Mexican deputies diverted 506 million pesos to 130 shell companies between 2013 and 2018

A session in the Chamber of Deputies of Mexico in 2016.Galo Cañas / Cuartoscuro

In the previous legislature, Mexican deputies diverted 506.5 million pesos, some 30.6 million dollars at the then exchange rate, through more than a hundred shell companies.

Between 2013 and 2018, the deputies hired 130 companies that were later indicated by the Tax Administration Service (SAT) of having simulated their operations.

The services they billed ranged from consultancies to draft bills to the purchase of office supplies and encyclopedias, according to a SAT database to which EL PAÍS has had access.

However, the tax receipts do not identify which legislator or administrative body made the purchase.

They also diverted to ghost firms resources from the economic game they receive for their social management work and which were for the acquisition of mats, wheelchairs and pantries intended to support the citizens of their districts.

In 2019, already under the government of Andrés Manuel López Obrador, legislators approved a law to punish the use of shell companies with which the treasury is defrauded.

The company that received the most resources is Aacors Solucion, established on October 30, 2015 in Villahermosa, Tabasco, and that a year after its foundation, it achieved the first contracts with the Chamber of Deputies.

The documents of the purchase procedures are not published on the transparency portal.

In 2017, in an audit, it was detected that the company did not appear on the official list of contractors despite the payments made.

For this reason, the management in charge of procurement was asked to include it in its list of suppliers and contractors.

The Chamber of Deputies paid Aacors just over 283 million pesos (15.1 million dollars) through 107 invoices that justified the alleged purchase of cartridges for printers and other stationery items, such as envelopes, staplers, folders, sheets, clips and pens.

During the government of former President Enrique Peña Nieto, shell companies became a structural scheme for the diversion of public resources.

An example of the widespread use in which they were involved was the case of the so-called Master Scam, where various agencies with the help of universities triangulated hundreds of millions of pesos that went through paper firms.

The false billing model was used by governors such as Javier Duarte in Veracruz and in health agencies such as the Mexican Institute of Social Security (IMSS) to the Mexican Army, as documented by EL PAÍS last year.

After the change of government, President Andrés Manuel López Obrador launched a crusade against false invoices that are used to evade paying taxes.

In the 62nd legislature, in office from September 1, 2012 to August 31, 2015, the parliamentary coordinators were Luis Alberto Villarreal (PAN), Silvano Aureoles (PRD) and Manlio Fabio Beltrones (PRI).

In the 63rd legislature, which ran from September 1, 2015 to August 31, 2018, César Camacho (PRI), Francisco Martínez Neri (PRD) and Marko Cortés (PAN) led.

For this report, each one of them was sought in order to find out their position on purchases from shell companies, but only four legislators responded.

They all dissociated themselves from the hiring.

Information on an ongoing investigation into these purchases was also requested from the Chamber, but there was no response.

Francisco Martínez Neri (PRD) assured that the main responsibility for acquisitions rested with the General Secretariat, an appointment made at the proposal of the majority group in the Chamber: at that time the PRI.

Villarreal, from the PAN, said it is the first time he has heard about shell companies in Congress.

He also stressed that they could not have invoiced consulting or transportation services because their parliamentary group is the only one that does not carry out external contracting.

There is, he explained, a team that provides them with logistical and legislative support on various issues (transportation, studies, food).

Marko Cortes, also from the PAN, said he was unaware of these hiring and explained that administrative matters fell to the administration committee and the General Secretariat.

César Camacho ignored the purchases from shell companies and said that since there are various spending executors, it could have been any of them.

In a report released in June 2019, the SAT accused that the use of shell companies increased exponentially in the previous six-year term with the complicity of public servants.

Between 2014 and mid-2019, the tax authority had identified 8,204 companies that invoiced simulated operations and that would have evaded the payment of 354,512 million pesos.

To shovel these evasion models, lawmakers undertook a series of reforms.

After months of intense debate, in October 2019 the Chamber of Deputies approved various changes to the law to classify the buying and selling of false invoices as organized crime crimes.

With this, the deputies stated, they sought to punish the companies that issue these tax receipts to cover up illegal operations.

Now it is known that not only the instances of the executive branch and the state governments used false invoicing, but that the same thing happened in the Mexican Congress.

The 62nd and 63rd legislatures invoiced 1,993 tax receipts to protect the acquisition of various goods and services, according to the information provided by the tax authority via transparency.

The contracts were made with 130 companies that were later classified as companies that invoice non-existent operations (EFOS) after having confirmed that they do not have the personnel, infrastructure, assets or the capacity to provide the services or produce the goods sold.

Although their names were published in the Official Gazette of the Federation, the SAT cannot consider that all of their operations have been fictitious, since they could have simulated only a part of them.

Advice for structural reforms

During the 62nd legislature, 158.6 million pesos were paid to paper companies.

The largest amount (44%) was allocated to the alleged rental of sound and audio equipment and the purchase of furniture.

Another 22% of the resources diverted to shell companies were justified as an advisory and consulting service.

One of the payments went to the Ficur SC company, which charged just over a million pesos to provide advice on various "constitutional reforms."

It was precisely during that legislative period that the so-called structural reforms —energy, educational and financial, among others— that were promoted by former president Enrique Peña Nieto with the support of the PRI bench came forward.

Other services that they allegedly hired were consultancies to prepare parliamentary reports, legal and administrative consulting, internal control services and studies on laws.

In one of the invoices it is read that the service of "specialized advice for the investigation of various topics necessary for the legislative work of the science and technology commission was provided."

Some of the companies hired for these items had the business of trading companies, so the service did not correspond to the corporate purpose, according to a review made to the notarial and business records of the firms.

Others were created expressly for the services they provided, such as Advisor Groups Soluciones Integrales y de Proyección, which was legally established in December 2014 and within six months it was already receiving the first payments from the Chamber to provide training in digital matters.

However, in the two addresses it registered, the company could never be located.

In a visit made by personnel from the Superior Audit Office of the Federation to verify that the public resources it received had been used correctly, they found that there was no company.

Several affordable houses were being built at the reported address, the auditors noted.

"In addition to that, no information about the company was located on the internet and during the execution of the audit, information was obtained that this company did not present the annual declaration for the income obtained in 2016 and transferred the resources to five other companies," the statement read in an ASF report.

The deputies of the 63rd legislature allocated 347.8 million pesos to shell companies.

Eight out of 10 invoices used to justify the allocated resources describe the alleged purchase of stationery.

Courses on gender equality, workshops on domestic violence, banquet services, food and lodging were also contracted, as well as the rental of rooms, hostesses and waiters.

Another million and a half pesos went to the purchase of educational materials, encyclopedias, manuals and books on history, political theory, immigration issues and philosophy.

The revised database also found payments made by the chamber for mechanical repairs of its vehicle fleet, for items ranging from alignment and balancing services to body repair and painting.

These items that now appear as purchases from shell companies are one of the most complicated parts of the authority to control, says Muna Dora Buchahin, former director of forensic audit at the Superior Audit Office of the Federation.

“You see themes and things that they acquire that are often intangible.

They have many open keys for corruption: from car adjudication, congresses, hostesses, transportation, plane tickets, encyclopedias, books, dining rooms, maintenance ”, he says.

They have been able to maintain part of this structure of opacity and discretion in their expenses because some of the people who work there are relatives or people close to them, he says.

The deputies also used part of the resources they receive for their citizen service work in hiring companies that issued false invoices.

In the concepts of the tax receipts it is read that purchases of sheets, pantries, mats, covers, uniforms, school supplies, wheelchairs, canes, walkers and construction materials such as cement, gravel and cardboard were made.

These articles had to be financed with the resources of a bag that is assigned to the deputies for their social management tasks and that are mostly destined to serve vulnerable groups.

One of the invoices reads: "remodeling of the management house of a legislator located in Iztapalapa delegation."

The deputies use the support contemplated in their budget for their legislative activity without controls.

For the Auperior Audit, the audit work in these areas is difficult because part of the subsidies are only verified with a simple receipt, explains Buchahin.

“They have the field open to be able to put in that bag as much as they want as support for their activity.

Those spaces that the law or internal regulations can lead to corruption ”, he reiterates.

When their expenses are subjected to scrutiny, there is political resistance: "They do not have the will to bear each of the expenses with all the supporting and supporting information that corresponds to each case," the anti-corruption expert highlights.

Hiring and acquisitions in the lower house are not concentrated in a single person or instance.

Some of them are carried out through the Secretariat for Administrative and Financial Services, but others are carried out by legislators directly or through their parliamentary groups.

There is also an Administration Committee, an instance made up of deputies and in charge of assisting the Political Coordination Board (Jucopo) in its administrative tasks.