council also said it felt “grave concern, even alarm” at the prospect of the tariffs taking effect.
Approximately 406,000 jobs will be lost in the United States if Trump goes ahead, according to the Perryman Group, a Texas economic consultancy, and the tariffs will also hit the Mexican economy hard.
Mexico was dealt another ratings blow today: Fitch Ratings downgraded Pemex to junk status, reducing its credit rating from investment grade to speculative with a negative outlook.
The new rating of BB+, down from BBB-, follows yesterday’s downgrade of Mexico’s sovereign debt from BBB+ to BBB.
“Although Pemex has implemented some cost-cutting [measures] and received moderate tax cuts from Mexico, the company continues to severely underinvest in its upstream business, which could lead to further production and reserves decline,” Fitch said in a statement.
“The very high level of transfers from Pemex to the Mexican government continues to significantly pressure Pemex’s cash flow generation and reinvestment ability and weaken its standalone credit profile,” it added.
The downgrade had been anticipated by some investors but perhaps not quite so soon.
Reuters reported earlier today that investors at six of the world’s largest asset managers, all of whom own Pemex bonds, expected them to be downgraded to junk status within months.
If one of the two other ratings agencies follows Fitch’s lead— Moody’s currently rates the bonds at one level above junk — there would be a sell-off of up to US $16 billion by investors who are required to hold investment-grade bonds.
Reuters said if that were to happen Pemex would become the largest fallen angel — a borrower that descends from investment grade to junk — in history.
It would also wreak havoc for President López Obrador’s ambitious social spending plans, because the government would be forced to make spending cuts.
Alfonso Romo, the president’s chief of staff, said earlier today that the government would have to work hard to win back the confidence of the ratings agencies. The work will now be even harder.
