Transparency & accountability

PEMEX executive resigns amid allegations of corruption

A senior executive with the Mexican state oil company PEMEX resigned after the Mexican newspaper Reforma reported that he accepted a free trip from a software company that had recently won a $30 million contract from PEMEX.

The German software company – SAP – reportedly footed the bill for PEMEX executive Manuel Reynauld to take a four-day trip to Monaco’s Formula One Grand Prix. Reynauld was PEMEX’s director of business processes and technology and infrastructure. The executive apparently took the trip not long after PEMEX awarded the software company a $30 million contract.

PEMEX responded by saying they have initiated an internal investigation and the agency is also seeking additional details about the arrangement from SAP. PEMEX chief executive Jesus Reyes Heroles told media that “with regard to ethics and the fight against corruption, the policy of PEMEX will be zero tolerance.”

Speaking this month in Veracruz, Mexican President Felipe Caldron addressed the issue of corruption in PEMEX in particularly strong language, admitting that corruption affects PEMEX in “diverse areas” which including the assignments of contracts. Calderon said that the transformation of the agency is being held back by politics, ideology and special interests.

The Mexican president appeared to chide PEMEX officials by saying that it is not possible to continue doing business as usual because that has proved to be ineffective. Calderon said PEMEX production has declined and reached a negative commercial balance in 2008, but that he is hopeful that with recent reforms to the system the situation will improve.

PEMEX has faced other corruption scandals in recent history. In December 2008, the German company Siemens agreed to pay $1.6 billion in fines to U.S. and European authorities in connection with their use of bribery to secure contracts for public works projects throughout the world, including in Mexico. In that case about $2.6 million in bribes were paid to a high-ranking official with PEMEX. The actions took place sometime between 2001 and 2007.

Last year, Mexico’s Congress approved an energy reform package that included specific measures to prevent corruption within PEMEX. Under the reforms, PEMEX has the option of entering into contracts with private groups, primarily for exploration purposes. It also allows for ordinary citizens to invest in PEMEX for the first time in the institution’s history. In order to attract this kind of outside funding, greater transparency measures were included as a way to ensure better accountability.

From the June Justice in Mexico Project’s Monthly News Report:

Melgar, Ivonne. “Llama Calderon a erradicar corrupcion en Pemex.” Excelsior. June 11, 2009.
“Pemex exec quits after report of trip paid by SAP.” Reuters. June 5, 2009.

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