April 28, 2000

"Reefgate" Rattles Acapulco—Election Year Scandal Over Misuse of Poverty Funds

By Kent Paterson

ACAPULCO, MEXICO — Happy hour on Acapulco's Condesa Beach, with its two-for-one drink specials, lasts all night long.

But a two for one deal involving Canadian warships has members of the Acapulco elite squirming. And while it is basically a local deal gone sour, the controversy typifies many of the vices being denounced by all of Mexico's presidential candidates.

The story opens last summer. Carlos Estrabeau, a Cancun-Acapulco businessman, inspired by the Internet site of the Artificial Reef Society of British Columbia (ARS-BC), had a brilliant idea. He decided to buy one of the old Canadian destroyers the society helps third parties acquire and sink to create artificial reefs. These are said to provide habitat for marine life and recreation centers for divers — and buyers of the warships can recover their costs by stripping aluminum, copper and brass from the ship and selling it as scrap.

Estrabeau and his partner Josefat Cortes, both members of the Ocean Promoter Society of Acapulco (APROMAR), convinced Estrabeau's father-in-law, Eduardo Marron — head of the Guerrero State Tourism Department — of the attractiveness of the project. They planned to sink the ship just in time for it to be christened for Navy Day on June 1, 2000, by Mexico's most famous diver, President Ernesto Zedillo.

In late December, Cortes and Estrabeau flew to Canada. They returned to Acapulco and announced the arrival of not one but two ships — the Restigouche and Kootenay. The partners said a Canadian federal court order forced them to buy the two as one package, and explained that they used their own money for the Kootenay, which would be reserved for their own business.

Then early this year, the Acapulco daily La Jornada El Sur broke the news that about $100,000 of the $160,000 used to purchase the Restigouche came from a federal fund set aside for people in extreme poverty. The paper dubbed the matter "Reefgate." Official documents show that the money was channeled through the city's previous municipal administration to Marron, who paid for the ship. Neither the city council nor the federal authorities were consulted, and according to Felix Salgado, Guerrero Senator and secretary of the Mexican Senate's defense committee, the Mexican Navy knew nothing about the deal either.

In a press conference, Estrabeau and Cortes claimed they knew nothing about the source of the money, which they now called a "loan."

Salgado, a member of the Party of the Democratic Revolution (PRD), does not fault the businessmen for the deal — but he is pursuing embezzlement charges with Mexico's Attorney General against Marron, the former mayor, and other former Acapulco officials with ties to the long-dominant Institutional Revolutionary Party (PRI).

Although the name of Guerrero Governor Rene Juarez appears as a witness of honor on one of the documents clinching the deal, his signature is strangely absent. And there is as yet no indication President Zedillo had a hand in the decision to spend federal anti-poverty money on a tourist project.

Nonetheless, the political fallout calls attention to a larger scandal in Mexico City, where the PRD-appointed public prosecutor is charging Oscar Espinosa, a former PRI mayor and the current head of Mexico's federal tourism agency, with embezzling public money. In both cities, defenders of the accused contend the opposition is making political hay in a presidential election year.

President Zedillo — who is standing behind Espinosa — has often made speeches claiming that no one was above the rule of law. Indeed, Senator Salgado employs language reminiscent of Zedillo's when he declares that "the law must be applied" in the case of the Resitgouche and Kootenay. "Reefgate" has struck raw nerves here. Acapulco is still recovering from Hurricane Paulina nearly three years ago — and from the fact that the new, opposition-elected municipal administration discovered a virtually empty public treasury when it assumed office last December 1. "Reefgate" highlights many of the burning issues still waiting to be resolved in 21st century Mexico. Topping the list are the need to guarantee transparency in business dealings, curb influence peddling, ensure efficient expenditure of public funds, and open information about public matters.

But in a nation where both royal and republican elites have long guarded information like a cache of stolen gold, old habits die hard.

Meanwhile, Cortes and Estrabeau have yet to tow either the Restigouche or Kootenay to Acapulco.

Contradicting earlier statements made by the pair, Jay Straith of ARS-BC says the men have only made a deposit on the Kootenay. Both warships, Straith says, are "sitting by the dock of the bay" — in Canada.

Kent Paterson is an Albuquerque-based freelance journalist who writes regularly about Mexico.

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