Monday, May 14, 2007

Scandal Again Looms Over Mexico’s Oil Company

By Enrique Andrade González

Seemingly the new government of Mexican President Felipe Calderón has started to settle some accounts leftover from the past administration.  Doing so to a certain extent on its own, and in part being forced to do so by circumstances and third parties, the latter demanding clarity and transparency of accounts from the Vicente Fox government (2000-06).

The Calderón administration has to readdress matters left pending with respect to alleged abuse by public officials during the past government.  Cases such as the contracts through political influence issues of the brothers Bribiesca Sahagún, the sons of former first lady Marta Sahagún de Fox.

And there are those of former cabinet ministers like Eduardo Romero, who was Secretary of Civil Service [SFP], and Secretary of Labor and Social Security Javier Salazar, for negligence with things like the miners’ union, and the deadly mining accident at Pasta de Conchos, Coahuila.  There are also issues of undue payments and commissions in connection with communications and transportation, along with other suspected and yet to be known acts of malfeasance.

One worrisome problem, due to its potential impact on the national economy, is a possible new scandal in connection with Mexico’s most important state-owned company, the oil and gas conglomerate Petroleos Mexicanos, or Pemex.  This involves former Pemex officials, including Fox’s director general Raúl Muños Leos, as well as members of the 100,000-plus Oil Workers’ Union — economically one of Mexico’s most powerful unions.

This makes one think back to the year 2000 and Mexico’s resulting “Pemexgate,” when former Pemex officials, members of the Oil Workers’ Union, and leaders of the Institutional Revolutionary Party (PRI) supposedly conspired to channel union funds to the PRI’s presidential candidate and campaign.  The accusations and charges went on from 2001 until 2006, when the matter was finally settled with a slap on the wrist as highlevel judicial officials ruled there was insufficient proof of a crime.

Those thought responsible were not convicted of any offense, although the PRI was fined.

But Pemex suffered more serious economic and political consequences, insofar as it was unable to advance towards modernization for six years — and today it is paying the price.

The first signs of a new Pemex scandal appeared following an observation by government auditors during the latter years of the Fox administration.  Overseers noted the need for an investigation, starting with Muños Leos, insofar as he committed US$170 million to the Oil Workers’ Union, during the signing of the 2004 collective contract, without legal authority to do so.  Moreover, the observation indicated it was money Pemex did not have.

Even before talk of the possible direction the Pemexgate affair between the government, Pemex and the union might take, differences surfaced.  At first, in 2000 the investigation centered on the union for supposed improper contributions to the PRI presidential candidate’s campaign, a legal assumption that subsequently involved not just the union, but too Mexico’s electoral institutions and the political party.

The scandal was quickly sparked, mainly due to the political impact of involving Mexico’s firmest political party, the PRI, that at the time still held majorities in Congress and state governorships.

As well, involving the PRI was Fox’s biggest mistake during his first months in office.  Especially since union leaders were so intimately tied to the PRI, for better or for worse.

The impending scandal will not be about factors of external power or influence over Pemex, nor will it relate directly to political accusations.  It will involve issues that by nature are mainly legal and accounting technicalities, that so far at least do not appear to be criminal actions.  In other words, this is a situation that leastways will begin as an administrative matter, under the jurisdiction of the Secretariat of Civil Service.  All of which means, for the time being those involved can only be public servants.

Yet subsequent stages, if factors are revealed that would make it in the best interests of the government to do so, may lead functionaries to undertake new criminal investigations of ex-officials and union leaders.  And this would have an obvious economic and social cost for the nation.

So far, however, this whole issue has not attracted much attention, except in the Mexico City newspaper El Universal.  Nor has any group, up to now, taken a special interest in “furthering” or “promoting” the scandal.  But this may simply be because the time is not right, insofar as negotiations are currently underway for a new collective contract between Pemex and the Oil Workers’ Union.

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Enrique Andrade, a Mexico City-based attorney and business consultant, writes a weekly column for MexiData.info.  He can be reached via e-mail at enriqueag@andradep.com.