Inquiry Into Outsourcing Firm Stirs Mexican Political Circles TUXTLA GUTIÉRREZ, Mexico - In the 1990s, they helped their parents run a small family food stand in front of a bus terminal in southern Mexico. Today, the Álvarez Puga brothers, Alejandro and Victor, sit atop a multimillion-dollar financial consulting firm, travel in private jets, own property in New York and boast of having clients around the world. But rather than an unlikely story of triumph over the odds, the authorities here are investigating whether the Álvarez Puga brothers" powerful firm, which provides administrative services and fiscal advice to a long list of widely recognized companies, set up an elaborate scheme to pocket tax payments and engage in other fraudulent practices. The investigation, which has led to international warrants against the director of the firm and one of the Álvarez Puga brothers, has lifted a veil on the widespread tax evasion in the growing and increasingly powerful outsourcing industry here, as well as the deep, often questionable ties between business and politics. A former state governor, Pablo Salazar Mendiguchía, is being held in prison pending trial, accused of, among other offenses, accepting $1.5 million in "illicit" money to direct business to the firm, Álvarez Puga & Asociados, according to the Chiapas State government. And in recent weeks, Interpol, the global police body, has issued so-called red notices seeking the arrest of the director of the firm, José Antonio Aguilar Bodegas, a former senator, on suspicion of "organized and transnational crime," and that of Alejandro Álvarez Puga, the vice president of the firm, on bank fraud and other charges. The firm is well known in Mexican business and political circles for providing a form of outsourcing services - setting up an array of companies to handle the labor obligations of other businesses, including paying their employees" salaries and corresponding taxes - for hundreds of Mexican and international companies. The case has set the political world here buzzing because of the firm's longstanding connections to top politicians. Santiago Creel Jr., the son of Santiago Creel, a former cabinet secretary who sought the incumbent party's nomination for president, is a prominent director in the firm, though neither of the Creels has been implicated. Typically, domestic and multinational companies hire a third party like the Álvarez Puga firm to arrange the payment of payroll, tax and other fiscal liability for workers. Arturo Urbina, a Mexican lawyer who has written extensively about corporate tax issues, said as many as five million workers in Mexico may have been hired under outsourcing arrangements over the years. But whether taxes for those workers have actually been paid is another matter. A study from the Autonomous University of Nuevo León, using data from the Mexican Treasury, estimated tax evasion by outsourcing arrangements between 2004 and 2010 to have reached $1.2 billion. Other estimates are higher, and some Mexican tax authorities say that many companies hiring these outsourcing firms are aware of - and complicit in - the tax evasion. Government auditors said they had identified at least 6,500 outsourcing firms that had failed to pay the taxes of the workers they handled. Beyond that, Alberto Real Benítez, the general administrator of federal fiscal audits in Mexico, said that most companies hiring such firms were aware that taxes were not being paid properly. "If it's not 100 percent, it's close to 85, 90 percent that are conscious of what they are doing," he said of the client companies. Sitting in a modern, minimalist conference room inside the firm's headquarters in Mexico City, Victor Álvarez Puga, the president of the firm, said his brother and the firm were being made targets as part of a political dispute with their home state's government.