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US Securities Exchange Commission Investigates Peña Nieto


Former Mexican President Enrique Pena Nieto. Photo: spokesman.com

By RICARDO CASTILLO

Just when former President Enrique Peña Nieto thought Mexicans had forgotten him forever and ever, his name hit back in the news bigtime again on Tuesday, June 18, when a Mexico City daily ran a leaked report linking him to a corruption investigation that occurred during his 2012-2018 shift in office.

The news item stated that the U.S. Securities Exchange Commission (SEC) was investigating a case of bribery on the purchase of the fertilizer production plant Fertinal. The reason why the SEC is looking into the Fertinal purchase and its ensuing bankruptcy is because it belonged to Mexico’s state-run oil giant, Petróleos Mexicanos (Pemex), a company that quotes on the New York Stock Exchange. That makes it subject to U.S. law.

The scant info offered by the newspaper, El Universal, in Monday’s edition indicated that the SEC is basing its investigation on data provided by a protected witness, but it is enough to involve not only Peña Nieto, but the owners of the once-divested-from-Pemex company, including TV mogul Ricardo Salinas and an Italian named Fabio Massimo Covarrubias Piffer, who allegedly received $635 million from former Pemex director Emilio Lozoya Austin.

This case has nothing to do with the alleged swindle at yet another fertilizing manufacturing petrochemical plant, Agronitrogenados, located in the Gulf of Mexico port city Pajaritos. In the Agronitrogenados case, the former owner, Alonso Ancira, is already in jail in Spain, awaiting extradition to Mexico, and there is a standing arrest warrant for Lozoya Austin. (For further background, please see my article “Mexican Steel Tycoon’s Arrest Foreshadows Political Storm.”)

On Wednesday, June 19, Mexican Fiscal General for the Republic issued an order for an investigation to be carried out on the Fertinal case.

There was immediate response Monday morning, after the article on the Fertinal plant was published, with Peña Nieto, who tweeting in Spanish:

“I categorically reject the false imputations against me, published this morning in different media and attributed to an alleged informant. This is not the first time someone tries to impute me in ill will and without any basis. Of course, they are lying.”

President Andrés Manuel López Obrador (AMLO) was asked immediately after the publication of the alleged backroom deal and he answered he had no information on Peña Nieto being bribed for allowing the repurchase of Fertinal but had heard about it.

“But it would be highly unlikely that the president would not be informed of such a high stakes transaction”. Since this was a theme he constantly hammered on during his campaign he added that he would be willing to carry out an investigation not just on Peña Nieto, but on all the corruption that went on since 1988 when President Carlos Salinas arrived in power. AMLO added that this looked like “an operation carried out by the state,” which would, of course, involve the president in turn.

Former Fertinal Director General and fraud suspect Fabio Massimo Covarrubias Piffer on Wednesday, June 19,  jumped into the arena sending, a letter to news station Radio Formula claiming that when he sold Fertinal back to Pemex in 2015, “the buyer received a productive, efficient, healthy and successful company. Today, its status is very different from what was delivered. What the buyer did can be compared to someone buying a perfectly good car to strip it down, get it out on the street, provoke a crash and blame the seller for the sorry state of the vehicle.”

Pemex bought Fertinal – the leading producer of phosphorous fertilizer in Latin America – from Covarrubias in a highly questioned operation because the company – contrary to what Covarrubias said – operated way below capacity and at a very high cost. The final price tag put on it was $635 million, which, according to Lozoya Austin, was an operation “approved by the Pemex board of directors,” then headed by Energy Secretary Pedro Joaquín Coldwell.

Fertinal has a long history of shady deals in its past. It was first divested from Pemex in 1998 and acquired by Covarrubias and his partner former Coahuila Governor Rogelio Montemayor (who had also been a Pemex director). Six years later, the firm declared bankruptcy and applied to be rescued by the Bank Savings Protection Institute (IPAB). In 1999, it had already been the subject of a $50 million loan from Bancomext, which, of course, was never paid back.

It was rumored on Wednesday that Covarrubias was forced to come into the open with his self-defense letter to Radio Formula given his close relationship to Salinas de Gortari, who allegedly was his political protector and godfather. The immediate next question was whether Salinas was involved in the scam.

There’s been no word from the SEC as to the alleged investigation, but it certainly was the gossip of the day as Mexican Fiscal General Office officials keep combing the nation looking for Lozoya Austin, who, according to his defense lawyer, Javier Coello Trejo, “they will never find.”

Just an added bit of info on the issue: Given the closure or intended bankruptcies of these two fertilizer plants, Mexico now has to import 75 percent of the fertilizer it uses for agriculture. This makes Mexicans, who always like to look upon their misfortune with a smile, quip: “Mexico Importa,” which may mean Mexico matters, but also Mexico imports when it could be producing food.

Corruption, anyone?

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Categories: Mexico, Mexico-U.S. relations, Opinion, Politics, UncategorizedTags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

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