US chamber study: Extortion on rise in Mexico

US chamber study: Drug cartels' extortion demands on businesses make big jump in Mexico

Associated Press

MEXICO CITY (AP) -- There has been a huge increase in the number of businesses reporting extortion attempts by drug cartels in Mexico, according to a survey by the American Chamber in Mexico.

The survey of 541 members of the American group as well as the British and Japanese chambers of commerce in Mexico showed the percentage of firms reporting cartel extortions has doubled. Such problems were reported by 18 percent in 2012, but the number jumped to 36 percent this year even as reports of most of other types of crimes declined.

"Obviously that's one of the ones that really jumped out when we were studying the graph, because almost all of the other tendencies were down," Thomas Gillen, chairman of the AmCham Security Committee, said Wednesday.

Companies reported fewer thefts of shipments or supplies and fewer threats or attacks on employees in the most recent survey.

As for the rise in reported extortion cases, "People might be becoming more comfortable in reporting it, or criminals might be getting better at extorting businesses," Gillen said.

It wasn't known how many businesses actually made protection payments because the survey didn't ask that question, but 3 percent of firms said they had "negotiated" extortion demands, something that could include payments.

Mexican authorities discourage businesses from making such payments.

Drug gangs have increasingly turned to demanding protection money from businesses in Mexico because it is a relatively easy way for them to supplement income from drug trafficking in areas they already control. Business owners who refuse to pay are often kidnapped or killed or see their businesses burned.

The problem has gotten so bad that residents in the western state of Michoacan took up arms earlier this year against systematic extortion demands by the Knights Templar cartel, forming community self-defense squads to kick the cartel out.

In 2012, the Knights Templar burned five warehouses and dozens of vehicles belonging to the Sabritas snack company, a Mexican subsidiary of PespsiCo. Banners signed by the cult-like drug gang said the firebombing attacks were conducted because the gang believed the snack company let law-enforcement agents use its trucks for surveillance, something the company denied.

Drug cartels had long appeared to prefer to shake down money from local, family-owned businesses in Mexico, in part because it's easier for criminals to identify who controls the finances in such firms and who can be pressured into making a payment.

But the survey suggests that extortion of foreign firms may be much more widespread than previously thought. While some Mexican firms and smaller businesses are members of the American Chamber, the majority of its members are foreign or transnational companies with operations in Mexico.

Most of the firms surveyed said the overall security situation in Mexico isn't getting worse: 84 percent said their companies were as safe or safer than they were in 2012. However, it was unclear whether that was a result of increased investment by the companies themselves in private security measures or because of a general improvement in public safety.

Twenty-eight percent of the firms said they had hired additional private security forces or consultants over the last year, and security spending averaged about 4 percent of total costs for firms responding in the survey. Gillen said that was in line with average outlays in Latin America.

"The study for me reflects optimism on the part of the business community here, but it's not unfounded, unrealistic optimism," Gillen said. "They're well aware of the problems they face."

Forty-two percent of companies said they restricted corporate travel by employees in Mexico for security reasons. That is a stance adopted even by the U.S. Embassy in Mexico, which limits nonessential travel by embassy personnel in certain regions of Mexico.

Two percent of companies said they had moved operations out of Mexico for security reasons. Five percent said they had moved, or were considering moving, operations from one Mexican state to another because of security concerns. That is a bit lower than in 2012, when 9 percent said they had moved from one state to another.

The state that lost the most firms was the northern border state of Nuevo Leon, where the industrial hub of Monterrey, Mexico's second-largest city, is located. Monterrey saw a huge increase in drug-related violence starting in 2011.

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