July 15, 2020 / 9:54 PM / 20 days ago

Returned of tainted Pemex boss spells trouble for Mexico's old elite

MEXICO CITY (Reuters) - Once a rising star of Mexican politics, Emilio Lozoya could trigger a precipitous fall from grace of former colleagues if he returns to spill the beans on alleged corruption inside the government of the country’s last president, Enrique Pena Nieto.

FILE PHOTO: Former chief executive of Mexico's state oil firm Pemex, Emilio Lozoya, is escorted by Spanish police officers as he leaves a court after appeared in Spain's High Court via video conference, after his detention in southern Spain on Wednesday, in Marbella, Spain, February 13, 2020. REUTERS/Jon Nazca/File Photo

Lozoya, who is being extradited from Spain to Mexico, is expected home this week to face a series of corruption charges dating back to his 2012-16 tenure at the helm of struggling Mexican state oil company Petroleos Mexicanos, known as Pemex.

Once vaunted as a possible foreign minister, the 45-year-old Lozoya has become a key piece in President Andres Manuel Lopez Obrador’s plan to expose corruption in and around the government he took over from Pena Nieto in December 2018.

Scion of a political family and former grandee of the annual World Economic Forum in Davos, Lozoya has agreed to inform Mexican authorities about what went on during the government of Pena Nieto, Lopez Obrador told reporters this week.

“We’re going to get this all out and make it public,” the president told a regular news conference on Monday.

Lopez Obrador has identified corruption as the source of Mexico’s principal ills, from surging gang violence to widespread poverty and chronic inequality and weak growth.

Aside from making the eradication of corruption his top objective, the president has used corruption to keep a steady barrage of fire trained on the opposition, which hopes to recapture the lower house of Congress in mid-term elections next year.

Lozoya, whom Mexican prosecutors accuse of money laundering and taking bribes from scandal-hit Brazilian construction firm Odebrecht, was one of the closest aides to Pena Nieto, who governed Mexico for the Institutional Revolutionary Party (PRI).

POLITICAL CALCULUS

According to prosecutors, in March 2012 Lozoya solicited and obtained funds from Odebrecht for the PRI presidential campaign, which Pena Nieto won that July, defeating Lopez Obrador.

In exchange, Lozoya awarded contracts to the Brazilian firm as boss of Pemex and also took money in exchange for contracts from Mexican steelmaker Altos Hornos de Mexico, they contend. Lozoya used that money to purchase properties, they say.

Odebrecht has admitted paying bribes in Mexico. The bosses of Altos Hornos have denied wrongdoing.

Additionally, prosecutors contend that while at Pemex, Lozoya spent some $450 million renovating and acquiring an out-of-service fertilizer plant from Altos Hornos de Mexico.

Lozoya, who was arrested in the southern Spanish city of Malaga in February, has denied any wrongdoing.

Lawyers for Lozoya, a onetime director and head of Latin America for the World Economic Forum, have said he always acted under the orders of president Pena Nieto.

Pena Nieto has repeatedly denied any allegations of wrongdoing, as has the former president’s influential finance minister, Luis Videgaray, who is now based in the United States.

Mexican media have been awash with speculation that Lozoya will make damaging revelations about his former colleagues in order to reduce any possible criminal sentence.

Lopez Obrador has been reluctant to point the finger directly at Pena Nieto. But the veteran leftist has suggested that Pena Nieto’s landmark 2013-14 liberalization of the energy market, which Lopez Obrador strongly opposed, was tainted by corruption.

The reform ended Pemex’s 75-year state monopoly on oil production and exploration, and was backed by much of the opposition, in particular the center-right National Action Party (PAN), which remains the strongest opposition force.

Revelations damaging to the PAN could hurt the party’s chances in the next year’s mid-term elections.

“My impression is the president aims to use Lozoya to hit the PAN,” said Agustin Basave, a former leader of the center-left Party of the Democratic Revolution. “He wants to weaken the opposition party that’s in the best shape.”

Additional reporting by Dave Graham; Editing by Leslie Adler

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