Corruption, Impunity, and a Stunning View of Central Park

by Maggie Ervin

Oaxacan resident Claudia Trujillo was eating lunch behind the cash register as she does every day, her elderly mother sitting next to her. “It makes me angry…Here I am breaking my back, facing higher electricity and phone bills and sales tax, and they’re off buying properties in New York, Miami, and who knows where else, and opening bank accounts in Switzerland.” She was reacting to one of the latest political scandals in Mexico, which sometimes feel as much a part of daily life as warm tortillas and hour-long lines at the bank. 

The latest one hits close to home for Claudia. An exhaustive investigative report in the New York Times last week revealed that ex-governor of Oaxaca José Murat has bought at least six high-end properties in the U.S.: in Utah, in Texas, and in the extravagantly expensive Time Warner Tower in New York City. Murat is from humble beginnings, and rose up through the ranks of the PRI party starting in the 70’s. He is a man known for his stentorian voice and larger than life presence, but when it came time to buy luxury property in the U.S., he became more discreet. By using names of relatives, altering his own surname, and founding a shell company, he was able to buy millions of dollars worth of property, much more than his government salary could have afforded. This may sound like the back-cover summary of a John LeCarré-meets-Horatio Alger novel, but this is the stuff of non-fiction.

Let’s go back to his home state for a moment. Oaxaca is Mexico’s second poorest state out of thirty-one. Over half of its citizens live in poverty, and about a quarter in extreme poverty. Home to diverse cultures and languages, archeological wonders, culinary riches that make mouths water the world over, more biodiversity than many nations can boast, and a blinding variety of crafts - not to mention alluring beaches - it’s no wonder Oaxaca is one of Mexico’s main tourist destinations. And yet this hasn’t translated into wealth for many Oaxacans. Perhaps it’s not surprising, then, that the state has a long tradition of emigration that started during the Bracero Program in the 1940’s and increased over the last twenty years, after NAFTA rendered small-scale farming a profitless endeavor. Remittances are essential to many families throughout the state. But not only in Oaxaca. Currently 10% of Mexicans live in the U.S., and in 2013 they sent a total of 21.6 billion dollars in remittances, the most significant sector of the Mexican economy after petroleum.

“José Murat...was a bad governor whose administration was marked by repression of social movements, co-optation of community leaders, and corruption,” ruminated Miguel Angel Vásquez de la Rosa of a local NGO, EDUCA. “In Mexico and in Oaxaca there are many politicians like José Murat, but unfortunately the Mexican justice system doesn’t take any actions to bring them to justice.” Indeed. The last few months alone have offered a wealth of examples: President Peña Nieto’s wife purchased a palatial $7 million home from a contractor cozy with her husband, Guerrero’s governor Aguirre had to step down due to suspected links with drug cartels, former governor of Veracruz Fidel Herrera was discovered to have multi-million dollar properties in New York, and ex-president Salinas’ brother Raúl, who amassed 84 million dollars and 41 properties during his brother’s administration, was exonerated of all charges. 

Of course, impunity in Mexico is a problem Mexico ultimately has to solve. But it's not the only issue at play here. Lax property laws in the U.S. which allow millionaires to buy property virtually anonymously are also to blame in this dynamic. By permitting sales in cash, or in the name of limited liability companies, shell companies, or trusts, these laws facilitate the movement and concealment of millions upon millions of dollars of dubious origin from all around the world. As Louise Story explains in her NYT piece, “In many ways, the (U.S.) government has allowed the real estate industry to turn a blind eye to the source of money used to buy luxury properties…Foreigners who buy real estate in the U.S. often have an easier time keeping it out of reach of investigators, victims and plaintiffs back home.” Which is to say, these laws contribute to the impunity that criminals like José Murat enjoy in Mexico and in other countries. The fact that it’s so difficult to trace the money makes prosecutions and convictions extremely unlikely. There is another troubling issue in this interplay of geopolitics and geocapitalism: a certain double standard. At the same time that the flow of people to the U.S. has become more restricted, cumbersome, and risky (i.e., a more militarized border, stricter immigration laws, higher deportation rates), the flow of money to the U.S. has become less restricted, easier to conceal, and more difficult to trace. 

Meanwhile, like Claudia and Miguel Angel, other Oaxacans I spoke to about the Murat revelation also expressed anger and fatigue. “Politicians are allowed to make a living, that’s fair. But steal from the people? That’s not right.” said Carlos Figueroa, who works six days a week at a local hardware store for $11.66 a day. “We know this goes on all the time, but every time there’s new proof I get pissed off all over again.”