March 15, 2018 / 12:14 AM / 6 months ago

Calls for probe of Mexico state pension fund investment after Reuters report

MEXICO CITY (Reuters) - The head of a Mexican congressional committee on Tuesday called for an investigation of an investment by state workers’ pension fund PensionIssste, after Reuters reported it spent millions on shares in a company spiraling toward bankruptcy.

PensionIssste spent around 400 million pesos ($21.5 million) buying the largest stake in builder ICA (ICA.MX), even after its shares had fallen by more than half in the previous year, three people with knowledge of the investment told Reuters.

It stands to lose almost all its investment in a restructuring.

Monday’s report angered many people in Mexico, where the opaque use of resources by public entities has been a recurrent theme during the six years of President Enrique Pena Nieto’s government.

“They can’t play with workers money like this, it’s not their money, it’s the people’s money,” Araceli Damian, president of the Social Security Committee in Mexico’s house of deputies told Reuters late on Tuesday after the story was widely reprinted and commented on in Mexican media.

“It’s not normal, they invested in a company that was clearly in a situation that put workers savings at risk.”

Damian, who is from presidential frontrunner Andres Manuel Lopez Obrador’s Morena party, said that Mexico’s Public Administration Ministry SFP, the government’s main anti-corruption auditor, should investigate how the decision was made to invest the money.

Issste, the government workers’ social security body, said in a statement on Tuesday that PensionIssste’s investment decisions were made in strict accordance with the law and that its portfolio was “extremely conservative.”

Issste did not immediately respond to a request for comment about Damian’s call for an investigation.

Regulator Consar said that it looked at the purchases and found they complied with the rules.

But Gustavo De Hoyos, head of prominent business chamber Coparmex, said the situation was worrying and that there must be checks made that no investment rules were broken.

“We are owed a clear, conclusive, unequivocal explanation on whether, in the investment process, the rules were scrupulously observed,” he told reporters on Tuesday on the sidelines of an event.

Several of Mexico’s leading national newspaper columnists have written about the report. One columnist at Mexico’s Excelsior newspaper said “There are some stories that just make you angry. This is one of them.”

($1 = 18.5770 Mexican pesos)

Reporting by Christine Murray; Editing by Frank Jack Daniel and Grant McCool

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