Mexico Extortion Hits 1/3 of Foreign Businesses

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A survey by the American Chamber of Commerce of Mexico (Amcham) found that 36 percent of the businesses questioned reported being threatened with extortion last year, double the number reported in 2011, reported El Milenio

Two percent of the businesses surveyed said they were forced to relocate operations outside of Mexico, due to security concerns. (Portions of the survey results are available on Amcham’s website.) Others reported having to withdraw operations — either totally or partially — from the states most affected by criminal violence, including Nuevo Leon, Tamaulipas, Chihuahua, and Michoacan. 

Another 24 percent of those surveyed reported suffering damage to their business facilities, something that is typically associated with extortion-related attacks. 

Amcham’s findings give a sense of some of the economic costs of Mexico’s struggle with insecurity. The report stated that a third of the businesses reported losing at least $1 million to insecurity in 2012, while another four percent reported losing between $1 million to $5 million. 

The survey found that businesses typically spent four percent of their total operation costs on security. Tom Gillen, president of Amcham’s security committee, said that this is equivalent to what businesses in Latin America typically spend on security, and is lower than the seven percent spent on average by businesses in the US. 

InSight Crime Analysis

Although grim, the findings were considerably better in overall perception of insecurity than the previous year. Gillen said that 84 percent of the businesses surveyed reported feeling safer in 2012 than in 2011, even though crime in Mexico continues at roughly the same rate. Survey respondents attributed this feeling to the federal government’s and their own actions to secure their environment.

There have been few public reports of large transnational firms paying extortion fees to Mexico’s criminal groups. One high profile case last year involved the Knights Templar launching several attacks against a PepsiCo subsidiary. In a more recent case, as reported by Excelsior, a US private investment firm is currently suing another US company for failing to sufficiently warn them about the repeated attacks its business facility would have to endure from the Gulf Cartel. 

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