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Mexico Arrests Cancun Mayor on Ties to Drug Gangs

May 26 (Bloomberg) -- Mexico’s federal police arrested Cancun Mayor Gregorio Sanchez yesterday for alleged money laundering and ties to drug-funded organized crime groups.

The Attorney General’s office said Sanchez, who is running for governor of Quintana Roo state where the resort city is located, had links to the Beltran Leyva and Los Zetas drug gangs, according to a statement read on television today by office spokesman Ricardo Najera.

“Efforts like this one are part of the work of the federal government to recover the confidence in institutions tasked with security and justice, as well as the peace of their citizens,” Najera said.

The statement didn’t provide details about Sanchez’s alleged crimes.

Sanchez denied any wrongdoing and said he was the victim of “political persecution” in remarks recorded yesterday and broadcast today on Milenio television network.

Sanchez, 47, a member of the Democratic Revolution Party, served as Cancun mayor since 2008 and has been on leave since April to campaign for governor. President Felipe Calderon belongs to the National Action Party.

‘Systemic’ Corruption

Corruption in Mexico is growing to “systemic” levels and stanching economic growth as politicians and bureaucrats profit, said Tony Payan, a political science professor at the University of Texas in El Paso. Calderon may be using this arrest to signal a crackdown on corruption, especially at the state and municipal levels, he said.

“Every time you fight corruption, you send a message to the others that might be involved,” Payan said in a telephone interview.

Transparency International said in a November 2009 report that Mexico’s corruption had worsened, pushing its ranking among nations down to 89 from 72 the previous year.

Some forms of corruption in Mexico may have previously spurred the economy in regions like Quintana Roo, such as when officials helped launch businesses quickly and bypass bureaucracy for a fee, according to Payan. That has changed in recent years as the practice spread, he said.

“When it becomes systemic, your net losses on account of corruption become a problem for the country,” Payan said.

About 22,700 people have been killed in fighting among gangs, the police and the army since Calderon took office in 2006. The president, during a visit last week to the White House, pledged to take on organized crime and drug trafficking bound primarily for the U.S.

Sanchez’s arrest comes after former Quintana Roo Governor Mario Ernesto Villanueva Madrid was charged in the U.S. this month with conspiring to send cocaine to the U.S. and laundering almost $19 million through accounts with Lehman Brothers Holdings Inc. He pleaded not guilty in federal court in New York.

Villanueva Madrid’s son, Carlos Mario Villanueva, is currently running for Cancun mayor.

To contact the reporters on this story: Jonathan Levin in Mexico City at jlevin20@bloomberg.net Adriana Lopez Caraveo in Mexico City at adrianalopez@bloomberg.net;

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

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