Ruling may mark new dawn for Mexican justice

MEXICO CITY (Reuters) -- A landmark ruling by Mexico's highest court against its executive branch may usher in a new era for the country's justice system, once a virtual lapdog of the president.

The Supreme Court of Justice ruled Thursday that President Ernesto Zedillo must hand over to Congress sensitive information on a controversial bank bailout.

The government saved the banking system from near collapse after a disastrous 1994-5 peso devaluation that pushed interest rates above 100 percent and forced millions of debtors to default on loans.

But the $100 billion price tag on the bailout, seen as saving the skins of rich and sometimes corrupt bankers at the cost of the ordinary taxpayer, has angered the Mexican public.

The court's first-ever ruling against the executive branch of government followed a complaint by the Congress that the government was hiding behind banking secrecy laws to withhold information on the bank rescue that followed the peso crash.

The court said bank secrecy laws did not apply because the bailout was debt being shouldered by the public.

"We have black holes in the application of justice, which allows much fraud and corruption," said Homero Aridjis, a writer, commentator and president of the Group of 100, an ecological pressure group made up of Mexican intellectuals.

"This could be the start of a political system within the law and which has as its end administrative transparency and accountability," Aridjis added.

Mexico has been swept by a wave of optimism over the progress of democratization since the opposition's Vicente Fox won a July general election, ending the 71-year rule of the once all-powerful Institutional Revolutionary Party (PRI).

Fox, a brusque rancher of the conservative National Action Party (PAN), has pledged to put an end to the graft that at times has characterized PRI rule. He takes office on December 1.

The Supreme Court, for years an instrument of the PRI, has been increasingly flexing its muscles, promising to be more independent. The court was appointed by the Senate, until now dominated the PRI.

"It's a big move for the Supreme Court and sets a very important precedent," said Jeffrey Weldon, a political scientist at Mexico's ITAM University. He noted, however, that the principle of the ruling was most significant and it was unlikely to have much impact on Zedillo personally.

"Even the PRI will probably be happy with this as it's setting a precedent not for Zedillo but for Fox. When there's conflicts between Congress and the executive he shouldn't count on the court being as pro-executive as in the past."

Over the past decade, Mexico's institutions have gained growing independence from the executive branch. Congressional elections in 1997 for the first time gave opposition deputies a majority in the lower house, while the electoral watchdog IFE was separated from the Interior Ministry in 1996.

The central bank has also been given greater autonomy in recent years.

"It is an important step in the institutionalization of Mexico in the sense that each of these bodies has its own source of legitimacy and they don't all depend on the institution of the president, which they did in the past," Weldon said.

While the ruling specifically centered on data on the government's takeover of the collapsed bank Banco Union, it could trigger probes into other murky dealings.

Banco Union owner Carlos Cabal Peniche, currently facing extradition from Australia charged with embezzling $700 million, says the PRI used the bank bailout fund Fobaproa to channel millions of dollars through his bank to fund Zedillo's 1994 presidential campaign and to promote other PRI officials.

The shady transactions of the now discredited Fobaproa are seen by analysts as an obvious target for revelation.

"I'm sure there will be an attempt to reveal the lists of Fobaproa (beneficiaries), which is already in the possession of the chamber of deputies," said political commentator Sergio Sarmiento.

And various PRI officials on the run for drug cartel links or graft may now be pursued with greater zeal.

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