translated from Spanish: Former Master Scam Man Faces Contract Process with CNBV

Erick Herzain Torres Mulhia, former director of the Fund for the Promotion and Development of Scientific and Technological Research (FONDICT) of the Autonomous University of the State of Mexico, was linked to the process for his likely responsibility for the crime of illicit use of powers in the contract signed with the National Banking and Securities Commission (CNBV) for 33 million pesos, and that he had irregularities in the contract and alleged execution of services.
Although it is only facing the judicial process in this case according to criminal case 519/2020, Torres Mulhia was the owner of FONDICT when 14 agreements were concluded with six federal government institutions that totaled one thousand 468 million pesos and which are part of The Master Scam.
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In those agreements, FONDICT did not perform the services but subcontracted companies to do so, although they proved to be illegal. And just for participating in this triangulation that served to evade bidding processes, the Fund gained 66 million pesos between 2013 and 2014.
FONDICT is the fund of the Autonomous University of the State of Mexico created in 1982 to finance plans and programs of scientific, technological research, university extension, dissemination of culture and promote productive marketing companies and systems to attract resources.
However, it participated in the plot of alleged diversion of resources, as did the entity on which it depends, UAEM, whose legal representative, Hugo Manuel del Pozzo, signed dozens of agreements between 2009 and 2014 with different general government units for alleged services. For this reason, he also faced a judicial process for farting.

The agreement with the CNBV
On April 27, Herzain Torres Mulhia and René Pineda Sánchez, former member of the National Banking and Securities Commission, were linked to the process, that is, the judge considered that there is sufficient evidence to continue the investigation for the possible crime of illicit use of powers and powers.
While José Luis Ayala Paredes and Luis Wolf Chavez, former MPSC members will also continue criminal proceedings for crimes of illicit use of powers and powers and unlawful exercise of public service since they did not inform their hierarchical superior in writing that serious harm could be caused to the interests of the CNBV by that agreement.
The case is investigated by the Office specialized in Combating Corruption of the Attorney General’s Office of the Republic, starting with the CNBV/461/2014 contract signed on 26 September 2014 and amounting to 33 million 996 thousand pesos.
The service would supposedly be “business process management tool tuning”, implementation of the inspection process, methodological framework and support and training.
However, the Federation’s Senior Audit reported irregularities from Financial audit and Compliance GB-071 to the CNBV in 2014 to the Information Technology area.
It discussed four agreements and contracts totaling 85 million pesos, two of them with private companies and two with FONDICT; the latter with the largest amounts representing 70% of total resources.
The agreements between the Commission and the Fund were made under Article 1 of the Procurement Act which allows the procurement of services between government authorities without the need to go through a tender, that is, to conduct a competition between companies to choose the supplier that offers the best conditions.
However, the article states that while the contracted entity may outsource to third parties, this should not exceed 49% to ensure that the person who will perform most of the services is the governing entity with which the agreement was made.
In this case, “no documentation was provided to prove that the CNBV ensured that the supplier did not make subcontracts that exceeded 49% of the total contract amount; and that if it were to be carried out it would have provided the information of the subcontracted third parties to supply the goods and services, crediting their technical solvency”, as detected by the Audit.
But in September 2015, nine months after implementing the tool for automating the Inspection process and Visit Planning and Execution threads, “only 24 inspections were carried out that accounted for 9.0% of the 267, and was used by 10 users out of 235 who made up the referred processes.”
In response to the second clarification meeting following the implementation of the audit conducted by this ASF, as of January 2016, they already totaled 83 usersintegrated into the tool 88 visit planning cases and 17 execution cases.
Another irregularity is that payments for this technology consulting services contract were recorded under heading 33901 “Outsourcing of Services with Third Parties”, which corresponds to “services such as: maintenance, maquila de productos, medicines, medical, hospital, laboratory service, among others, where it is not possible to care for them directly by dependency itself”, however, this expenditure item does not cover ICT services”.
In addition, the provider only trained 10 people in the systems area, although the cost for such a service would be 3 million pesos. As a result of the audit, 215 people from the business areas who would use the audit were trained until November 2015.
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Meanwhile, during the five months after the implementation of the tool, 23 incidents related to failures and problems with it were recorded, arising from human errors and result of the learning curve. The last record of May 27, 2015, indicates that a reinstallation of the full productive environment of the tool was carried out due to a misconfiguration of the platform’s servers.
There are also no minutes of work that could verify the realization of validations, reviews and agreements of the activities executed by the provider, the Audit warns.
“Therefore, it is concluded that there were significant deficiencies in the controls for the management and compliance of all the elements agreed in the contract, as well as for the procurement procedure, during which it was not established whether and why the supplier would conduct contracts with third parties,” the Audit reported.
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Original source in Spanish