The Buchanan/Rafa Total Yacht Works Mess

The last thing the sailing world needs is another messy story out of Mexico, but it’s hard to ignore this one, as it involves a longtime respected marine business in Mazatlan, one mostly owned by a Canadian, who apparently decided that it was in his best interest to flee the country on his boat.

The background of the story doesn’t seem to be in dispute. In the year 2000, Canadian Bob Buchanan showed up in Mazatlan, which was just getting off the ground as a pleasure yacht center, with his then wife Leana aboard their Acapulco 40 Bolias Dream. Bob started doing engine repair and eventually entered into business with Rick Cummings, who still does marine work in Mazatlan. Rafael ‘Rafa’ Serrano Venegas, who had his own engine business, although not on boats, started working for Buchanan and Cummings when they had a business together, and alternatively for the two after they went their separate ways.

Five years ago, after working off and on for Buchanan for five years, Rafa says he was asked to become a 25% partner in a Mexican corporation Buchanan was starting. Buchanan would own 75%. Rafa tells us he wasn’t crazy about the idea, but agreed to it. Although he would receive a weekly paycheck, he’d have to pay his own health insurance. That lasted until about a year ago, at which point Rafa wanted to be an employee — as well as a 25% shareholder — so he wouldn’t have to pay health insurance premiums out of his pocket.

Starting last summer, the versions of what happened are likely to be in dispute.

According to Rafa, the 10-year relationship started to fall apart in September, when Rafa asked Buchanan for a loan against five year’s worth of profits he believed he was owed. He wanted a loan against the profits instead of the profits themselves, he says, because Mexican law meant it would have taken several weeks to go through the legal distribution process.

According to Rafa, Buchanan didn’t want to show him the books, and when he finally did, "it was all red" — meaning they showed there hadn’t been any profits. Rafa, who says he often worked 10 hours a day, couldn’t believe there weren’t lots of profits. Why any 25% owner in a business would wait five years for an accounting of the business or his share of the profits is beyond us, but Rafa explained it by saying Bob was the administrator.

In any event, by October 1 Bob and Rafa decided they would split the Total Yacht Works space at the Fonatur Singlar Marina, and start their own businesses under different names. But Rafa also contacted a lawyer, who demanded to see the books. When the lawyer eventually got to see them, he somehow came to the conclusion that there had been $600,000 U.S. profits over the five years Buchanan and Rafa had been in business together, and thus demanded $150,000 from Buchanan on behalf of his client. At some point Hacienda, the Mexican IRS, got involved, or it was threatened to be brought in. Rafa tells us had he gotten the $150,000 U.S. he believed he was owed, Hacienda would not have been a problem.

Rafa tells Latitude that his lawyers discovered that Buchanan had big bank accounts in the United States and Canada. It’s not clear to us how his lawyer could have discovered such accounts. Rafa says it was through "investigation." But Rafa admits that Buchanan did not live a wealthy lifestyle.

In any event, numerous sources in Mazatlan tell us that Buchanan and his girlfriend haven’t been seen since January 19, and his Acapulco 40 and her boat have been absent from their Isla Marina slips. It is widely believed that they have both fled Mexico, without having checked out with the port captain.

Rafa says that only one or two boats Buchanan and his team had been working on were left in limbo with work needing to be completed. As best we can tell, that’s where things now stand. Rafa says he may continue a suit, which he believes will eventually lead to Interpol looking for Buchanan.

We can only assume that Buchanan has a very different version of what happened and why. Others in Mazatlan give an entirely different picture of the one painted by Rafa. "Bob was the only class act in Mazatlan, the only one with a sense of honor and integrity," wrote one. The same reader said that "anti gringo sentiment is at an all-time high in Mazatlan," and that Buchanan and Bruce Raymaker, the yacht broker who worked out of his business, had been physically threatened by thugs, and had had equipment and materials stolen. It’s also been alleged that Rafa had become a big drag on Total Yacht Works business, and once he opened his own business, found out that he wasn’t able to attract enough business to pay the bills. Once again, these are unproven allegations, not facts.

Then there is the middle middle view, where the situation in Mazatlan was described as "the best it’s ever been in terms of marine industry business," until Bob and Rafa became "like two stubborn kindergarten kids who just couldn’t get along." The result is, currently at least, a very bad situation, where workers and suppliers are owed lots of money, and the once terrific reputation Mazatlan had as a place to get boat work done is at least temporarily tarnished.

A word about taxes in Mexico. Mexico is possibly one of the few countries where businesses and individuals pay less of the taxes owed than do the Greeks. "If anyone did pay the taxes they really owed," said one small businessman, who we believe is about as honest and altruistic as they come, "they’d really get screwed because all their competitors — who don’t pay taxes — would have such a big competitive advantage." The result is that any partner in a Mexican business almost always wields the nuclear option of telling Hacienda that the majority partner didn’t pay the taxes the company owed. As foreign boat owners know, you don’t need to be guilty of anything to end up in a world of trouble with Hacienda.

If you’re a foreigner thinking about starting a business in Mexico, alone or with a Mexican partner, our advice is to think very, very carefully before taking the plunge. Mexico has the 14th biggest economy in the world, just ahead of South Korea and just a little bit behind Spain. Yet the World Trade Organization — which among others ranks Mexicans as the hardest workers in the world — ranks Mexico a dismal 53rd for ease of doing business.

By the way, we wrote a pretty big story on Mazatlan for the February issue of Latitude that will be out this Friday, January 31. We hadn’t been in for about five years, and we were knocked out by how much better it seems now than it did then. We hope it’s able to quickly bounce back on its feet.