Bank stocks plummet after senators’ surprise move to regulate bank charges

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November 9, 2018

Black Thursday architect Senator Monreal.

Yesterday was “black Thursday” on the Mexican stock market when bank stocks plummeted after senators from president-elect López Obrador’s Morena party unexpectedly presented a proposal to curb bank charges.

The Mexican Stock Exchange’s benchmark IPC index fell 5.81% due to the bank losses, its biggest single-day decline since August 2011.

Senator Bertha Alicia Caraveo, who presented the legislative initiative on behalf of Morena upper house coordinator Ricardo Monreal, said that bank charges generated income of more than 108 billion pesos (US $5.3 billion) for Mexican banks last year, 8% more than in 2016.

The proposal to stop banks from charging certain commissions, she explained, seeks a “fairer” relationship between the banking sector and Mexican families.

Shares in Banorte suffered the biggest drop, down 11.9% at the close of trading, while Gentera and Inbursa saw 10.23% and 10.08% wiped off their market value respectively.

The Mexico subsidiary of Spanish bank Santander slumped 8%.

According to Bloomberg, the combined losses of Banorte, Inbursa, Santander, BanBajío, Gentera and Regional totaled more than 85.4 billion pesos (US $4.2 billion).

The FTSE index of Mexico’s new stock exchange BIVA also took a hit yesterday, closing trade down 5.66%.

The Banks of Mexico Association (ABM) said in a statement that it would analyze the content of the Morena proposal in order to identify its reach and determine the impact it would have on its members.

The bill referenced a study by financial consumer protection agency Condusef that said that, on average, 30% of Mexican banks’ revenue comes from commissions.

That percentage, Morena argued in its proposal, is more than banks in other countries earn from those charges.

If approved, the legislation would prohibit banks from charging customers for checking their account balances, withdrawing cash, requesting past statements and issuing replacement cards among other services.

Gabriela Siller, a director at Banco Base, said that the initiative is a sign that the soon-to-be ruling party will promote policies that could have an adverse effect on the private sector.

Several bankers told the news agency Reuters that the proposal caught them by surprise while the move also served to further stir fears about López Obrador’s economic plans.

The private sector is already concerned about the impact that canceling the Mexico City International Airport project will have on the economy.

Prominent business leaders last week slammed the cancellation decision, which came after a public consultation on the future of the project was held.

“All of this is by the book of what every other leftist government has done in Latin America: governing by referendum, then going after the financial conglomerates,” said Santiago Arias, a portfolio manager at Credicorp Capital Asset Management.

“There was a hope that Lopez Obrador would be a little more conscious about how he would approach the private sector,” he told Reuters.

Following the market reaction to the bank charges proposal, Senator Monreal stressed that lawmakers would take business concerns into account.

“We are not going to pass [the law] in an abrupt, fast, hasty way,” he told reporters. “We are going to listen and we will take enough time to be able to listen to all sectors.”

Future finance secretary Carlos Urzúa also sought to calm markets, calling on lawmakers in both houses of Congress to review the financial impact of their proposals.

“While we recognize the aim [of these initiatives] is to try to improve the living conditions of Mexicans, this objective will not necessarily be achieved unless impacts on public finances and stability in the financial sector are taken into account,” he said.

UPDATE November 9, 6:46pm CT:

Bank stocks recovered today after president-elect López Obrador offered an assurance there would be no fiscal reforms during the first three years of the new government.

“We are not going to make any modifications to the legal framework with regard to economic, financial or fiscal matters,” he told a press conference.

Mario Delgado, the head of the soon-to-be-governing Morena party in the lower house, promised there would be no more “surprises” such as yesterday’s proposal.

Source: El Financiero (sp), Reuters (en), El Economista (sp)

Fox sees little austerity in AMLO’s decision to cancel airport project

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MND Staff

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November 9, 2018

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Former president Vicente Fox has hit out at the decision to cancel the new Mexico City International Airport, charging that it is at odds with the incoming government’s austerity push.

In a statement issued yesterday, the ex-National Action Party (PAN) leader said that by scrapping the US $14-billion project, president-elect López Obrador has fulfilled his first campaign promise but asserted that it comes at the expense of the Mexican people.

“The cancellation of the new airport will cause the loss of 120 billion pesos [US $5.9 billion], a conservative estimate, because there will be contractors that will surely go to court to recover their investment,” Fox wrote.

“In addition, there is 60 billion that has already been paid, of which 45 billion is impossible to recover. See how it is useless to boast of austerity, when a public works project is being thrown away,” he continued.

Fox, who governed Mexico from 2000 to 2006, also addressed the decision to eliminate pensions for past presidents, a López Obrador campaign promise that lawmakers decreed by the official federal gazette this week.

Past presidents were entitled to a monthly pension of just over 205,000 pesos (US $10,000) not including other benefits.

“My position is firm and secure: if it is for the good of Mexico, I gladly give up my pension. If it means that my country will have significant growth in its economic resources, I gladly relinquish it,” Fox wrote.

Fox went on to outline a range of expenses to which the new government has committed, including higher pensions for the elderly and disabled and scholarships for students, pointing out that it will also have to pay interest on external debt and allocate money to the states, among other costs.

“If taking away my pension helps significantly to meet these challenges, great! Or if it helps to make a difference to the extreme poverty rate, even better!” the ex-president wrote.

Fox said that “apparently this government-elect is prepared to pull down what is already successful,” adding that it needs to learn the difference between “governing appropriately and viscerally dismantling.”

In closing, Fox declared: “my commitment will never change, with or without pension, it will always be the same. I will continue to work . . . for Mexico and its people.”

López Obrador, who will take office on December 1, has already announced a range of personal austerity measures he intends to adopt as president.

They include largely forgoing personal security, flying on commercial airlines rather than the presidential plane — which he has pledged to sell — and receiving a salary less than half that paid to President Peña Nieto.

Both houses of Congress, controlled since September by the coalition led by López Obrador’s Morena party, have also thrown their support behind austerity measures that include cutting salaries of politicians and other government officials.

López Obrador confirmed last week that the airport would be canceled after a public consultation found 70% support to kill the project and instead build two new runways at the Santa Lucía Air Force Base and upgrade the existing Mexico City airport and that in Toluca.

In contrast to Fox’s claim, the president-elect said this week that the companies that have been building the new airport will not take legal action against the incoming government over the decision to cancel the project.

Source: Milenio (sp), El Universal (sp)

Tax agency uncovers ‘aggressive’ new fraud scheme

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MND Staff

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November 8, 2018

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The Federal Tax Administration (SAT) has uncovered a new and “aggressive” tax fraud scheme involving more than 13,000 partners and shareholders of 600,000 companies, many of which are bogus.

Unidentified media organizations and professional soccer teams are among the entities that have avoided paying tax of between 1 million and 120 million pesos (US $50,000 to $5.9 million) each.

Samuel Magaña, a high-ranking auditor at the SAT, told a press conference yesterday that the fraudulent scheme is being used to avoid paying income tax (ISR).

The scheme basically consists of companies contracting supposed suppliers that are in fact bogus companies, which in turn subcontract other ghost companies, creating a chain of simulated suppliers that operate without employees, don’t pay taxes and report minimal profits or losses.

“They disguise not paying this withholding [ISR] to the federal treasury through certain tax applications such as clearances and credits: that is, they generate or simulate tax credits, income tax losses or workers’ wage credits that don’t exist in order to kill the entire [tax] retention . . .” Magaña said.

“We have detected these companies’ chains, their partners and shareholders, their legal representatives, their tax residence, telephone numbers, emails . . . and that allows us to conclude that this is a simulated scheme,” he added.

He said that criminal investigations into some of the fraud cases detected are already very advanced and that prison sentences of five to 15 years could be imposed on those found guilty.

As it detects new fraud cases, the tax administration contacts companies to ask them to voluntarily correct their tax situation and thus avoid being investigated for possible criminal activity.

To date, around 400 million pesos (US $19.8 million) in lost tax revenue has been recovered by the SAT including 161 million pesos from a single tax evader, Magaña said.

Among the irregularities the SAT detected in the fraud scheme were the inclusion of dead people on companies’ payrolls along with employees who supposedly worked for up to 27 companies at the same time.

Source: Milenio (sp)

Cancún to adopt single-command policing; officers end strike

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MND Staff

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November 8, 2018

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Disgruntled police in Cancún boot out the chief on Monday.

Cancún has agreed to cede control of its police force to the Quintana Roo government and join its single-command policing system.

Announcement of the decision today comes just three days after police officers in the resort city went on strike to demand the removal of Cancún’s top cop, whom they accused of mistreating them and having links to organized crime.

The mayor of Benito Juárez, the municipality where Cancún is located, said the police returned to work yesterday after talks were held between authorities and the striking officers.

Mara Lezama explained that the agreement with the Quintana Roo government meant that not only would state authorities be responsible for the security strategy in the Caribbean coast city but also for the training and management of the local force.

In addition, they will be charged with identifying and removing corrupt police from within the force’s ranks.

“We have taken a decision together: from today it will be the state government and in particular the Secretariat of Public Security that is responsible for executing the [policing] strategy so that peace and tranquility is restored to every part and every block [of Cancún],” Lezama said.

“It will also be the responsibility of the state secretariat to inform the municipal government and citizens about the progress, actions and results in these matters,” she added.

Lezama also said that not only will the new mando único, or single command, agreement ensure that municipal and state authorities are on the same page with regard to the security strategy for Cancún but would also allow them to combine human resources and finances.

“My main commitment is to return security and peace to the municipality and today I am committed to doing what is necessary to achieve it. Let it be clear, we are not relinquishing the tasks that correspond to us,” she said.

Lezama, who took office for the leftist Morena party on September 30, said the municipal government will also focus on implementing programs and policies that prevent violence.

Cancún police chief Jesús Pérez Abarca was forced off the job Monday by angry officers who physically pushed him out of the city’s police headquarters.

Lezama said today that the incident was “unacceptable and under no circumstance can it be repeated.”

State Public Security Secretary Alberto Capella attributed the work stoppage to opposition against a move to carry out a “cleansing” of the municipal force to remove corrupt police.

The mayor said the municipal force was made up of a lot of brave officers but that there are also some who are resistant to change and acted illegally to demonstrate it.

“We deeply regret that . . . this group of police brought their daily activities to a halt to argue against a range of dissatisfactions . . .” Lezama said.

Source: Reforma (sp)

AMLO’s fourth transformation is just a new phase of the PRI: Calderón

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César Hernández

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November 8, 2018

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A former president describes Andrés Manuel López Obrador’s fourth transformation of Mexico as little more than a new face of the Institutional Revolutionary Party, or PRI.

Felipe Calderón Hinojosa said the phrase “fourth transformation” was “pretentious.”

” . . . It looks more like the fourth transformation of PRI . . . it’s the fourth transformation of a regime that has done a lot of damage to Mexico,” said the ex-president, who escalated the war on drugs, one of the bloodiest chapters in the nation’s history, during his term between 2006 and 2012.

Mexico’s first three transformations were independence from Spain, the 19th-century liberal reform known as La Reforma and the Mexican Revolution.

Calderón made the comments during an interview with broadcaster Grupo Fórmula, at which he confirmed he might seek to create a new political party next year that would act as a counterweight to the new government.

A longtime member of the conservative National Action Party (PAN), his loyalty — and that of many other party members — was shaken by the party’s election campaign alliance with the leftist Democratic Revolution Party. The coalition was engineered by former PAN president Ricardo Anaya, who went on to become its presidential candidate, placing a distant second behind López Obrador.

Calderón said the PAN has been “completely destroyed” and incapable of confronting the new government.

“There are citizens asking the question, ‘What are we going to do now?’ and they have no place to go.” A new political party with a commitment to ethical standards and not just politics is required, he said.

However, he said the party could remedy the situation by choosing veteran politician Manuel Gómez Morín as its new president because it is currently controlled “by the group that destroyed it.” Whether he goes ahead with the launch of a new party will be decided in large measure by the choice the PAN makes, Calderón said.

Calderón also brought up the highly-criticized invitation to Venezuelan President Nicolás Maduro to attend López Obrador’s inauguration on December 1. Calderón observed that Maduro’s predecessor, Hugo Chávez, was a guest at his own swearing-in ceremony but pointed out that “the current human rights crisis did not exist” in that country at the time.

“At present Maduro is a symbol for authoritarianism. For the sake of democratic consistency he should not be at the inauguration.”

Source: El Financiero (sp)

Lower house adjourned after assassination of deputy’s daughter

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Tony Richards

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November 8, 2018

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Valeria Medel was shot and killed in a gym in Veracruz.

Lawmakers in the lower house of Congress adjourned early today after the assassination in Veracruz of the daughter of a Morena party deputy.

Proceedings were brought to a halt early this afternoon when Carmen Medel Palma suffered a nervous breakdown after receiving a telephone call notifying her that her 22-year-old daughter had been killed while working out at a gym in Ciudad Mendoza.

According to preliminary police reports, Valeria Medel, a medical student, was shot nine times by a lone gunman. Another woman was also killed in the gunfire.

The Morena party’s Veracruz director did not rule out the possibility that the crime was politically motivated.

A session in the Chamber of Deputies came to a stop when the victim’s mother began crying out, “My daughter! My daughter! Valeria! Valeria!”

The session was declared postponed until next Tuesday after several deputies and medical personnel helped Medel Palma leave the chamber.

Morena Deputy Pablo Gómez observed that his colleague’s daughter was a victim of the state of violence in which Mexicans live.

“Today we face the tragedy in a much more direct way, through a member of this assembly. We are all subject to this crisis of violence and all of us, together as a legislature, must respond. We must bring peace to Mexico, and eradicate violence and violent crime.”

Source: El Universal (sp), e-veracruz (sp), El Sol de México (sp)

Ford closes Guerrero dealership due to insecurity, extortion

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MND Staff

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November 8, 2018

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The empty Ford dealership in Chilpancingo.

The Ford dealership in Chilpancingo, Guerrero, has closed due to insecurity and extortion, a local business leader said.

Pioquinto Damián Huato, president of the Chilpancingo chapter of the National Chamber of Commerce (Canaco), said that organized crime had been demanding 20,000 pesos (US $1,000) per month in cobro de piso or extortion payments from the dealership’s owners but recently increased the amount.

“. . . They preferred to close and leave Chilpancingo [than keep paying],” Damián explained, although earlier reports said the closure followed a significant decline in sales. But that was blamed on crime levels by employees of the dealership last week.

Damán said violence and insecurity in the Guerrero capital continues to be of great concern and that many other businesses have also been forced to shut.

“At the most, there are [only] 10 big business owners that remain in the capital,” Damián said.

Volvo and Volkswagen dealerships also recently closed in Chilpancingo although the latter apparently didn’t do so due to security concerns.

Damián said the state Congress needs to change the penal code so that those found guilty of extortion face prison sentences of up to 40 years, contending that the proposal of a Guerrero lawmaker from president-elect López Obrador’s Morena party for 16-year jail terms isn’t harsh enough.

The business leader, who since 2013 has been afforded government protection due to death threats against him, said he has lost count of the number of businesses that have closed this year due to insecurity.

“. . . A lot of business people left because they couldn’t endure the cobro de piso [demands] anymore,” Damián said, adding that some businesses were threatened by two or more criminal groups.

“In other words, they paid double and, well, they chose to leave, close for good,” he said.

Source: Reforma (sp)

2 narcos down, one in Chihuahua, another in Querétaro

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César Hernández

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November 8, 2018

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Chihuahua gang leader El 300, left, and drug smuggler Don Ángel.

Two high-ranking narcos are now behind bars after being arrested in Chihuahua and Querétaro.

René Gerardo Santana Garza, presumed leader of the Aztecas gang and believed to be one of the main instigators of violence in Ciudad Juárez, was arrested in Aldama, Chihuahua.

Federal Interior Secretary Alfonso Navarrete Prida wrote on Twitter that Santana, also known as El 300, is one of 11 drug lords warring over the control of drug trafficking operations in Juárez.

Santana is also believed to be responsible for attacks on the state police, making him a priority target for the Chihuahua Attorney General’s office.

He now faces at least three counts of homicide.

It is not the first time Santana has been captured by authorities. In September las year he was arrested but released after paying bail of 5,000 pesos (US $280) after the charges against him were reduced to carrying an unauthorized firearm and possession of drugs.

In Querétaro, a suspected Colombian drug smuggler who is wanted in the United States was arrested in fulfillment of an extradition order.

Ángel Humberto Chávez Gastélum is wanted for trafficking cocaine and methamphetamine from Colombia to the U.S. via Central America and Mexico.

Investigations have shown that the drug is being moved into the U.S. via express border crossings and in planes, ships and through tunnels.

Chávez, also known as Don Ángel, has been tied to a seizure of 3.5 tonnes of cocaine and for ordering a series of assassinations.

He now faces charges of crimes against health, organized crime, criminal association, operating with resources of illicit origin and homicide.

Source: El Universal (sp), Vanguardia (sp)

6,200 migrants are now in Mexico City; another 4,500 are in Chiapas, Oaxaca

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MND Staff

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November 8, 2018

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An estimated 6,200 Central Americans traveling with the first migrant caravan have arrived this week at a sports stadium-cum-shelter in Mexico City and another 4,500 are en route.

Nashieli Ramírez, president of the Mexico City Human Rights Commission, said that at least 700 minors are among those staying in the stadium located in the borough of Iztacalco.

The migrants, of whom an estimated 86% are Hondurans, began arriving in the Mexican capital last Saturday and by Tuesday night their numbers had increased to the current level.

“We’re basically receiving the exodus that left Honduras on October 13 and started to arrive in dribs and drabs on Saturday . . .” Ramírez told a press conference yesterday.

She also said the United Nations Refugee Agency (UNHCR) and the National Human Rights Commission (CNDH) are investigating the reported disappearance of as many as 100 migrants.

Oaxaca human rights ombudsman Arturo Peimbert said earlier this week that he had received reports that two busloads of Central Americans had been kidnapped last Saturday and handed over to a criminal organization.

Ramírez stressed that the “recruitment” of migrants by criminal groups as they travel through Mexico towards the United States border is “one of the risks” the Central Americans face and urged them to stick together.

Caravan leaders held a meeting last night at which they agreed to go to United Nations’ offices in Mexico City today to request buses to transport the migrants to the United States’ southern border, where they intend to seek asylum.

However, some of the migrants – who are fleeing poverty and violence in Honduras, El Salvador and Guatemala – are anxious to continue the journey towards the border and hoped to leave the shelter today.

“I’ve been here for three days already and I’m already rested. I want to move on,” 40-year-old Honduran Francisco Redondo, who has previously worked in construction in California, told the Associated Press.

Mexico City authorities have not only provided food and shelter to the migrants but also medical attention.

Personnel from the health department including doctors, nurses and psychologists had treated close to 1,000 people as of late yesterday for a range of problems including severe blisters and contagious illnesses.

Journalists, photographers, human rights officials and local residents donating clothing and other items have also converged on the Jesús Martínez Palillo Stadium, part of the Ciudad Deportiva (Sports City) complex located to the east of the capital’s downtown.

According to some members of the caravan, people offering the migrants jobs have also infiltrated the shelter.

They requested that caravan leaders and authorities pay close attention to the entry of unidentified persons due to the possibility that those offering employment are in fact human traffickers.

Another visitor at the migrant shelter yesterday was former Honduran lawmaker Bartolo Fuentes, who helped organize the caravan’s departure from Honduras. He told a group of migrants that they should wait until president-elect López Obrador is sworn in before resuming their journey.

“Bartolo asked us to wait until December,” one migrant told the newspaper Reforma.

López Obrador pledged last month that once he takes office visas will be offered to Central Americans who want to work in Mexico.

“From December 1, we’re going to give employment to Central Americans. It’s a plan we have, he who wants to work in Mexico will have a work visa,” he said.

Bartolo encouraged the migrants to heed those words.

“I don’t think the man [López Obrador] is a liar, he’s going to come in as president, he’s going to lead this great nation and he has promised them something, so we have to see. I say that it’s worth it for them to wait but they’re the ones who decide,” he said in an interview.

Bartolo warned the migrants that they wouldn’t be able to cross the United States border as one large caravan as they did at Mexico’s southern border with Guatemala, reminding them of U.S. President Trump’s hardline immigration rhetoric and plan to send up to 15,000 troops to the border area.

“. . . [The migrants] should seek asylum in Mexico and then, as refugees, think calmly about another country,” he said.

Another migrant who spoke to Reforma said that he was uncertain about his plans.

“I don’t know, I have a family to support . . . and I don’t have work, what do I do?”

President Peña Nieto announced a program last month called “Estás en tu Casa” (You are at Home), offering shelter, medical attention, schooling and jobs to the Central American migrants on the condition that they formally apply for refugee status with the National Immigration Institute (INM) and remain in either Chiapas or Oaxaca.

However, most migrants rejected the offer.

Meanwhile, around 4,500 migrants are continuing their journey through southern Mexico as part of two other caravans.

The second caravan, made up of 1,500 people who clashed with Federal Police at the southern border last month, is currently in Oaxaca while the fourth, with 3,000 people, yesterday reached Mapastepec, Chiapas.

Around 450 Salvadoran migrants who entered Mexico legally as part of a third caravan are still in Tapachula, Chiapas, waiting for their asylum requests to be processed.

Those currently on the move through the two southern states could arrive in the capital within a week if they manage to secure rides between towns.

Many members of the fourth caravan yesterday walked from Huixtla to Mapastepec although women and children traveled on buses provided by local Civil Protection services.

Municipal governments, community groups and residents of the small towns in Chiapas and Oaxaca where the migrants have stayed have provided food, water and other aid to caravan members.

But there are signs that the willingness to support the exodus of migrants — and means to do so — are dwindling.

The parish priest in Huixtla said support for the caravan that left the town yesterday was much less than that afforded to the two that preceded it.

“As a parish we don’t have any money,” Heyman Vázquez Medina said.

At least seven Central Americans decided to turn around yesterday and return to their countries of origin because the journey is “very difficult,” the priest said.

The second caravan reached Juchitán in the Isthmus of Tehuantepec yesterday.

Source: Milenio (sp), El Universal (sp), Reforma (sp)

10 dead after semi loses brakes on Mexico City-Toluca highway; excessive speed blamed

By

MND Staff

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November 8, 2018

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The semi amid crumpled cars after yesterday's accident.

Ten people are dead after a semi-trailer lost its brakes and slammed into at least 15 cars on the Mexico City-Toluca highway last night.

Mexico City police chief Raymundo Collins said that the 10th victim died in hospital this morning. Eight men and one woman were killed yesterday, all but one instantly.

A further 16 people were injured and are being treated in two hospitals in the capital.

The accident occurred just after 7:00pm in the Mexico City borough of Álvaro Obregón near the Santa Fe business district.

The driver of the trailer, a 41-year-old woman identified as Ana G., was uninjured.

Collins said the driver told authorities that her brakes failed and she completely lost control of the trailer, which was transporting a 24-tonne load from Toluca to Cuautitlán Izcalli, México state.

She said she had four to five years’ experience driving semi-trailers.

Security camera footage shows the truck traveling at high speed on the busy highway that links Mexico City with Toluca, the capital of neighboring México state. Accidents on the highway are common.

The mayor of Cuajimalpa, a borough next to Álvaro Obregón, said that excessive speed was to blame for yesterday’s horrific crash.

“This was caused precisely by speeding, the trailer traveled more than 400 meters without being able to brake due to the speed it was traveling at,” Adrián Ruvalcaba said.

Paramedics treated between 25 and 30 people for minor injuries at the scene of the accident. Some victims had to be cut out of their crumpled vehicles by rescue crews.

In a Twitter post at 12:20am, the Mexico City Secretariat of Public Security said the Mexico City-Toluca highway had been reopened to traffic.

Source: Milenio (sp), Excelsior (sp)