Mexican governor: Feds withhold funds on corruption probe

The governor of the northern Mexico state of Chihuahua says federal authorities have refused to disperse millions of dollars in funding because of a state investigation into possible embezzlement involving the Institutional Revolutionary Party, which is led by President Enrique Pena Nieto.

Mexican states rely heavily on federal revenue sharing. Gov. Javier Corral said Monday that the federal government agreed to bridge funding of about 700 million pesos in December, but then refused to pay after state prosecutors arrested a former official of Pena Nieto's party,

Alejandro Gutierrez is accused of diverting about 240 million pesos ($12 million) in public funds for political campaigning under former Chihuahua Gov. Cesar Duarte.

The federal Treasury Department denied any political motive, saying it has paid out more money than originally budgeted for Chihuahua.