Why AMLO Won’t Let the Pemex Investigation Clean Up Corruption in Mexico

The case was expected to be a “blockbuster.” In July 2020, Emilio Lozoya Austin, former director of Mexican state-owned oil giant Petróleos Mexicanos (Pemex), was extradited from Spain to Mexico on charges of bribery, money laundering, and racketeering. The most significant of the charges related to his receipt of $10.5 million in bribes from embattled Brazilian construction firm Odebrecht. Upon his return to Mexico, Lozoya leveled bombshell accusations in a plea for prosecutorial leniency, claiming that former Mexican President Enrique Peña Nieto, along with his former treasury minister, two other former presidents, five former senators, and two former presidential candidates, orchestrated an extensive corruption scheme throughout the government ranging from securing bribes to passing controversial energy reform legislation. Lozoya’s accusations appeared to confirm information that Mexican authorities uncovered years ago. Back in 2017, after Odebrecht admitted to paying millions of dollars in bribes in Mexico, a Mexican special prosecutor determined that in 2012 Lozoya, then the newly-minted Pemex director, awarded Odebrecht several lucrative contracts in exchange for bribes. Then-President Peña Nieto, however, fired the special prosecutor and stalled the investigation.

But Mexico’s current president Andrés Manuel López Obrador (AMLO), who made anticorruption a cornerstone of his 2018 presidential campaign, vowed to reignite the investigation and prosecution of Lozoya. And last year’s extradition of Lozoya to Mexico seemed to be a sign that Mexico was (finally) on the verge of a real reckoning with endemic corruption akin to the Lava Jato (Car Wash) investigation in Brazil. Lava Jato, which began as an investigation into alleged corruption and money laundering by Brazilian state-owned oil company Petrobras, eventually ensnared Odebrecht, exposed the company’s decade-and-a-half long bribery scheme in a dozen countries, and led to the recovery of more than $5 billion in government funds and the conviction of more than 170 people—including several senior politicians. Despite recent setbacks (including the premature disbanding of the Lava Jato Task Force and the judicial invalidation of the operation’s highest-profile conviction), the Lava Jato investigation nonetheless provides a template for how an investigation that starts with one corrupt official at a state-owned country can snowball into a national reckoning that disrupts a long-entrenched corrupt system. The parallels between Lava Jato and investigation into Pemex are obvious, and many anticorruption advocates, both inside and outside of Mexico, were hoping for something similar.

Instead, nearly a year after Lozoya’s arrest, there has been little progress on the case, and it seems increasingly unlikely that this investigation will prompt the same kind of anticorruption reckoning as in Brazil. Indeed, court-watchers now fear that Lozoya and those he named will escape any real consequences. While many factors have contributed to this disappointing result, an apparent lack of enthusiasm and commitment from AMLO and his government has played an important role. Instead of doing everything in his power to move the investigation forward, AMLO slashed the budget of the Mexican Attorney General’s Office (FGR), which is leading the Pemex investigation, condoned soft treatment for Lozoya, and has seemed generally ambivalent about the investigation’s apparent lack of progress.

AMLO’s behavior is this regard seems puzzling, since one would think that AMLO has every incentive to support the investigation. After all, AMLO’s 2018 anticorruption platform was wildly popular, and—especially given that his support is waning—revitalizing this anticorruption narrative might improve the standing of his newcomer political party, Morena, heading into this coming June’s midterm elections. So why has AMLO’s support for the Lozoya investigation been so tepid? There are, I think, two main explanations, both of which cast doubt on the sincerity of AMLO’s commitment to rooting out corruption in Mexico’s government.

  • First, AMLO may be fearful that an expansive investigation could end up ensnaring members of his own government. Although the figure at the center of the Pemex scandal is AMLO’s predecessor and political rival Peña Nieto, many of AMLO’s highest-ranking advisors were actually members of Peña Nieto’s party or administration. If a thorough investigation into allegations of corruption at Pemex implicates AMLO loyalists, this could seriously undermine AMLO’s image and message. So, AMLO wants to keep the focus on Peña Nieto, and is happy to emphasize the allegations against him, but AMLO does not seem particularly committed to ensuring that the broader investigation succeeds in uncovering details regarding everyone who was involved in the alleged scheme. And there is plenty of evidence that AMLO’s fears of the investigation implicating his political allies are justified. For example, Manuel Bartlett Díaz, a longtime senator who now heads Mexico’s state-owned electricity company, has been called “AMLO’s Lozoya” and dodged allegations of self-dealing in the past. Alejandro Encinas Rodríguez, AMLO’s Undersecretary for Human Rights, Population and Migration, became tied to the Pemex investigation after a 2013 tweet from Lozoya surfaced in which Lozoya shared a photo of himself and Encinas declaring that they two had had a “very profitable meeting.” And Ernesto Acevedo Fernández, AMLO’s Undersecretary of Industry and Commerce, was linked to several companies implicated in Pemex’s grossly inflated purchase of a fertilizer plant, another scheme facilitated by Lozoya that the Pemex investigation is reviewing. AMLO’s shielding of these advisors and others contradicts his pledge that even his “brothers-in-arms” would not be spared from anticorruption probes, and only furthers the culture of impunity that frustrated Mexicans elected him to break.
  • Second, AMLO could be concerned that a far-reaching investigation would result in substantial reforms to Pemex, like what happened to Petrobras after Lava Jato. But AMLO doesn’t actually want to reform Pemex. This may explain why the FGR (formally independent, but in practice run by one of AMLO’s close confidants) has kept the Pemex investigation shrouded in secrecy. With details of the investigation—and evidence of impropriety at Pemex—off the airwaves, AMLO can spin the narrative that Pemex is not in need of reform—a narrative that benefits AMLO both politically and personally. His support for Pemex, one of the largest employers in Mexico and a symbol of national pride, has always been popular among voters. Additionally, the government relies heavily on Pemex’s revenue for the national budget. Mexican politicians and their parties have even been known to pilfer Pemex’s coffers for their campaigns (see here and here). And AMLO and his family benefitted financially from their relationship with Pemex. Leaving Pemex as is—and potentially even putting Pemex back in control of the energy market—without reforming the internal procedural deficiencies that Lozoya exploited won’t help Pemex or Mexico. In fact, the status quo will only ensure that Pemex remains a political tool for the executive and significant conduit for corruption.

Unfortunately, AMLO’s strategy seems to have paid off. According to polling, Morena maintains a comfortable lead over challengers ahead of the midterm elections despite the fact that the Pemex investigation is drawing to a close without sweeping findings. Without updates on the investigation’s progress, the story has gradually faded into the background of the public consciousness. This is understandable. However important anticorruption may be for the average Mexican citizen, there are other pressing issues vying for attention: Covid-19 is far from contained, the economy is struggling, and violence has been on the rise. But this is a disappointing result for those who had hoped that this investigation would ignite real institutional reform. Unfortunately, Mexico will have to wait a little longer with AMLO at the helm.

7 thoughts on “Why AMLO Won’t Let the Pemex Investigation Clean Up Corruption in Mexico

  1. Fantastic post Laurel! So I’m curious if you agree that AMLO seems to be all bark and no bite? Is his anticorruption campaign merely a means to get him elected and is more of a power grab? Otherwise, I agree that his actions do not seem to match his words and I would imagine someone who is truly committed to rooting out corruption would surrender people within his own administration to achieve that aim.

    • Thanks, Vincent! Yes, I agree with your assessment. Perhaps AMLO genuinely cares about anticorruption at some level, but it does not seem as high on his priority list as increasing executive power, among others.

  2. Good post, Laurel. You are right, everything is moving at a snail´s pace. However, the FGR is beginning to move on the bribes paid to legislators, but that is small potatoes compared to the corruption in Pemex. Of course, one of AMLO´s priorities is to bolster and save Pemex. He likely sees attacking Pemex corruption as potentially undermining those efforts. From another perspective, however, addressing Pemex´s corruption might be the key to saving it.

    • Thanks for your comments! Yes, it is great to see some movement, albeit not the sweeping reckoning that we hoped for. I recognize that tackling corruption at Pemex is full of risks for AMLO, both politically and economically. But I think reforming Pemex would be the best way forward for the long-term, instead of continuing to prop it up.

  3. This is a great post Laurel! I wonder how big of a story this is in Mexico? If it become a bigger story, I wonder if the pressure will grow on AMLO to try and actually deal with this problem. It seems like because polling remains high for Morena that this might not be a big story. But if this became a bigger deal, then it seems like a good tool for opposing political parties to use to undercut AMLO’s anticorruption image.

    • Thanks, Michael! There continues to be a fair amount of media coverage regarding the investigation, updates on charges, etc. And you’re right to think that the lack of progress should be ammunition for Morena’s opposition. But AMLO’s (often unpredictable and controversial) action in other areas — and national crises — have diverted media and political attention away from the investigation, not unlike what happened in the United States with the previous administration. Also, if voters didn’t really expect the investigation to change anything, they are not going to penalize him for the investigation’s failures.

      • It’s interesting to compare this conversation with Astrid’s recent post on Peru. In it, she suggested the public reaction to COVID vaccine corruption was a bit overwrought. In addition to country differences, I wonder if the nature of the corruption here versus in Peru is also salient to public engagement.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.