Thursday, October 25, 2012

The drug dealer in pinstripes

MGRR Opinion -
Bankers, government officials and others play star roles in Mexico's misery, even in the City of Peace

Mérida, Yucatán -
Buying a house in the United States is still a big deal. It's probably the most serious business transaction in which most Americans will ever be involved. The purchaser is confronted with mountains of paperwork, piles of documents to sign and not a few fees. If the new home owner doesn't have cash in hand, if he or she is financing the acquisition as most still must do, the process is yet more complex and time-consuming.

Everything is laid bare when you buy real estate, and there are no secrets. Not about the property, not about the buyer, not about the seller. Too many other people are involved. Real estate agents and brokers, title searchers, bankers or mortgage lenders, sometimes attorneys and always public officials, such as the local recorder of deeds. Nothing gets by anybody, not the slightest detail.

In Mexico land transactions are more relaxed, to be sure, but even so a well-defined system is in place, thanks to the country's long Spanish colonial history. Property ownership is registered in a local recording office, just like anywhere else. There are legal documents which are the equivalent of an American deed of conveyance. People pay real estate taxes, too, although generally far less than in the U.S.

Many land acquisitions in Mexico are still in cash, particularly for residential properties. The system of mortgage financing in this country is but a shadow of its counterpart north of the border. Probably most who want to and are able to secure a mortgage here really don't need one. The oldest rule of banking is to lend money to those who don't need it, not to those who do.

At closing some real estate sellers here demand their proceeds in cash - literally. The prospective buyer carries pesos to a bank serving as the escrow agent, or perhaps wires the purchase price to that institution, where it's placed in the seller's hands (or transferred to his own account, if he prefers). Everyone has a detailed record of the transaction, including of course the bank.

Mérida's dirty little secret, that drug traffickers are just as present here as everywhere else, is finally out of the bag. All of the nonsense from city and state officials in recent years, particularly those who love to wrap themselves in the PRI tricolor, is about to evaporate. They've long peddled the myth that Yucatán enjoys a natural peninsular immunity from organized crime, protected by both geographical isolation and crack security forces as well. Now we know otherwise.

A Mexican woman arrested in Nicaragua two months ago, while riding in a convoy of vehicles laden with over $9 million dollars in cash, is the outright owner of a half dozen properties in a premier Mérida residential development. She also owns a 60 acre ranch just beyond city limits. The Mérida properties alone have an aggregate value of well over three million dollars. She acquired all of them in the last 24 months (Narcos know where to invest: in Mexico's City of Peace).

Yesterday federal agents raided the properties, which is a good thing (Mexico's Organized Crime Strike Force searches Mérida residences of Yucatán narco queen). But many important questions remain unanswered.

The woman - by all the evidence a person who could not possibly account for such wealth - had to hand over a lot of money to the previous owners and/or their legal representatives. Huge amounts of cash must have traded hands. Banks, one way or another, were involved. If the sellers insisted on Mexican pesos or American greenbacks (a popular currency for such transactions), presumably at some point they took those funds to their own institutions and deposited them. And of course, government land recorders made official note of the new title holder - plainly a woman of no apparent means- together with the fair market values of her high end acquisitions. Alarm bells should have gone off everywhere. It does not appear they did. Not until she was arrested in Nicaragua, that is, where she'll go on trial next month, together with 17 cash smuggling confederates.

It should be no surprise that narcotics traffickers are hard at work here (Routine traffic stop in Mérida yields "Boss of the Plaza"). Nor that corrupt bankers who choose to look the other way have been full fledged partners in crime with international narcotics traffickers for years (HSBC to pay $2 billion for laundering Mexican drug profits). But it's worth remembering that the violence of Mexico's exhausting drug war is played out every day in the serene calm of business offices and executive suites around the nation, executed with gilded pens applying signatures to carefully crafted documents, all with the same ferocity of the roaring, ubiquitous AK-47 delivering its clip of .9 mm rounds to the next victim.

Oct. 30 - Denial, Mexican style: Notary Denies Links with Narco Homes
Dec. 20 - Mérida millionairess convicted on all counts in Nicaragua


  1. Hi Edward,
    Are you the first to draw this conclusion, or are there other sources to corroborate this "opinion"?

  2. You are joking, right? So much has been written about the corrupt influence and participation of governmental officials, bankers and others in international narcotics trafficking and Mexico's drug war that it's virtually common knowledge - common with everyone but you, perhaps I should say.

    For starters, read the HSBC article I've linked above. Then start following the daily news.

  3. The US has very recently introduced Anti-Money Laundering regulation that require banks and non-bank financial institutions (such as mortgage companies) to report all suspicious cash transactions over $5000US.

    Of course, none of that matters if the bank is complicit.

    Thanks for your reporting.

  4. Opinion - bankers, government officials and others play leading roles in Mexico's misery, even in the City of Peace

    Simply curious as to why your opening statement began with "opinion", rather than "fact", as you seem to be reporting it... that is all.

  5. Thanks for writing. Your question will permit me to explain something which may not be clear to all readers, particularly to the many new ones who are constantly coming on board.

    Sometimes - most of the time - I write pure news stories. They're not labeled as anything other than that.

    Other times, I try to go behind the basic facts of a news story and add my own analysis. When I do so, I clearly label the story as "News Analysis." Those words are a telegraph message to readers that some opinions are going to be presented - my opinions, obviously.

    Still other times I mark a post as "Opinion." That doesn't mean 100% opinion, by any means. It means my opinion based upon the underlying facts. Take this story for instance. Go through it, sentence by sentence. It's filled with facts, many of them reported by independent news services. This week's events in Mérida, for instance, have been fully reported by several Spanish language sources, which I've linked in this or connected posts.

    My "opinion," of course, is simply this: that those who share responsibility for Mexico's drug war include respectable members of society - such as the HSBC bankers. I think most of my readers will understand the point readily enough. Is the opinion original with me? Hardly.

    My News Analyses and Opinions always have been and always will be based on facts (not something which all journalistic enterprises can say). An opinion without facts to support it is worthless. But I want my readers to get a clear Heads-Up whenever I'm about to inject any amount of personal thought into a story, however marginal.

    Thanks again for commenting.

  6. In relative terms, would you say that the Yucatan/Merida is still safer than many parts of the USA or Canada?

  7. Unquestionably. I lived there for 25 months, and as far as security is concerned, I would not hesitate to endorse it. But everyone should know what is really going on in an area, and the notion that the city or the state are somehow immune to Mexico's drug war is ridiculous. Moreover, security is not a static concept. A place relatively safe today could be a war zone 18 months from now. Juarez was not the deadly city it is today just five or six years ago, nor was Acapulco, nor were places along the Riviera Maya, like Playa del Carmen (and even Cancun). Security in this country is in a constant state of flux, and probably will remain that way for a number of years. That's the reality of things. I think most people considering a permanent move or the acquisition of property here would consider that factor important, to be balanced along with many others.

  8. I would hardly refer to Playa Del Carmen as a "deadly city", relative to Juarez.

  9. May I suggest you familiarize yourself with what's going on there. Start by reading several dozen MGRR articles on Playa narco violence in 2011 and 2012.

    I had a chance meeting with a man in Mérida about four months ago (a Mexican national). Mid-50s perhaps, and well-educated. He lives in Progreso, but has friends in Playa del Carmen, where he travels two or three times a year. He's been visiting the Riviera Maya coast since he was a teenager. His words to me: "It's really scary over there now. I watch myself all the time."

    Enough said.