New Internationalist

Sticky Fingers

Issue 137

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THE RICH [image, unknown] Corruption

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Sticky fingers
Nicky Harman looks at corruption and
currency speculation in Latin America.

Former Mexico City chief Moreno lives in exile in Paris due to corruption scandal.
Photo: Steve Benbow / Camera Press

Corruption is one of the most direct ways the better-off and the more powerful bleed those below them in the Third World. In the ‘get rich quick’ Chile of the junta, it is perhaps a small step between personal enrichment by legal and by corrupt means. Chileans are just discovering that their own generalissimo, Augusto Pinochet, has been living rather differently from the modest manner presented to the public. In March 1984, Pinochet defended the building of a lavish presidential mansion at Lo Curro in a suburb of Santiago which, at a cost ofUS$18 million, took up a full five per cent of the 1984 public works budget. In answer to criticism, he said the building was for the benefit of future presidents and he himself has only a small home, built with his life savings of $3,000 just outside the city. However, the Social Democrat party magazine, Cauce has passed material to the Sunday Times of London which suggests that not one but four houses have been built by Pinochet, costing over a million dollars; while the land around them had been bought by the state for ‘public works’, then sold off at a nominal price to an officer acting for the Pinochet family.

In Mexico, where the endemic corruption is known as ‘la mordida’, the bite, some truly spectacular cases of embezzlement have come to light in recent years. The latest case is that of the former police chief of Mexico City, General Arturo Durazo Moreno, whose six million dollar mansion has recently been put on show to the public. Moreno built it on an annual salary of only $18,000, augmented by the proceeds of numerous rackets and fiddles - like the special monthly deduction from the pay of his policemen which went towards a ‘funeral fund’.

The Moreno case came to light in 1982 after both he and his protector, ex-president Jose Lopez Portillo, lost their jobs - and the scale of his embezzlement has astonished even the Mexicans. Moreno’s chief assistant, in a recent ‘criminal biography’ of his ex-boss, has calculated that he pocketed 46.8 billion pesos ($2 billion at the then exchange rate) during his eight years in office. The Mexicans are so fascinated by the case that the biography became a runaway best-seller and sold 250,000 copies in the first two months after publication.

Moreno’s corruption effectively cancelled two years’ worth of the country’s tourist earnings - put officially at $1.1 billion in 1978 and one of Mexico’s prime hard currency-earning industries. The comparison is significant: most of Moreno’s profits are said to have gone to a foreign bank account, enabling him to live as a comfortable tourist in exile.

There are other ways in which the affluent and the comfortable in the Third World drain their national economies. Currency speculation is one. When the Mexican economy faced its debt crisis in 1981/82 there was an alarming outflow of capital in the months before the government took action to devalue the peso. Since money was still being borrowed from abroad, this meant that money coming in was going straight back out again - to the tune of US $8 billion between the months of October 1981 and February 1982 alone. This represents nearly ten per cent of the country’s external debt, now standing at $85 billion. As the wealthy Mexican speculators use their millions to buy up real estate in Florida, the poor at home are left to shoulder the burden of the debt. And part of that burden is the new loan terms negotiated with the International Monetary Fund. Subsidies and price control on basic foods like brans, corn and cooking oil have been removed - increasing food prices in early 1984 by 20 to 40 per cent. More expensive food can only worsen the figures calculated by the government itself - that out of a population of 71 million, 30 million Mexicans are now seriously undernourished.


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