Wednesday, September 30, 2009

Corruption outrages Mexicans, but they feel powerless

A young man I work with has daily fits of outrage when he reads my copy of the leading daily newspaper here in Guadalajara.

The front page always has a story of corruption or inefficiency whose audacity leaves Poncho frustrated. What´s worse is that these revelations don´t seem to bother any of the public officials or move them to action. There are no crusaders against corruption.

Asphalt for 20 times the going rate

Yesterday Poncho was in a tizzy because of an article about how the city of Guadalajara is paying 20 times the going rate for asphalt used to patch potholes. The contract was awarded to Perma-Patch, a U.S. company, without bidding.

The head of public services said it was the acquisitions department that was responsible. No one from the acquisitions department was quoted. This kind of buck-passing is typical. No one is responsible or held accountable.

So far this year, the city has paid more than $600,000 for the asphalt on this no-bid contract and has exceeded its budget in this category.

Poncho is putting his hopes on a reformist mayor to change things.

Making off with the money from the PTA

Yesterday El Universal newspaper published a story about how voluntary parent contributions to improve schools are regularly diverted to the personal use of principals and others in charge.

These contributions include revenues from fund-raising activities like school lunch counters and amount to an estimated $1.3 billion (17 billion pesos) annually, according to the National Association of Parents. It was this organization that denounced several cases of fraud. (The figure of $1.3 billion works out to $52 for each child in Mexican schools.)

According to the parents´ group, no one pays any attention to how this money is spent. School officials browbeat parents for contributions and then divert it to personal uses such as sending their kids to the U.S.

$2 billion in oil products stolen in the past year

The state-run oil company, Pemex, is well known for its inefficiency and lax management. In the past year an estimated $2 billion of its oil and gas was stolen. That´s billion with a B. Organized crime milks its oil and gas lines and sells the products in Mexico and the U.S.

A reasonable person might ask how Pemex knows that the thefts totaled $2 billion. Given its management practices, losses could have been greater.

Bonuses paid despite falling production

The 114,000 workers at Pemex are known in the oil industry to be among the least efficient in the world. (see Economist article)

They just started receiving a 21% monthly bonus on top of their salary. The bonus is supposed to be based on "encouraging and increasing productivity". They´re getting it even though production has been falling for years.

Suggesting foreign investment is political suicide

Pemex spends virtually all it takes in rather than investing in new wells, production and refineries. Because of a lack of refining capacity, Pemex has to import 40 percent of its gasoline.

Where would new investment come from? Either from wiser managment of its oil revenues, which would mean cutting lots of cushy jobs and sweet contracts, or from letting foreign companies invest and thus control part of the reserves. Both options are politically unacceptable.

The sad part of this is that it affects public services. More than a third of Mexico´s federal budget comes from oil revenues.

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