Mexican Envoy Accused of Ignoring Stock Fraud

Times Staff Writer

Opposition congressmen are accusing Mexico’s ambassador to the United States, Gustavo Petricioli, of having “turned a blind eye” on illegal trading in the Mexican stock market while he served as secretary of finance in the Cabinet of former President Miguel de la Madrid.

The congressmen charge that the ruling Institutional Revolutionary Party (PRI) is covering up for Petricioli by blocking their efforts to bring action against him for failing to act on complaints that major brokerage houses provoked a 1987 market crash that wiped out tens of thousands of investors here.

In February, after being in power for less than three months, the government of President Carlos Salinas de Gortari jailed four prominent stockbrokers for alleged irregular operations in the stock market. Officials are said to be investigating 152 other brokers.

The jailed brokers, including financier Eduardo Legorreta, who reportedly contributed heavily to Salinas’ presidential campaign last year, are accused of trading expired treasury certificates, buying and selling stock without the authorization of their clients and other violations.


“Petricioli knew of these irregularities and allowed them to pass; he turned a blind eye,” said Ciro Mayen Mayen, a Socialist member of the Chamber of Deputies.

The Foreign Ministry issued a statement Feb. 22 saying that Petricioli “energetically and categorically rejects the unfounded insinuations that authorities of the past government may have been negligent or avoided or covered up irregular activities of some stock brokerages and their officials.”

Laws Tightened

Petricioli said that the Ministry of Finance and Public Credit took a number of steps against brokerage houses from mid-1986 to the end of his term in November, 1988. He said the government tightened laws regulating the market and initiated the investigation that led the Salinas administration to make the arrests.


PRI leaders charge that the opposition is trying to discredit Petricioli because of his role in helping to renegotiate Mexico’s foreign debt. During last year’s presidential campaign, the leftist parties called for a moratorium on debt payments.

The Mexican Socialist Party led the move this week in the Chamber of Deputies to charge Petricioli with negligence under a law governing public servants. Violation of the law is considered a political rather than criminal offense, and the penalty is to be barred from public service.

To support their case, the leftist deputies produced three documents, including a May, 1988, report by the Federal Securities Commission recommending that the secretary of finance impose sanctions against two firms, including Legorreta’s house, Operadora de Bolsa, for illegal transactions with treasury certificates.

They also produced a November, 1988, letter from Sergio Garcia Ramirez, who was then the attorney general, informing Petricioli of apparently illegal activities in the stock market. Enclosed with the letter was a list of 35 complaints against brokerages. The letter said federal attorneys had informed Garcia Ramirez that there was sufficient evidence to file criminal charges. By law, the secretary of finance must ask the attorney general to proceed.

Petricioli responded to the letter on Nov. 28, two days before the end of the presidential term, saying that stock market operations are complex and that the diverse charges require further study.

At the urging of the Mexican Socialist Party, the Chamber of Deputies formed a subcommittee to study the case.

A PRI majority on the subcommittee determined that there was not enough evidence to charge Petricioli, but the opposition called the PRI resolution unilateral and drafted a resolution of its own. The two resolutions are to be considered later by the full Constitutional and Judicial Committee, and the PRI majority is expected to approve its own resolution.