Loan scandal topples head of Mexico’s PRI party

Reporting from Mexico City â€”  Humberto Moreira, president of Mexico’s former ruling party, quit his post Friday amid a swelling financial scandal that threatened to throw off the party’s bid to retake power in next year’s elections.

Moreira has been hammered for months by charges that in his previous job as governor of the northern state of Coahuila, he left it saddled with $3 billion in debts, at least partly due to loans allegedly sought using falsified documents.

Moreira, who was named head of the Institutional Revolutionary Party, or PRI, early this year, has denied wrongdoing, saying the heavy borrowing took place after he left the governorship in January to run for the national party post.

The state was run by a stand-in governor, Javier Torres, until Thursday, when Moreira’s brother, Ruben, took over. Both are members of PRI. Ruben Moreira was elected governor in July.

Humberto Moreira announced his resignation before a televised gathering of the PRI’s political council, saying he would not allow a “war in the media� to hurt his party.

The debt controversy was becoming a drag on the PRI even as early polls show it poised to retake power in Mexico 12 years after being unseated. The scandal threatened to remind voters of the sort of graft that characterized the PRI’s 70-year reign just when it is seeking to promote a fresh, cleaned-up image.

The federal attorney general’s office said it has opened an investigation of possible wrongdoing over the Coahuila debt.

Moreira’s departure appeared to become inevitable when the PRI’s lone presidential candidate, former Gov. Enrique Pena Nieto of the state of Mexico, acknowledged this week that the scandal was taking a toll.

Many analysts predicted that Moreira would step down after gubernatorial elections were held Nov. 13 in the western state of Michoacan. The PRI won, defeating the sister of Mexico’s conservative president, Felipe Calderon.

That victory continued the winning streak the PRI has been on since it regained control of Congress’ lower house in 2009.

The PRI’s top post will for now be held by its secretary-general, Cristina Diaz. But reports say the post could soon go to Manlio Fabio Beltrones, an old-guard senator who mounted a halfhearted campaign for the party’s presidential nomination before yielding to Pena Nieto last week.

During nine months as party president, Moreira was known for a combative style. He hit back at charges that the party coddled drug lords, noting acerbically that when the PRI was in control, the country’s top suspect, Joaquin “Chapo� Guzman, was in custody. Guzman escaped from a Mexican prison in 2001, after the right-wing National Action Party, or PAN, took over.

But the months-long borrowing scandal proved difficult to shake. The staggering debt burden has created a financial crisis in Coahuila.

The loan requests allegedly carried false declarations that the Coahuila Legislature had approved the borrowing, from private banks. Coahuila officials have said the funds were used for public works, but have yet to account for the money.

Moreira has called for an investigation into the role played by the federal Finance Ministry, which cleared the loans. The former finance minister, Ernesto Cordero of the PAN, left that post in September to run for his party’s presidential nomination.

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