SAN FRANCISCO XOCHICUAUTLA, Mexico — Armando García has filed lawsuits, joined protests and gotten arrested trying to stop a highway from slicing through his hilly backyard in a nature reserve.
But even with a court order on his side, bright green
pines have been stripped away and tree stumps dot the hillside. Parts of
protected forest have been slashed, exposing the path of a 20-mile highway to
the new airport in Mexico City that is demolishing swaths of Mr. García’s
indigenous community in its wake.
Mr. García and his neighbors fighting it say they never
really stood a chance. After all, they are not battling ordinary construction
crews. They are taking on a businessman so well connected that Mexicans have
long called him the president’s “favorite contractor.”
After years of demonstrations and court battles,
President Enrique Peña Nieto signed an executive order this month
expropriating 91 acres of what many here consider sacred land. And is it any
wonder he did, residents argue. The same contractor carving through their land
has held the title to the president’s family mansion, provided a house to the
finance minister for zero profit and does billions of dollars in deals with the
government.
“We knew the president’s political grip in this state
goes back for years and years,” Mr. García said. “We just didn’t know it would
end up affecting us directly, so badly.”
Mr. Peña Nieto’s relationship with the contractor is one
of several recent scandals that have raised tough questions for the president,
tainting his legacy and further eroding the public’s already shaky faith in the
country’s governing institutions.
All around Mexico, people are busy debating another
blow to the administration: how one of the world’s most notorious drug
lords, Joaquín Guzmán Loera, known as El Chapo, managed to sneak out of a
maximum-security prison this month by building a mile-long tunnel right under
the nose of the authorities. How was that possible without the help of someone
in power, many Mexicans are asking.
Residents in the path of the highway say their battle against
the government raises troubling questions, too. How did a friend of the
president’s who started out selling office supplies like Post-it notes wind up
running an empire that collects billions of dollars in government contracts,
getting the green light to pave through a protected forest and winning bids to
build hospitals and trains?
The president and his inner circle have not been charged
with any wrongdoing in either case. The findings of a government inquiry into
the president’s family mansion are imminent. A separate investigation is
examining Mr. Guzmán’s escape.
But while the two cases have important differences, they
have caused widespread frustration, tapping into a broad sentiment that despite
Mr. Peña Nieto’s claims that Mexico and his Institutional Revolutionary Party
have changed, some of the country’s most fundamental problems have not.
“It’s evident that this issue with El Chapo and the issue
of the contracts is the same: corruption,” said Manuel Huerta, an opposition
congressman who wrote a book detailing the contracts. “It shows the
incompetence, impunity and corruption of this government.”
The company building the highway is owned by Juan Armando
Hinojosa Cantú, a government contractor with close ties to the president that
date back to when Mr. Peña Nieto was an ambitious young aide in the State of
Mexico.
Newly obtained records show that Mr. Hinojosa’s companies
and its affiliates have secured at least $2.8 billion in business with
government agencies, through more than 80 contracts, which opposition
legislators and other critics contend are the result of a decades-long
relationship between the two men.
Mr. Hinojosa’s close ties with Mr. Peña Nieto were a
source of contention even before local journalists discovered late last year
that the president and his wife were buying a 15,000-square-foot house that Mr.
Hinojosa had built to their specifications on unusually favorable terms.
The first lady, a former soap opera star, said she was
purchasing the house on credit for $4 million. Mr. Peña Nieto also used a
second home owned by one of Mr. Hinojosa’s companies as an office during his
presidential campaign and before he took office in 2012.
After a torrent of accusations that the president and his
finance minister, Luis Videgaray, were receiving special favors from a
contractor who wins lucrative government deals, Mr. Peña Nieto defended
himself, saying there was no conflict of interest. The first lady, Angélica
Rivera, has said that she paid off nearly a third of the house with her own money,
and that she would sell her rights to the purchase.
Still, the president acknowledged “that the allegations
have generated the appearance of something improper.” He then named one of the
finance minister’s longtime friends to investigate, causing more consternation
among critics.
Mr. Peña Nieto canceled a government contract for a $3.7
billion train, a signature project being built by a consortium that included
one of Mr. Hinojosa’s companies.
But other major deals involving Mr. Hinojosa have
continued, including the highway, the cost of which was originally expected to
be $132 million but has swelled to $207 million, budget records show. Beyond
that, Mr. Hinojosa’s companies have won a $74 million no-bid contract to
renovate the presidential airplane hangar; a $104 million road-widening project
that has grown to $127 million; and a 37 percent stake in an enormous aqueduct
plan to bring water to Monterrey.
The aqueduct deal has become particularly contentious.
One of the companies involved confirmed that the project is expected to cost
$3.5 billion in construction, maintenance and operations over 30 years. Under
those terms, Mr. Hinojosa’s share comes close to $1.3 billion.
Only collusion between the federal government and its
contractors could explain such a soaring price tag, contended Jaime Rodríguez,
the governor-elect of Nuevo León, where the aqueduct will be built. He is
vowing to kill the deal, adding to the chorus of complaints about the president
and his corporate partners.
“The president has said he does not meddle in contracts,
and that he did not participate in the request for bids,” said Haydeé Pérez,
the executive director of Fundar, a research group in Mexico City. “That is not
true: If he can verbally cancel a contract when there is no institutional
mechanism for that, then he is also able to deliver those contracts.”
Mr. Peña Nieto’s office declined to answer questions
about his relationship with the contractor, citing the investigation that the
“president ordered to be carried out, with the objective to not influence the
direction or hinder its course.”
The finance minister did not respond to a request for
comment, nor did the head of Mr. Peña Nieto’s party or the state agency in
charge of the highway project. Mr. Hinojosa’s personal assistant said he
was “too busy” to respond.
Mexican legislators and officials said that the contracts
awarded to Mr. Hinojosa’s various companies over the years, including his
conglomerate known as Grupo Higa, cover a wide array of enterprises, spanning
asphalt, publicity, construction, air transport, concrete, real estate and
highways.
Despite his tremendous influence, Mr. Hinojosa remains
something of an enigma. He has never spoken publicly about the home he built
for the president and his wife, even though the arrangement was first reported
eight months ago.
By all accounts, Mr. Hinojosa, a native of the State of
Tamaulipas, arrived in the State of Mexico, Mr. Peña Nieto’s home state, in the
1980s. He got small contracts for government printing and publicity projects,
making inroads with the tightknit political clan that the president, his party
and some of his relatives have built to maintain a grip on power, jobs and
business deals in the state for generations.
In 2000, Mr. Hinojosa gave tens of thousands of dollars
in a donation to Mr. Peña Nieto’s powerful party, known as the PRI, records
show. His companies eventually billed the government for everything from stoves
to gentleman’s shirts, according to records on government transparency
websites.
The business relationship started under the state’s
former governor, Arturo Montiel. And it blossomed under his young, ambitious
protégé — Mr. Peña Nieto — who began as the governor’s private secretary and
later occupied state cabinet positions with access to influence contracts.
“There was evidence that the power that Grupo Higa had
descended from Peña Nieto, but nobody wanted to see it,” said Francisco Cruz,
who has written several books about the president and his influential friends.
“In 2011, I asked for all the contracts his company had just in the State of
Mexico, and they added up to 23 billion pesos,” or about $1.8 billion at the
time.
Some of the most disputed projects happened after Mr.
Peña Nieto became governor of the State of Mexico in 2005. One of Mr.
Hinojosa’s companies built a $509 million hospital that cost several times as
much as other new hospitals in the country. Another big project in which he had
a major stake — a performing arts center — was built in such a far-flung location
that it was criticized as a white elephant.
Other contractors balked, saying they were getting shut
out of public projects.
“Juan Armando Hinojosa arrived here with nothing; it
seemed like he became a millionaire in a matter of days,” said José Altamirano,
a former government official who is now representing construction firms with
legal disputes against the government.
When Mr. Peña Nieto ran for president, one of Mr.
Hinojosa’s companies ferried him around in a helicopter free, the Mexican news
media reported. The president was also widely reported to have been the witness
at the wedding of Mr. Hinojosa’s son, also named Juan Armando. Then the junior
Hinojosa died in a late-night helicopter crash three years ago, after a dinner
to celebrate Mr. Peña Nieto’s 46th birthday.
When Mr. Peña Nieto won the presidency, the contracts
grew, including the hotly debated aqueduct.
Experts agree that it is not unusual for every
presidential administration to have its favorite contractors, but they said
that Mr. Hinojosa’s variety of contracts and the amounts were astonishing.
“They are used to working with a little impunity,” said
Edna Jaime, the executive director of México Evalúa, a good-government civic
organization. “They figured the way things were done in the State of Mexico
could be repeated here in the capital.”
Fausto Hernández, an economist at the Center for Economic
Research and Education in Mexico City, said that having a conglomerate control
so many government contracts generally increases the price, particularly
because markups to cover up kickbacks are routine.
“The message is: It doesn’t matter how talented, how
innovative, how capable you are as a businessperson. The only thing that really
matters is your political connections,” he said.
Here in Xochicuautla, the president’s eminent domain
decree ordered that the community be compensated nearly $715,000. But the
protests have continued, including another one this week.
“We are invisible to the Mexican State,” said José Luis
Fernández, 54, a construction worker who lives here.