Extortion, gang violence hitting even big corporations in Mexico

CIUDAD VICTORIA

Even Mexico’s largest corporations are now being hit by demands from drug cartels, and gangs are increasingly trying to control the sale, distribution and pricing of certain goods.

Well-known, high-ranking business leaders aren't even safe.

On July 29, the head of the business chambers' federation in Tamaulipas state, across the border from Texas, gave television interviews complaining about drug cartel extortion in the state. Hours later, on July 30, Julio Almanza was shot to death outside his offices in the city of Matamoros, across from Brownsville, Texas.

The problem came to a head when the Femsa corporation, which operates Oxxo, Mexico’s largest chain of convenience stores, announced late last week that it was closing all of its 191 stores and seven gas stations in another border city, Nuevo Laredo, because of gang problems.

The company said it had long had to deal with cartel demands that its gas stations buy their fuel from certain distributors. 

Since convenience stores are used by most people in Mexico, the gangs see them as good points to keep tabs on the movements of police, soldiers and rivals.

Cartel violence in Mexico has long been focused on smaller businesses, where owners often visit their shops and are easily abducted or approached by gang members to demand extortion payments. But Femsa is the largest soft drink bottler in Latin America and is listed on the Mexican stock exchange.

Sectors ranging from agriculture, fishing and mining to consumer goods have been plagued by cartels trying to essentially take over their industries.

This week, the American Chamber of Commerce, whose members tend to be larger Mexican, American or multinational corporations, released a survey of its members in which 12 percent of respondents said that “organized crime has taken partial control of the sales, distribution and/or pricing of their goods.”

About half of the 218 companies in the American Chamber survey said that trucks carrying their products had suffered attacks, and 45 percent of the companies said they had received extortion demands for protection payments.

Of the companies that reported how much they had to spend on security measures, 58 percent said they spent between 2 percent and 10 percent of their total budgets on security; 4 percent spent at least a tenth of their total outlays on security measures.

Mexico's powerful drug cartels have expanded their income sources by both extorting money from companies and even taking over legitimate businesses.

In 2014, authorities confirmed the Knights Templar cartel had essentially taken over exports of iron ore from the western state of Michoacan, and the ore trade with China had become perhaps its biggest single sources of income.

Cartels have also been accused of controlling production and manipulating domestic prices for crops like avocados and limes.