The trusts are divided in six groups that help the federal government face emergencies such as financial support, budget stabilization, infrastructure, pensions, employment benefits and subsidies. (Infographic: EL UNIVERSAL)

Trusts, the government "secret stashes"

Lilia Saúl y Daniela Guazo
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The 614 trusts included in the data base of EL UNIVERSAL hold US$113,040,594,724, almost half the entire national budget approved for 2016.

The hundreds of trusts in Mexico have become a sort of "secret stashes" for the different levels of government, and they are kept opaque and without any accountability, according to experts.

In most cases they are handled in a discretionary manner as "petty cash", not subject to accountability under the excuse of banking and trustee secrecy, experts explained.

"We are talking about lots of contracts throughout the country, which may be idle or may be generating returns for a General Director who knows how to manage the trust in a discretionary manner. All the Financial Reform could have had the same result if there had been a recovery policy of all assets in trusts," explained Óscar Arredondo, researcher for the Center for Analysis and Research (FUNDAR).

EL UNIVERSAL conducted a data mining operation and requested information about 614 federal public trusts to the Ministry of Finance, as instructed by the National Institute of Access to Information (INAI).

Before 2004 there was no organized data about trusts. Starting that year, the Federal Institute of Public Access to Information (IFAI) ordered the systematization and debugging of the system and now, with the implementation of an open data policy, the Mexican government has this information posted online since 2006.

Petty cash for everyone

In Mexico there are hundreds of trusts. In addition to federal trusts (posted on the website of the Ministry of Finance), every local government can open trusts and each of these governments can also open trusts with the federal government and vice versa. This way, access to "secret stashes" is maximized.

That was the reason why the General Law of Transparency and Access to Information includes trusts as one of its subjects. It includes checking accounts, like the one managed by the Special Commission for the Care of Victims, an agency like the National Tourism Fund or a local government trust, like the ones opened by state governments to pay their debts off.

In Mexico, trusts have been opened for just about anything: building a road, rescuing former migrant workers, correcting a mistake like the toxic spill in the Sonora River or helping the victims of incidents like the ABC day care fire or disappearances.

There are also trusts that were opened only for a specific date, like the celebrations for the Bicentennial of the Mexican independence or the construction of the new headquarters of the Senate.

Aníbal Gutiérrez, a researcher at the National Autonomous University of Mexico (UNAM), said that under excuse of banking and trustee secrecy, many of these financial instruments, used by federal and local authorities, are at risk of being used as unaccountable "petty cash", while the final use of the millionaire funds is unknown.

"The goal would be to keep it from becoming an additional financial burden or petty cash that can be used at any given time. That would be very important," he said.

Detected irregularities

The 614 trusts included in the database of EL UNIVERSAL hold US$113,040,594,724, almost half the entire national budget approved for 2016. 

Each one of these trusts generates millionaire yields, just like any other bank account. However, this information is not readily accessible and irregularities in the management of these funds have been detected, according to the Superior Audit of the Federation (ASF).

"There is still so much to do in order to have greater efficiency in the use of these resources. I am not saying that they are diverted, but that they are accessed to or used through trusts," said then newly appointed Superior Auditor Juan Manuel Portal, in 2010.

What is a trust? Experts explain it as follows: It is similar to having the government opening a banking account, but using public funds, coming from the taxes that all Mexicans pay.

"Trusts are financial instruments with some money and trustees tell the Technical Committee what can be done with that money", explains María Marván, former commissioner of the IFAI and one of the persons responsible for registering the trusts before the Ministry of the Treasury under a specific order.

Covered under the trust secrecy, agencies and states always refused to provide information on the subject.

Today, with the approval of the General Transparency Law, trust secrecy cannot be invoked by authorities and they must open all information up.

Currently, the trusts are divided in six groups that help the federal government face emergencies such as financial support, budget stabilization, infrastructure, pensions, employment benefits and subsidies.

The unit that concentrates more trusts is the Ministry of Finance and Public Credit, as it is the agency that determines the opening of this financial instrument in governmental units. One of the main advantages of trusts - at least those that are not parastatal -, is that they do not need to be approved by Congress.

Audits to stashes

The Supreme Audit of the Federation (ASF) has audited, year after year, these financial instruments, due to the irregularities they present, to the point of being considered the "secret stashes" of governments.

Some trusts that showed irregularities are the following: Trust No. 1326 was created in 1991 by the Ministry of Finance for the “Educational Modernization of the country". It was closed and in spite of this, 16 years later, 1.71 billion pesos (US$93 million) showed up in its accounts. This was detected by the ASF in 2009.

Another one was the trust for the Durango-Mazatlán highway. It was created as a contribution of the trustees, in this case the governments of Durango and Sinaloa. However, they opened the trust with 500,000 pesos (US$27,100) but the road ended up costing 28 billion pesos (US$1.51 billion).

Such irregularities, coupled with the banking and trust secrecy, were detected years before by the IFAI and therefore the Ministry of Finance was ordered to publish all data since 2004.

"Due to the pressure from the IFAI and the information requests, they began to make an inventory of the trusts, first published in 2004. Even the officials of the Ministry of Finance admitted that they themselves did not know how many they had," Marván said.

And the banking and trust secrecy was not appropriate if officials had accepted to disclose the trusts since that time.

"The comparison is simple. If I decide to show my bank account to my husband and my children, nobody could say I am breaking the bank secrecy. This is exactly the same, but they did not want to understand it because that way it was easier," she said.

Although idle trusts have been disappearing, many persist for various reasons. Even the Bicentennial trust, opened for the celebrations of 2012 only, remains as one of the active instruments of the federal government.

There are also some controversial trusts still keeping a lot of information under secret: the complete invoices of the trust fund for the new headquarters of the federal Senate, the traffic bridges constructed during the administration of the former Mexico City mayor Andrés Manuel López Obrador, the ones for the construction of Line 12 of the Metropolitan Subway System, among may others, according to Marván.

"Why were they never opened up? Because the government or officials decided not to open this information and because they found a way to hide this information erroneously invoking trust secrecy," she explained.

Officials from the Ministry of Finance were contacted for this article, but our request was not answered.


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