Whitewater: Mexico officials remain quiet over alleged corruption case involving US energy company | international

During the administration of Enrique Peña Nieto (2012-18), a US company with close ties to a Mexican energy official received contracts worth hundreds of millions of dollars from Comisión Federal de Electricidad (CFE), a state-owned electric utility in Mexico. WhiteWater Midstream, based in Texas, has been gaining attention since 2018, when sources in Mexico expressed surprise at the scale of Contracts awarded to inexperienced startups.

With a penchant for seeking the limelight, Mexican President Andres Manuel Lopez Obrador has remained uncharacteristically quiet about the allegations raised against the US company and key executives who served during the Peña Nieto years. CFE Director Manuel Bartlett also stuck to his tongue regarding the WhiteWater case, even as his company worked to prove wrongdoing in both Mexican and US courts. Meanwhile, Lopez Obrador’s management insists on limiting the participation of private companies in Mexican energy sector.

During his years as director of CFE International, the private arm of the state company, Guillermo Turrent awarded a little-known company in Texas several contracts, including one to supply 15% of the natural gas that Mexico imports daily. Contracts with WhiteWater became particularly problematic in February 2021, when extremely cold temperatures drove up natural gas prices in Texas. The CFE – at Bartlett’s direction – refused to pay the higher costs, which led to the companies entering arbitration proceedings. In July 2021, EL PAÍS published an investigation that exposed relationships between Turrent and WhiteWater executives dating back to 2000. Later that month, the presidency issued a joint statement with the CFE, reporting that Mexican and US authorities had launched separate investigations into WhiteWater Midstream. “To award contracts on suspicion of corruption, breach of trust and abuse of influence.”

To date, there are at least seven known contracts between CFE International and WhiteWater, valued at billions of dollars over the lifetime of the deals. Two other former officials of the conventional armed forces, Javier Gutierrez and Jose Guadalupe Valdez — both of whom held positions close to Torrent — appear in internal documents as executors of at least one agreement with Whitewater, according to the traditional armed forces at anti-corruption hearings in Mexico. . prosecutor. Among their most important findings is an American company owned by Gutiérrez – JG Energy – which Received over $250,000 While the former official worked at CFE. JG Energy is registered at the same address as one of the founders of WhiteWater.

The US Embassy in Mexico contacted analysts to inquire about WhiteWater. Meanwhile, CFE hired the prestigious law firm of Paul, Weiss in Texas to get legal ground there. The company has reached out to a US media outlet to share its findings, indicating that CFE is ready to draw more attention to the issue. However, the State Administration has not responded to several requests for information made by EL PAÍS since last year. The statement made in July 2021 was the last time the CFE spoke about WhiteWater.

The issue has gained more prominence since last month, when the United States and Canada began consultation procedures with Mexico as part of the USMCA (the trade agreement that replaced NAFTA in 2020). While the Mexican government has defended its decision to return the country’s monopoly on electricity to the CFE, its trading partners claim that this violates the trade agreement. Gutierrez’s lawyers have tried to use recent events to their advantage.

“The AMLO administration has ruthlessly sought any means necessary to restore the Mexican government’s monopoly on natural gas and other energy products, including by canceling permits and canceling contracts for private energy projects, seizing the assets of American companies…and threatening[ening] Gutierrez’s attorneys told the Texas judge in a written statement, referring to Lopez Obrador, better known as AMLO.

Analysts agree that linking a potential corruption case – such as the WhiteWater case – to the trade dispute would be a mistake. “It would be like mixing apples and oranges,” says Alejandro Schulman, president of EMPRA, an emerging market risk advisory firm in Mexico City. “The United States says that a business partner is in violation of treaty principles … has nothing to do with whether there is a case of corruption involving a Canadian or American company.”

It is likely that Lopez Obrador and Bartlett will be silent on the whitewater issue because it does not benefit the government politically, says Stolman. Torrent and Gutierrez seem to have acted on their own, without being associated or protected by any Lopez Obrador’s political opponent.

“What we’ve seen is that corruption is suppressed when the president can claim a political advantage,” says Stolman. We are not seeing systematic progress in the fight against corruption. What we are seeing is very specific targeting of issues that are politically appropriate or that can be politically manipulated to give this government victory.” The WhiteWater case does not appear to meet these criteria.

“I am very amazed, not only by the silence of the president, but by the silence of Bartlett, because they tend to be more noisy, more sharp,” says Oscar Ocampo, Energy Field Coordinator at the Mexican Institute of Competitiveness (IMCO).

However, Ocampo notes that drawing attention to a possible corruption case for a US company could generate more tension in bilateral relations.

This is likely to be a reason not to create more tension with the United States on the energy issue. Because in this case, we’re not just talking about CFE executives… we’re talking about an American company involved in this.”