WiLD Blog

Hotel development continues to devastate ecosystems in Quintana Roo, reports the Mexican weekly Proceso. Authorities are enforcing environmental laws very weakly, granting permits for massive “megatourism” projects left and right with little consideration of the subsequent environmental impact. When they do force builders to comply, it is usually the result of pressure by nonprofits such as the Mexican Center for Environmental Law (CMDA). For example, at least 50 percent of the projects that the group has leveled complaints of nonconformity against have been canceled or modified.

However, developers sometimes proceed without the necessary permits, as the profits expected from the project outweigh the fine for breaking the law. One of the most flagrant illegal acts came in 1997, when the Spain-based Riu consortium, with the support of the mayor of Cancún, built a hotel there without first submitting an Environmental Impact Statement, as required by law. The Attorney General for Environmental Protection (PROFEPA) fined the consortium 3.5 million dollars for the violation.

Developers and politicians have also done an end-run around the urban development plans for Cancún, which originally included a four-storey height limit for buildings and a maximum of 16,000 hotel rooms. Today there are 30,000 rooms and buildings exceeding eleven stories.

In addition to the lack of enforcement of existing laws, there is currently an alarming proposal in the Senate to weaken them so as to permit hotel zone construction in mangrove areas. Sixty-five percent of this rich habitat has already been destroyed in Mexico. According to La Jornada, President Felipe Calderón directed legislators to get the proposal passed “by any means”.

The concept of sustainable tourism is not yet widespread in Mexico, says Marisol Venegas, who represented the country at the first Encuentro Internacional de Turismo Justo in Málaga, Spain in 2006. The vulnerability of the tourism industry, a crucial sector of the national economy, is often used as a pretext to justify all tourism development, no matter how ill-conceived and destructive.

A majority of the hotel firms in Quintana Roo are Spanish, and already have a history of environmental destruction in their own country. Patricio Martin of CMDA likens them to lobsters, moving on to fresh territory once their reckless development has despoiled the place they are currently doing business in. Some firms expect to see a profit from their investments in as little as five years thanks to cost-cutting measures such as not paying workers bonuses or utilities. (The industry norm is ten years.) At the prompting of one of the few developers who has been shut down by PROFEPA, the Spanish ambassador has even met with officials from the agency to try and persuade them to permit the blocked project.   

-Thomas Holder

Puerto Cancun: A fraudulent project

If you think your investment in megaprojects in Mexico is protected because American businessmen are in charge of it, think twice.

Michael E. Kelly was arrested last December by the FBI with charges of fraud for more than 400 million dollars against thousands of American retirees who invested in Kelly’s hotels in Mexico. Promising juicy dividends in a short period of time, Kelly convinced thousands of Americans to enter in a pyramidal scheme in which the last beneficiary was Kelly and his family. Kelly lured a lot of Americans by inviting them to Cancun, all expenses covered, to special parties with Mexican government officials (including the governor of the state of Quintana Roo) to check the lifestyle they could enjoy if they invested their money in his megaprojects.

In Cancun, Michael E. Kelly “reactivated” a project in Puerto Cancun, which has had a history of corruption scandals with Mexican and European corporations involved. Even at the time that Kelly obtained the concession for Puerto Cancun in 2003 by the Mexico’s National Trust Fund for Tourism Development (Fondo Nacional de Fomento al Turismo, FONATUR), the Mexican government received tough criticism from authorities in the United States that were already investigating Kelly’s investments.

To avoid early prosecution, Michael Kelly kept changing the names of the corporations used in his fraudulent scheme. Some of the companies used were Resort Holdings International, Galaxy Properties and Yucatan Resorts.

Puerto Cancun is only the tip of the iceberg of the millions of dollars of fraudulent investments that Kelly made in Mexico: Hotel Boutique Baccara, Avalon Bay, Avalon Grand, Avalon Reef Club, Odyssey Sporting Club, Avalon Excalibur, and The City Disco, among others.

The FBI in Chicago has an investigation open (file number 312-421-6700) and a phone line available to add names to the list of naive Americans, who thought their investment was safe.

This is a cautionary tale. Think twice before investing in megaprojects in Mexico: they are bad for the environment and for your pockets.

Saul