How AMLO
could win Mexico’s
election (For readers abroad)
Teotihuacán
en Línea. For readers abroad. When campaigning for Mexico’s general election
officially begins on March 30th, Andrés Manuel López Obrador, a left-wing
populist, will be the clear front-runner for the presidency. His two main
challengers are political moderates, but their rivalry is no less bitter for
that. One is backed by the government. The other is feeling heat from the
federal prosecutor. To many Mexicans, that smacks of political bias. It also
increases the chances that Mr López Obrador will win the presidency—a prospect
that terrifies markets and puts economic reforms in jeopardy.
On February
21st the office of the acting attorney-general, Alberto Elías Beltrán,
confirmed that it was investigating a property deal involving Ricardo Anaya,
the brainy presidential candidate of the centre-right National Action Party
(PAN). This has shaken up a campaign in which the main issues are crime and
corruption.
Few voters
think that José Antonio Meade, the nominee of the ruling Institutional
Revolutionary Party (PRI), is the best candidate to tackle these ills. No one
has accused Mr Meade, a technocratic former finance and foreign minister, of
wrongdoing. But voters regard the PRI and Mexico’s current president, Enrique
Peña Nieto, as abettors of lawlessness. Crime has soared. Mr Peña’s government
has been dogged by allegations of graft. In February the government auditor
said that 1.3bn pesos ($71m) of public money had gone missing from two ministries
run by Rosario Robles, now secretary of agrarian development. Mr Peña’s
personal reputation was damaged in 2014 after reports that his wife had
acquired a house with help from a businessman who had contracts with the
government.
Mr López
Obrador, often known as AMLO, and Mr Anaya have contrasting claims to be the
candidates of clean government. The leftist former mayor of Mexico
City has a decades-long career of railing against corrupt elites
and promises to clean up Mexico
through the sheer force of his righteousness. Although presidents serve for a
single six-year term, Mr López Obrador says Mexicans will get the chance to
vote him out of office every two years, by referendum. Mr Anaya has a more
modest suggestion for establishing the rule of law. He says he would make
institutions such as the attorney-general more independent. He is the only one
of the three leading candidates to emphasise this.
The
property scandal surrounding Mr Anaya has the twin effect of dramatising the
need for the institutional reform he champions, while making it less likely
that he will be in a position to lead it.
It revolves
around the purchase of land in 2014 by a firm owned by Mr Anaya and his family
in his home state of Querétaro. The firm paid $815,000 for the plot, built a
warehouse on it and sold it two years later for $2.5m. The investigation and
the coverage of it by the press have raised questions about the probity of the
people Mr Anaya’s firm dealt with, about the size of the profit it made and
about the tax it paid. Mr Anaya insists he is blameless on all counts.
Mr Elías
Beltrán is looking into whether the purchaser, a company thought to be linked
to Manuel Barreiro, a businessman, engaged in money-laundering. A lawyer who
says he represents two people hired by Mr Barreiro has stated that Mr Barreiro
controlled the money for the purchase and told his clients to move it
anonymously through offshore havens before paying it to Mr Anaya’s firm. Mr
Barreiro, who has not commented publicly on the case, is also the president of
the industrial park that originally sold the land to Mr Anaya’s company. The
two people shown in public records to be the firm’s founders are said to be Mr
Barreiro’s driver and the wife of one of his employees.
This
connection is awkward for Mr Anaya. He says he believed that the purchaser
belonged to a local architect who has publicly claimed to own 99% of its shares
and may well have bought it from the founders. (That transaction would not be
shown in public documents.) Even if the allegations about Mr Barreiro are true,
Mr Anaya insists he has done nothing wrong. He has posted online a video in
which he contends that it is not his legal responsibility to verify the source
of the buyer’s money. The sale contract includes an anti-money-laundering clause,
in which the buyer attested that it was paying with money that it obtained
legally.
Mr Anaya
says that the money his firm used to finance the original purchase is clean,
and that its profit reflects market prices. He invited The Economist to inspect
documents attesting to that. They show that just over half the cash to buy the
property came from a loan secured by his house, which is in his wife’s name. A
tenth came from an interest-bearing loan from the industrial park. The Anayas
used their savings to finance the rest of the land purchase and the building of
the warehouse.
Mr Anaya’s
firm paid $63 a square metre for 13,000 square metres
of land in 2014. That does not look suspiciously low. A report in 2016 by
ProMexico, a government body that promotes investment, put the price of
industrial land in Querétaro at $50-95 a square metre. Mr Anaya’s firm spent $1.3m
to build a 7,000-square-metre warehouse. Assuming an average exchange rate of
16 pesos to the dollar, that is a cost per square metre of 3,000 pesos. A
builder in the area says the going rate to build such a structure is 3,200
pesos.
Having
spent $2.2m (including $100,000 in tax) to buy and build, Mr Anaya’s firm sold
the property for $2.5m, making a profit of 14% in two years. A property with a building
half the size at the same industrial park is listed for 35m pesos, or about
$1.9m. That does not suggest that Mr Anaya’s company received an inflated sum
for the sale. In 2016 it paid 3.5m pesos ($189,000) in tax. The tax authorities
have confirmed that it paid the right amount.
Whether or
not Mr Anaya’s defence holds up, the conduct of the case raises questions about
the independence of law-enforcement agencies and their relationship to the PRI.
Mr Elías Beltrán’s office posted on its Twitter account security footage of Mr
Anaya and his entourage visiting its premises. That was unprecedented and
illegal, says Armando Santacruz of Mexico United Against Crime, an NGO. The
prosecutor’s office also issued a press release falsely stating that Mr Anaya had
refused to offer a “ministerial declaration”, a statement from an accused in
response to a preliminary investigation. The electoral commission ordered the
prosecutor to take down the video and press release. A home video showing Mr
Anaya at Mr Barreiro’s wedding in 2005 appeared online after police raided the
businessman’s home. Mr Anaya says the bride was the sister of a high-school
friend, and denies knowing Mr Barreiro well.
That has
not stopped the PRI from hurling accusations at Mr Anaya, seconded by the
pro-government press. Going beyond Mr Elías Beltrán’s investigation, they claim
that Mr Anaya was laundering money and is beholden to Mr Barreiro. Enrique
Ochóa, the PRI’s president, called the PAN candidate “two-faced, a liar and a
crook”.
Less partisan
Mexicans worry that Mr Elías Beltrán, who received his law degree in 2011, is
acting like a political operative. They contrast his pursuit of Mr Anaya with
his apparent leniency towards members of the PRI who are suspected of
corruption. On March 14th Mr Elías Beltrán decided not to press charges of
money-laundering and tax fraud against César Duarte, a PRI ex-governor of Chihuahua. Prosecutors
in the state (now governed by Mr Anaya’s party) are still pursuing Mr Duarte
for allegedly diverting billions of pesos of public money. He is a fugitive.
In December
2016 executives from Odebrecht, a Brazilian construction firm at the centre of
lots of scandals in Latin America, claimed to have paid bribes worth $10m to
Emilio Lozoya, a close friend of Mr Peña and an adviser to his presidential
campaign in 2012 who became the boss of Pemex, the state-run oil firm. Mr Elías
Beltrán sacked the investigator last year, ostensibly for illegally disclosing
information about the probe. This month a federal judge suspended the inquiry
indefinitely.
All this
suggests that the attorney-general’s office has yet to achieve the independence
and stature it is supposed to have as part of a new “anti-corruption system”
created by Mr Peña. This month 56 intellectuals and activists published a
letter accusing the government of politicising institutions to help Mr Meade’s
candidacy. Some anti-corruption activists say the PRI is actually trying to
help Mr López Obrador. That is because it fears that a President Anaya would
crack down harder on corruption.
Mr Anaya’s
supporters fear they are witnessing a replay of the election in the state of Mexico last
June. Two months before election day Mr Elías Beltrán’s predecessor accused
members of the family of the PAN’s candidate of money-laundering. In the end,
the prosecutor did not file charges. But the allegations helped the PRI win
over voters opposed to the candidate of Mr López Obrador’s party, Morena. The
PRI won by three percentage points.
This time,
the beneficiary is likely to be Mr López Obrador. His advantage has widened
since Mr Elías Beltrán launched his probe of the land deal in February. He
leads both Mr Anaya and Mr Meade by more than 15 percentage points, according
to Bloomberg’s Poll Tracker. There are other reasons for his ascendancy.
Mexicans do not remember earlier PAN governments more fondly than they do those
of the PRI. Only Mr López Obrador represents a break with the past. An election
with just one round gives him an advantage over rivals scrapping for the
anti-AMLO vote.
Without the
property scandal, that vote would have been more likely to consolidate around
Mr Anaya. The attorney-general’s intervention means that he and Mr Meade are
more evenly matched, and less of a threat to Mr López Obrador. Mr Anaya and Mr
Meade should hold a two-man debate, the populist cheekily suggested. He
is obviously enjoying the spectacle
