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 Business News | June 2005 
Mexican Watchdog Wants Bank Bailout Open to Public
 Noel Randewich - Reuters
Mexico City - Mexico's transparency watchdog wants the books opened on a $100 billion bank rescue that could be a major issue in 2006 presidential elections, but the government insists its hands are tied under the law.
Transparency commissioner Juan Pablo Guerrero says the government is misusing legislation meant to protect the privacy of bank clients in order to keep details of the 1995 bailout and other government spending out of the public domain.
He said the Finance Ministry is even more opaque than Mexico's secretive armed forces.
"The military in Mexico has been less troublesome for the commission than the financial sector in terms of access," Guerrero told Reuters in a recent interview.
Guerrero has top secret security clearance and he reviews disputed data to decide whether it should be made public.
An economic crisis in 1994-95 devastated Mexico's financial sector and the government pumped $100 billion into the banks to keep them solvent.
Critics say more money was handed out than the banks needed. They allege some of the banks defaulted loans were the result of cronyism and should never have been included in the rescue package.
Opening the books could embarrass business executives who benefited from the bailout as well as senior officials who engineered it, some of whom are still in office.
Mexico passed legislation in 2003 to force the government to share more information with the public but Guerrero said the Finance Ministry has fallen short of the mark.
'BETWEEN A ROCK AND A HARD PLACE'
Vicente Fox's government refuses to publicize details of the defaulted loans covered by the bailout, saying it is illegal to share financial information relating to third parties. Officials say they could be held criminally responsible if they hand over the records.
"We're between a rock and a hard place," said Rodrigo Brand, spokesman for the bank protection agency IPAB, which administers the ongoing costs of the bank rescue.
"The law is very clear. We would be violating bank secrecy and could be subject to criminal proceedings."
After Mexico's "Tequila Crisis" of the mid-1990s eased, most of its big banks were sold to foreign firms like Citigroup and BBVA for big profits, and the ongoing debt carried by taxpayers from the bailout has become a rallying cry for leftist politicians.
Mexico City's mayor, Andres Manuel Lopez Obrador, is the front-runner for 2006 presidential elections. He wants to open the books on the bailout and might insist on renegotiating the government's debts from it if he becomes president.
"There would definitely be a truth commission if Lopez Obrador wins," said Alfonso Ramirez, who sits on the lower house of Congress' finance committee and is a member of Lopez Obrador's leftist Party of the Democratic Revolution.
Guerrero says his commission respects the importance of rules that guarantee financial privacy and the dispute centers around interpretation of the bank secrecy law.
After the transparency legislation was approved, the commission and a reluctant defense department reached an agreement allowing secrets to be kept about military strategy and fighting strength but the commission insisted on publication of most other records.
"We quickly agreed on common ground, but that has not happened with the Finance Ministry," said Guerrero."" |
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