Latinnews Archive
Latin American Weekly Report - 29 September 1998
PRD quits Fobaproa talks;PAN DENIES DEAL WITH PRI ON US$ 65BN DEBT CONVERSION PLAN
After looking, the previous week, like they might make some real progress in discussions on the debts the government's Fondo Bancario de Proteccion al Ahorro (Fobaproa) took over from the banking system during the peso crisis in 1994/95 (see Page 440/98), Mexico's leading political parties fell out over the question again last week. First, the left-leaning Partido de la Revolucion Democratica (PRD), which shares a majority in the lower house with the right-wing Partido Accion Nacional (PAN), abandoned the discussions over its differences with the governing Partido Revolucionario Institucional (PRI). Meanwhile, the PAN started making demands on the government to stay in the game, including the resignations of central bank governor Guillermo Ortiz and the head of the securities commission (CNBV), Eduardo Fernandez.
Alternatives. The PRD walked out of the talks on 22 September, announcing via its coordinator in the lower house, Porfirio Munoz Ledo that it was 'suspending' its participation.
The PRD congressman said his party would only return as and when the government gave a 'concrete' response to its suggestion that other alternatives be sought to President Ernesto Zedillo's proposal that US$ 65bn of Fobaproa debts be converted into public debt.
The PAN stays. The PAN remained in the talks, but was deeply offended by the government's attempts to show they could soldier on without the PRD in the talks. Indeed, it began making demands on the government as the price for its continued participation in the negotiations.
The day before the PRD's walkout, on 21 September, the authorities leaked a document to the press concerning 'points in common between the political parties and the executive branch on the proposals for reforms of the financial sector' ie the Fobaproa issue.
Divisive tactics. This document suggested PRI and PAN were moving closer on the issue, agreeing to promote a further round of assistance to bank debtors while speedily selling off Fobaproa's assets. The PAN responded angrily, however, that no such deal had been struck, and indeed that it would not sign any agreement on Fobaproa without the PRD.
PAN national president Felipe Calderon Hinojosa said later in the week that the leak had been a 'very clumsy' attempt to drive a wedge between his party and the PRD, who jointly lead the four-party opposition grouping that won a majority of the lower house for the first time in 68 years in 1997 (see Page 301/97). Calderon added that the PAN had asked the government to remove deputy finance minister Martin Werner from the post of chief negotiator for the executive branch in the talks, as it was he, along with deputy interior minister Jorge Alcocer, whom they held responsible for Monday's leak.
Sidek boss jailed. Among the PRD and PAN's demands in the Fobaproa case is that any fat-cat businessmen found to have been making personal gain from the bank bailout be punished. In what some observes interpreted as a high-profile sop to the opposition, on 23 September in Acapulco the police arrested, on charges of tax evasion, Jose Martinez Guitron, the president and main shareholder in the giant Sidek group and a leading PRI fundraiser.
The Sidek group comprises 226 companies, 48 of which are under investigation by the tax authorities. In six of them, they found sufficient evidence of evasion to issue warrants for Martinez and a former Sidek board member, Jose Manuel Gomez Gil. The group is responsible for no less than US$ 2.2bn of the debts on Fobaproa's portfolio, and is considered to be among the highest risk.
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