Businessman Carlos Slim speaks during a press conference about Mexico's airport construction on April 16, 2018 in Mexico City, Mexico. (Photo by Carlos Tischler/NurPhoto/Sipa USA). PA images, All rights reserved.The construction of the new Mexico City airport has been marketed by the Mexican government as a model of transparency. The infrastructure project is an improvement in Mexico’s long history of public sector opaqueness and corruption. The government run airport website has whole sections dedicated to transparency, including the publication of contracts, and information about finance structures.
But behind this squeaky clean veneer lies a web of secrets and unpublished information, suggesting it is business as usual for public projects in Mexico.
To start with, the finance structure of the new airport lends to secrecy which, in turn, facilitates corruption and the misuse of public resources. Investments are held in trusts – a structure used in Mexico to manage public funds. Of the four trusts created to manage the investments, two are private trusts which receive private investments made up of loans to the Mexican government. These trusts are cloaked in mystery. Unlike public trusts, private trusts have no obligation to report their activities and no accountability mechanisms.
Whilst the Mexican Federal Auditing Body is able to review the accounts of public trusts, those of private trusts are immune to public scrutiny. Given that the private trusts managing the airport investments effectively contain public debt, this lack of transparency is serious, and at odds with the notion that information regarding the use of public funds should be accessible to the public.
The lack of transparency surrounding the construction of the airport is epitomised by the government’s failure to explain the vast increase in costs. The project was originally meant to cost around $9.08 billion USD. This number has increased, at an alarming rate, to almost $11.3 billion USD without explanation. And the government’s excuse for failure to publish data on the increased costs? You guessed it! The relevant funds are managed by a trust.
The fact that the trust in question is a public trust, subject to transparency and accountability obligations, makes the lack of information even more worrying, and shows non compliance with Mexico’s regulatory framework1.
For any in need of convincing about the Mexican government’s propensity to misuse public funds, let me dispel your doubts. In 2015 alone, the Federal Auditing Body recorded more than $42 million USD in irregular, non-transparent payments in the context of the airport. Once the relevant information was handed over to the auditor, some of these were found to be legitimate. However, the auditor also found, amongst other things, double payments made for the same service or product, payments made for services which were never carried out, undue advance payments and a failure to verify the origin of funds.
The awarding of contracts related to the construction and operation of the airport has also been veiled in secrecy. As of June 2016, 50% of the total value of contracts had been awarded directly without invitations to submit bids which goes against public procurement principles.
Competition in public procurement is essential in order for the State to ensure it obtains the best deal in terms of value for money. This is recognised by the Mexican Constitution which requires open bidding procedures except where this is not appropriate - i.e. where it will not ensure the best deal.
Where the government decides to award a contract directly, it must justify its decision to do so2. Presumably, this should be done by way of a report explaining why open bidding is not appropriate and how the best contract conditions have been guaranteed by other means. The government has failed to publish justifications for the use of direct contracts in the context of the airport.
On 1 July of this year, the leftist Andrés Manuel López Obrador, commonly known as AMLO, won a landslide victory to become the next President of Mexico following a campaign in which he promised to fight corruption. He has railed against the new airport, not only in terms of its social and environmental impacts, but also in terms of corruption related to the project. He has gone so far as to say that, in the event that solutions cannot be found to right the wrongs associated with the airport, it will be cancelled. He has also raised the possibility of granting concessions to the private sector for the construction of the airport so that the project is not paid for out of the public purse.
AMLO will not be sworn in until December of this year, but, a month into the transition period, he is already showing signs of headway. Soon after his win, he announced his plan for combatting corruption which includes the dissolution of trusts and other mechanisms used to hide public funds.
Javier Jiménez Espriú, who will assume the position of Secretary of Communications and Transport in the new administration, is already conducting public consultations with local communities affected by the airport, and has begun to look into the project’s finances, promising a full review of all contracts. Most recently, the government announced the suspension of four open bidding processes for airport contracts pending the outcome of AMLO’s team’s review.
Let this not all be a show! As President, AMLO should develop real policies aimed at combatting the legal and financial structures in Mexico which continue to prevent transparency and facilitate corruption. In terms of specific instances of irregularities related to the airport, he should encourage criminal investigations where appropriate and cancel all illegitimate contracts.