Mexico Corruption Fight Nets Cache of Contraband

The confiscated cargo containers piled sky-high in this steamy Gulf of Mexico seaport are evidence of a tough new effort by the Vicente Fox government to fix the rat’s nest that was this country’s customs.

The 75 seized containers are filled with Indonesian electronics, Scotch whiskey, U.S. tools, Chinese footwear and other smuggled merchandise. In the past, they would have sailed through customs after smugglers paid $10,000 to ensure that the cargo would not only get waved through a Mexican border or port entry, but also arrive intact--and duty-free--at its final destination.

Asked to describe the level of corruption in past regimes, Comptroller General Francisco Barrio recently replied, “Almost everyone.”

Times have changed. President Fox has ordered sweeping changes to curb widespread and long-standing abuses. He has fired 1,100 customs officials, spent millions on high-tech equipment and forged a closer relationship with U.S. counterparts. Pressing hard for the reforms are the Mexican textile and shoe industries, which say the smuggled goods are undercutting their legitimate business.

The upshot is a thirty-six-fold increase in the seizures of contraband compared with last year--and possibly the start of a new image. “We’re not going to build the Empire State Building right away, but we have a plan,” said Jose Guzman Montalvo, an attorney whom Fox recently appointed to head the cleanup effort.

‘Triangulation Schemes’

The biggest focus of the new enforcers is smuggling rings that use “triangulation schemes” to send Asian goods--mainly from China--that have arrived legally in Long Beach, paying minimal duty. They are then passed on to Mexico under the guise of being U.S.-made, thereby escaping Mexican tariffs of up to 1,100%.

Officials acknowledge that eliminating decades-old practices is impossible. Barrio, who heads the Fox effort to fight government corruption, said in spring that customs corruption was institutionalized.

A bribe of $50 at the customs gate here got a truckload of guns, fabric, computers--whatever--through inspection. At the Mexico City airport, smugglers of drugs, currency and jewelry had a scheme worked out that allowed them to choose inspectors who had already been paid off.

“ ‘Con dinero, baila el perro--With money, the dog dances.’ It’s a phrase inspectors used to solicit bribes,” said Francisco Serrano, 31, the new head of customs in Veracruz, the nation’s busiest port and scene of some of the most audacious crimes.

But the Fox administration has ordered a sweeping restructuring that includes lie detector tests for all top administrators. Forty-one of 48 regional chiefs have been fired since Fox took office, as have nine of 10 top administrators in Mexico City.

In all, one-fifth of the 6,500-member customs staff is gone, replaced by a mostly young cadre of officials brought in from other federal agencies. Their stepped-up confiscations include some spectacular seizures, including 42,000 pairs of Chinese-made tennis shoes in Guaymas, the main port in Sonora state, and warehouses full of electronics in Puebla, 70 miles southeast of Mexico City.

“We’re not talking about any normal change in administration,” said Serrano, who was transferred to Veracruz from a customs post in Chiapas state and who says he has been threatened several times since he arrived for refusing bribes.

The overhaul fits Fox’s campaign pledge to improve revenue, modernize government and fight corruption. But he is under enormous pressure from Mexican companies that complain that Asian goods slipping through Mexican ports or U.S. border crossings are costing jobs and billions of dollars in lost sales because people are buying the cheaper products.

Half or more of the Asian goods enter Mexico from the U.S. border with false documentation that indicates the products were made in the United States, qualifying them for low tariffs under the North American Free Trade Agreement, said Mexican Sen. Ricardo Alaniz. That way, Chinese shoes, textiles and toys avoid steep Mexican duties.

Alaniz represents Guanajuato state, whose shoe industry has been clobbered by the smuggled goods. He said the problem “involves corruption on both sides of the border, not just in Mexico. The United States has been a conduit for all of these kinds of products, and we have asked for its help.”

Alaniz recently visited Washington to alert U.S. legislators and customs officials, who he says were slow to recognize the problem. The two countries have begun sharing information to better verify the goods’ legitimacy, and Alaniz said he will propose laws this session in the Mexican Congress to toughen smuggling penalties.

Luis Alvarez, assistant customs attache at the U.S. Embassy in Mexico City, did not return several telephone calls for comment.

Juan Antonio Reus, executive director of the Leon-based Mexican Footwear Chamber, said his industry’s production was off 30% over the first half of this year because of contraband and the poor economy. Mayer Zaga, head of one of Mexico’s largest textile manufacturers, said recently that the flood of cheap smuggled goods has forced him to lower prices an average of 17%.

“Much of this is the fault of the United States, which permits the transshipping at the border. If they stopped it, Mexico would be producing much more profitably, hiring more people and sending fewer migrants to the north,” said Zaga, owner of the company Zagis in Tepeji del Rio, 50 miles north of Mexico City.

Inspection practices are being changed on advice from U.S. and European officials, said Armando Fernandez, 34, the new customs chief at the Mexico City airport, the second-busiest port of entry for imports after Nuevo Laredo. The airport’s six different police forces, from the highway patrol to federales to municipal police, with their overlapping jurisdictions, now are restricted from the customs area and have less opportunity to smooth the way for smugglers. In addition, customs inspectors can no longer choose their stations.

Asked if he has been threatened since he took charge of airport customs and subsequently fired 110 of the 200 customs officials there, Fernandez replied, “Plenty of times.” His head of inspections, Jose Antonio Cuellar, 29, has kept count. He’s received 19 threats so far.

In Veracruz, the first of five sophisticated mobile X-ray machines has arrived. The devices, which cost $3 million each and are capable of detecting a range of illegal cargo--from arms to drugs to other organic material--are the first such machines in Latin America.

Ingrained Corruption

Will the efforts succeed? Although he applauds Fox’s efforts, crime expert Jorge Chabat, a political scientist at the Center for Economic Research and Teaching in Mexico City, is wary. Crooks with impunity have dominated customs for a long time, he said.

“If Fox can pull this off, he can do anything,” said Chabat, whose university is known by its Spanish initials, CIDE. “This has always been one of the most corrupt sectors in Mexico.”

Latin American customs corruption is ingrained because political leaders have historically used customs for personal enrichment or to pay off political debts, said Luigi Manzetti, a political scientist at Southern Methodist University in Dallas. When Carlos Menem was Argentina’s president, he named as his customs chief his Syrian brother-in-law--who spoke no Spanish. In July, an Argentine judge indicted Menem in an arms-smuggling scandal.

Before being booted out of office for “mental incapacity” in 1997, Ecuadorean President Abdala Bucaram filled one customs job with his son, who threw a party to celebrate his first $1 million in bribes.

Veracruz customs chief Serrano is under no illusions about the difficulties ahead. One recent morning, he arrived at work to find that crooks had somehow removed five of the confiscated cargo containers from the restricted customs compound, loaded them onto semitrucks and were on their way out of the port before being stopped by security.