SIM Report: Latin America & the Caribbean, Issue 6

MEXICO: High-level corruption case set to prompt probes into prior administration

On 16 July, Emilio Lozoya, the former CEO of state-owned oil company PEMEX, arrived in Mexico City by plane after being extradited from Spain on corruption charges. Lozoya’s apprehension and return to Mexico, on charges linked to corruption prior to and during the administration of former president Enrique Peña Nieto, marked the most significant anti-graft development during the administration of incumbent President Andrés Manuel López Obrador, who took over from Peña Nieto in December 2018. Since his arrest in Spain in February 2020, Lozoya has agreed to cooperate with Mexican prosecutors probing corruption during the Peña Nieto government, potentially prompting legal cases against former high-ranking elected officials and probes into business agreements penned under the last Institutional Revolutionary Party (PRI) government.

The case is particularly significant due to Lozoya’s close political ties to Peña Nieto. As well as serving as the CEO of PEMEX, Lozoya led the international affairs office of Peña Nieto’s 2012 electoral campaign, working alongside future senior cabinet ministers, including ex-finance minister Luis Videgaray. In declarations to prosecutors since his extradition, Lozoya has claimed that Peña Nieto and Videgaray instructed him to direct more than USD4 million worth of bribes during the 2012 presidential campaign to foreign electoral consultants, and also to pay off opposition legislators for their support for several significant economic reforms carried out during the first half of Peña Nieto’s administration. This has led López Obrador’s administration to consider opening probes into both men. Peña Nieto and Videgaray have not commented on the latest allegation; however they have previously denied corruption allegations against them.

Allegations of widespread corruption tainted the previous administration and members of the ruling PRI party. Former PRI governors including Javier Duarte of Veracruz and César Duarte of Chihuahua fled Mexico amid corruption allegations and have since been arrested and detained. During his presidency, Peña Nieto faced repeated questions over his then-wife’s apparent acquisition of a MXN 86 million (USD7 million) house in an exclusive neighbourhood of Mexico City from a company linked to the country’s first high-speed rail contract. Peña Nieto repeatedly denied wrongdoing. Widespread public anger over government corruption, together with rising insecurity and sluggish economic growth, saw Peña Nieto’s approval ratings fall as low as 12 per cent. In 2018, López Obrador capitalised on rising public discontent, promising to eradicate corruption and lead a ‘moral regeneration’ of the country.

In the first year of López Obrador’s presidency, however, there were few significant steps taken towards his pledges to eliminate corruption. López Obrador refused to criticise members of his cabinet and other political allies facing allegations of unexplained wealth, such as head of the Federal Electricity Commission (CFE), Manuel Bartlett. Furthermore, López Obrador repeatedly signalled his reluctance to investigate and charge former presidents, instead saying he would consider allowing the public to vote on whether ex-presidents accused of corruption should stand trial. The arrest and extradition of Lozoya, therefore, mark an important change of direction for the current administration. As no former Mexican president has been charged or jailed for corruption in modern history, any probe of Peña Nieto, or his close allies, would signal a new direction for anti-graft policy in the country. Investigations would likely go beyond the highest-ranking officials, likely leading to probes into other cabinet ministers and public contracts signed under former administrations, particularly in the energy sector liberalised under the prior administration. Companies with interests in Mexico, particularly related to public contracts signed under previous governments, should monitor anti-graft developments, cooperate fully with requests from judicial authorities, and assess how these affect operations and strategy.

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