January 9, 2018 / 3:06 AM / 6 months ago

Mexico governor says federal funding withheld in graft probe dispute

MEXICO CITY (Reuters) - A Mexican state governor on Monday accused the finance ministry of withholding federal funds to punish his administration for launching an investigation into alleged corruption that has embarrassed the ruling Institutional Revolutionary Party (PRI).

Javier Corral Jurado, Governor of the state of Chihuahua, gestures during a news conference in Mexico City, Mexico January 8, 2018. REUTERS/Daniel Becerril

Chihuahua Governor Javier Corral, of the center-right opposition National Action Party (PAN), said the ministry was pressuring the northern border state because of its probe into the administration of his PRI predecessor Cesar Duarte.

Corral said that after he announced last month the arrest by state and federal authorities of Alejandro Gutierrez, a former top PRI finance official, the ministry failed to transfer to the state more than 700 million pesos ($36.5 million) it was due.

“This is an attempt to strangle the government of Chihuahua economically,” Corral told a news conference in Mexico City.

The finance ministry said it had met all the required payments, and that Chihuahua had received more funds in 2017 than originally budgeted due to higher federal revenue.

Deputy finance minister Miguel Messmacher rejected the suggestion the ministry was seeking to punish Chihuahua and told Mexican radio that the Chihuahua state government had asked for additional “extraordinary” funds at the end of last year.

Javier Corral Jurado, Governor of the state of Chihuahua, speaks during a news conference in Mexico City, Mexico January 8, 2018. REUTERS/Daniel Becerril

Such funds are conditional on the federal government’s budgetary room for maneuver and were ultimately not paid to Chihuahua, or to a number of other states, Messmacher said.

“But they’re not funds they have a right to,” he said.

The dispute risks keeping attention focused on alleged PRI graft in the run-up to a presidential election in July. Tackling corruption promises to be a key campaign issue, and the PRI faces an uphill struggle to hold on to power.

After noticing the holdup in federal transfers, Corral said, he and aides held a meeting with top ministry officials in Mexico City on the evening of Jan. 4 to discuss the impasse.

There, Corral added, the Chihuahua delegation was told that his state’s investigation into alleged corruption had called “into question the mechanism of how funds are transferred,” for which reason the ministry decided to withhold the money.

Prosecutors in Chihuahua accuse Gutierrez of participating in a scheme to divert public funds worth 250 million pesos into PRI coffers during the 2016 election season, in which Cesar Duarte’s successor was chosen. Gutierrez has denied the charge.

A Mexican judge issued an arrest warrant for Duarte last March. Corral says his predecessor is in the United States.

Javier Corral Jurado, Governor of the state of Chihuahua, gestures during a news conference in Mexico City, Mexico January 8, 2018. REUTERS/Daniel Becerril

($1 = 19.1880 Mexican pesos)

Reporting by Dave Graham and Ana Isabel Martinez; Additional reporting by Lizbeth Diaz; Editing by Matthew Lewis and Leslie Adler

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