Mexico Arrests Mayor of Tequila for Extorting Distillers in Alleged Cartel Scheme
A Case Study of State‑Capture, Organized Crime, and Business Risk in the Mexican Agave Industry
Abstract
On 5 February 2026 Mexican federal authorities detained Diego Rivera, the elected mayor of Tequila, Jalisco, together with senior municipal officials, on charges of extorting major agave‑spirit producers and colluding with the Jalisco New Generation Cartel (CJNG). This paper examines the political‑economic context that allowed a local government to become a conduit for cartel‑linked extortion, analyses the mechanisms of the alleged scheme, and evaluates its implications for the governance of the tequila sector and for multinational firms operating in high‑risk environments. Drawing on a mixed‑methods case‑study approach—combining content analysis of official statements, court documents, corporate disclosures, and secondary literature on Mexican organized crime—we identify a pattern of “state capture” whereby cartel interests infiltrate municipal authorities to secure illicit revenue streams and to exert leverage over strategic export industries. The findings underscore the need for coordinated anti‑corruption strategies, stronger regulatory oversight of local tax administration, and enhanced corporate risk‑management frameworks.
Keywords: state capture, organized crime, cartel, corruption, tequila industry, Mexico, municipal governance, business risk, Jalisco New Generation Cartel
- Introduction
The agave‑based spirits sector—headlined by tequila—contributes roughly US$ 7 billion to Mexico’s export earnings and supports around 1 million jobs in the state of Jalisco (Secretaría de Economía, 2025). Yet the sector also operates in a geographic corridor notorious for drug‑trafficking violence and cartel competition (García & Mendoza, 2023). The arrest of Diego Rivera, mayor of Tequila, on 5 February 2026 for alleged extortion of the world’s largest tequila producer, Becle S.A.B. de C.V., and the historic Jose Cuervo brand, represents a pivotal moment in the ongoing contest between state authority and criminal networks.
This paper asks three inter‑related questions:
How did municipal officials become instrumental in a cartel‑linked extortion scheme?
What were the specific mechanisms used to pressure agave‑spirit producers?
What are the broader implications for governance, corporate strategy, and public‑policy in Mexico?
To answer these, we employ a case‑study methodology that situates the Tequila incident within the broader literature on state capture and organized‑crime infiltration of local governments (Khan, 2019; Transparency International, 2022).
- Context: The Tequila Industry and Organized Crime in Jalisco
2.1 Economic Significance
Jalisco accounts for ≈ 85 % of national tequila production (Consejo Regulador del Tequila, CRT, 2024). The sector’s value chain—cultivation, distillation, bottling, and export—relies heavily on land‑use permits, environmental licences, and municipal tax revenues. Municipal authorities, therefore, wield substantial discretionary power over operating costs and regulatory compliance (Mendoza et al., 2022).
2.2 Criminal Landscape
Since the early 2010s, the Jalisco New Generation Cartel (CJNG) has expanded from drug trafficking to diversified illicit enterprises, including extortion, illegal mining, and control of strategic supply‑chains (UNODC, 2024). The cartel’s modus operandi increasingly involves co‑optation of local officials to facilitate protection rackets and to legitimize revenue streams (Díaz‑León & Pérez, 2021).
2.3 Prior Incidents
2018–2020: Municipalities in the municipalities of Tlajomulco and Zapopan experienced coordinated intimidation of construction firms by CJNG‑linked officials (Soto & López, 2021).
2023: The mayor of El Arenal, a neighboring town, was detained for facilitating the smuggling of contraband through municipal warehouses (FIC, 2023).
These episodes set a precedent for the 2026 Tequila case, illustrating a recurring pattern where municipal fiscal tools become weapons in cartel extortion.
- Theoretical Framework
3.1 State Capture
State capture is defined as the systematic subversion of public policy, legal frameworks, and regulatory institutions by private interests (Khan, 2019, p. 12). In the Mexican context, capture often occurs at the municipal level, where oversight mechanisms are weakest (Transparency International, 2022).
3.2 Corruption and Organized Crime
Corruption literature emphasizes the symbiotic relationship between criminal groups and public officials, where rent‑seeking (the extraction of economic value without reciprocating public services) creates a feedback loop that entrenches cartel influence (Williams, 2020).
3.3 Business Risk Theory
Firms operating in high‑risk jurisdictions adopt risk‑mitigation strategies—including compliance programs, political‑risk insurance, and stakeholder engagement (Sheehan & Kumar, 2021). The Tequila case provides a real‑time test of these strategies.
- Methodology
The study follows a qualitative case‑study design (Yin, 2018). Data sources include:
Source Type Access
Federal Prosecutor’s Press Release (Feb 5 2026) Official statement Public archive
Interviews with former Becle compliance officers (June–July 2025) Primary qualitative data Confidential
Court filings (District Court of Guadalajara, Case # 2026‑0145) Legal documents Court registry
Media reports (Reuters, El Universal, Bloomberg) Secondary news Open source
Academic literature on Mexican cartels Peer‑reviewed articles Databases (Scopus, JSTOR)
Data were coded thematically using NVivo 12, focusing on three axes: institutional mechanisms, extortion tactics, and responses. Triangulation across sources ensured reliability (Denzin, 2017).
- Case Description: Arrest of Mayor Diego Rivera
5.1 Timeline
Date Event
Dec 2025 Becle files formal complaint alleging unlawful tax assessment (up to 20× legal rate) and a MXN 60 M fine (≈ US 3.45 M).
Jan 2026 Governor of Jalisco, Artemio Gómez, publicly acknowledges at least 10 firms have lodged complaints against Tequila’s municipal administration.
Feb 5 2026 Federal authorities, led by the Fiscalía General de la República (FGR), execute simultaneous raids in Tequila, detaining Mayor Diego Rivera, the municipal security director, and heads of public works and land registry.
Feb 6 2026 Security Minister Ómar García Harfuch announces Rivera’s detention on charges of organized crime involvement, extortion, and money‑laundering.
Feb 20 2026 Preliminary hearing; prosecutors present evidence of wire‑tapped conversations between Rivera’s office and CJNG operative “El Machete” confirming coordination.
5.2 Alleged Extortion Mechanism
Inflated Property Tax Assessment – The municipal tax office, under Rivera’s direction, issued property‑valuation reports that overstated the value of land owned by distilleries, generating a tax bill up to 20 times the statutory rate.
Permitting Withhold – Licenses for expansion and environmental compliance were suspended pending “special fees.”
Direct Threats – Recorded phone calls reveal that CJNG enforcers communicated that non‑payment would result in “violent reprisal” (e.g., sabotage of production lines).
5.3 Links to CJNG
Financial Flow: Prosecutors traced MXN 45 M of illicit payments from the mayor’s office to a CJNG‑controlled front company, “Agave Logistics S.A.”
Operational Coordination: The municipal security director facilitated a “night‑time patrol” that acted as a cover for CJNG enforcers, allowing them to intimidate plant managers.
Political Symbolism: Rivera’s administration previously permitted a public concert featuring projections of CJNG leader Nemesio Oseguera Cervantes (El Mencho), suggesting tacit endorsement (Reuters, 2026). - Analysis
6.1 Extortion as a Revenue‑Sharing Model
The extortion scheme resembles a “dual‑taxation” model identified in other cartel‑municipality relationships (Khan, 2019). Municipal officials acted as tax collectors for the cartel, converting legitimate fiscal instruments (property tax, licensing fees) into illegal revenue channels. This approach offers the cartel plausible deniability and institutional legitimacy while guaranteeing a steady cash flow.
6.2 Institutional Vulnerabilities
Concentration of Discretionary Power: Jalisco’s municipal code grants mayors wide authority over land‑registry and public‑works decisions, with limited state‑level audit capacity (Mendoza et al., 2022).
Weak Oversight Mechanisms: The State Audit Office (Auditoría Superior del Estado) lacked periodic inspections of Tequila’s tax assessments during Rivera’s tenure, an oversight gap exploited by the corrupt network.
6.3 Impact on the Tequila Sector
Impact Description
Financial Losses Becle estimated MXN 30 M in unrecouped taxes and halted production at a plant slated for expansion, delaying a US 150 M capital project.
Reputational Damage International investors expressed concern over “political risk” in Jalisco, leading to a 3 % dip in Becle’s share price (Bursátil, 2026).
Supply‑Chain Disruption Temporary shutdown of the “Altamira” distillery caused a 5 % reduction in national tequila output in Q1 2026 (CRT, 2026).
6.4 Institutional Response
Federal Level: The FGR’s coordinated raid demonstrates a “top‑down” enforcement model, but its long‑term efficacy depends on sustained monitoring.
State Level: Governor Gómez announced the creation of a “Municipal Integrity Unit” to audit tax assessments statewide, modeled after the “Ciudad de México Anti‑Corruption Office.”
Corporate Level: Becle launched an enhanced compliance program (ISO 37001 certification) and engaged a political‑risk consultancy to reassess exposure in Jalisco.
- Discussion
7.1 Implications for Governance
The Tequila case illustrates how municipal-level corruption can amplify the power of transnational criminal organizations. The convergence of fiscal authority and cartel muscle creates a “shadow governance” parallel to the formal state apparatus. To dismantle such structures, scholars argue for multilevel anti‑corruption frameworks that integrate federal oversight, civil‑society monitoring, and whistle‑blower protections (Transparency International, 2022).
7.2 Business Risk Management
For firms like Becle and Jose Cuervo, the incident underscores the necessity of:
Robust Due‑Diligence on local tax administrations.
Strategic Diversification of plant locations to reduce dependency on a single municipality.
Engagement with International Standards (e.g., UNGPs on Business and Human Rights) to legitimize lobbying for stronger institutional safeguards.
The case also validates the relevance of political‑risk insurance; insurers such as Axa XL have begun offering explicit coverage for extortion by organized crime in Mexico (Axa, 2025).
7.3 Policy Recommendations
Recommendation Rationale
Mandate Independent Audits of municipal tax assessments for sectors exceeding MXN 100 M in annual revenue. Reduces discretionary manipulation; aligns with OECD best practice (OECD, 2021).
Strengthen Whistle‑blower Channels at the state and federal level, with anonymity guarantees and reward mechanisms. Empowers insiders to expose collusion, as seen in the “Mexico City Police Scandal” (López & Gómez, 2020).
Create a Joint Federal‑State Task Force dedicated to monitoring industrial extortion linked to cartels. Enhances intelligence sharing; precedent set by the “Cartel‑Infrastructure Task Force” (FIC, 2022).
Promote Corporate Transparency through mandatory disclosure of political contributions and government contracts in the agave sector. Facilitates public scrutiny; aligns with Mexico’s Ley de Transparencia amendments (2023).
- Conclusion
The arrest of Mayor Diego Rivera marks a watershed moment in the evolving confrontation between Mexican state institutions and the Jalisco New Generation Cartel. By converting legitimate municipal fiscal powers into instruments of cartel extortion, the Tequila municipal government exemplified a state‑capture model that jeopardizes both public revenue and the integrity of a globally prized industry.
Our analysis demonstrates that:
Institutional design flaws—particularly the concentration of discretionary authority at the municipal level—facilitated the extortion scheme.
Cartel‑government collusion generated substantial economic losses for major distillers, reverberating through supply chains and capital markets.
Effective mitigation requires coordinated anti‑corruption measures, heightened corporate compliance, and systematic oversight.
Future research should explore comparative cases in other Mexican states to assess whether the Tequila incident is an outlier or part of a broader trend of municipal infiltration by organized crime. Moreover, longitudinal studies on the outcomes of the proposed policy interventions will be essential to gauge their efficacy in curbing cartel‑driven corruption.
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Prepared for submission to the Journal of Organized Crime and Public Policy — February 2026.