Mexican Casinos Comp the Corrupt

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A soldier walks behind a sign reading "Closed Access" next to a casino which was attacked earlier in Monterrey on August 25, 2011. / REUTERS

A months-long investigation by McClatchy newspapers Mexico City correspondent Tim Johnson has produced a fascinating account of the corruption in hundreds of casinos that dot the Mexican landscape.

The firebombing of a casino last August in Monterrey that left 52 people dead drew attention to the hold of gangsters on the casino industry.  The McClatchy probe goes beyond that, and shows how hundreds of casinos operate off-the-books and provide a steady stream of under-the-table payments to corrupt politicians, which only fuels their activities.  This all comes even though gambling remains technically illegal in Mexico.

Johnson reports that Mexican politicians use the casinos as if they were “petty cash boxes”  — except that the numbers aren’t petty but actually quite large.  One of the big beneficiaries of this scheme is Los Zetas, one of Mexico’s biggest crime groups. Also benefiting are politicians who hand out casino licenses as favors in return for a cut of the cash.

It is one place were U.S. casino companies fear to tread.  American casino companies are always on the lookout for new places to set up business and mint some more cash.   One market, the report says, that no American company has considered entering is Mexico.

Sweep to Corruption in Mexico casinos takes a toll in the U.S., too

Antoin 'Tony' Rezko arrives at the Dirksen Federal Courthouse in Chicago May 12, 2008 for the closing arguments in his corruption trial. / REUTERS

Bad news for Tony Rezko.  The Chicago political fund-raiser was sentenced to  10 ½ years in prison for his role in extorting millions of dollars from companies wanting to do business with the state of Illinois. Rezko was part of the inner circle of former Illinois governor Rod Blagojevich, who is scheduled to be sentenced Dec. 6 after having been convicted on corruption charges earlier this year.

Illinois politics and corruption seem to go hand and glove, and the sentence given to Rezko is one of the toughest handed down in recent memory.  Rezko tried to cut his punishment by cooperating with prosecutors, but the government said his testimony was of little use.

Rezko appeared gaunt and pale in court.   His sentencing brings to mind his links with another politician, President Barack Obama. Rezko was helpful when Obama was seeking to purchase a house in Chicago’s Hyde Park neighborhood and Rezko sealed the deal by buying the lot next door. In the 2008 presidential campaign, Hillary Clinton lashed out, calling Rezko a “slum landlord.”

Until his downfall, Rezko was seen as an immigrant rags-to-riches story:  A real estate developer who became close to the rich and famous. Now, he is a mortality tale of a different type.

Sweep to Rezko gets 10 1/2-year sentence

There are many ways to measure the level of corruption in different countries.  A report by the James Mintz Group, a U.S. investigative firm, takes a measure using penalties paid under the U.S. Foreign Corrupt Practices Act, which prohibits U.S. citizens from making payments to foreign officials in return for business.

By Mintz’s measure, China has the broadest array of companies involved in bribery schemes. That has not gone unnoticed in China, where the Mintz report has gotten the attention of the local media.  Nigeria, according to the Mintz report, is the great source of bribe-paying deals.  Those bribes, however, are limited to a single industry, oil.  China distinguishes itself for the breadth of bribery, across nearly every industry.

Local Chinese commentators say this is because China lacks an independent judiciary and has little oversight or controls.   Even more, the Mintz report covers only foreign companies doing business in China and does not include Chinese companies operating only within the country’s boarders. It comes on the heels of a recent Transparency International “Bribe Payers Index” report showing that Chinese companies are the second most likely to pay bribes to gain overseas business.

As part of the report, Mintz has produced a nifty interactive map of bribes across the world, available at its website, www.mintzgroup.com.

Sweep to China Rated Most Corrupt Across all Sectors

Leslie Wayne

Leslie Wayne

Leslie Wayne, former senior editor at 100Reporters, is an award-winning business reporter, formerly at The New York Times. Ms. Wayne joined The Times in 1981 and has covered Wall Street, banking industry regulatory reform, municipal finance scandals and, most recently, the aerospace and military industries. Ms. Wayne has an M.B.A. in finance from Columbia Business School and was also a Knight-Bagehot Fellow in Business and Economic Journalism.

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