Mexico Looks The Other Way As Contractors Fleece Oil Giant Pemex



Reuters

MEXICO CITY, Jan 23 (Reuters) - The state-owned petroleum giant Pemex paid $9 million in 2011 to have an oil rig towed halfway round the world, from the United Arab Emirates to the Gulf of Mexico. When government auditors looked at the contract, they turned up some problems.

The rig had the wrong equipment for the assignment, according to a report by Mexican congressional auditors. And the tow job itself was a fiction: The rig didn't need to be moved. It was already in the Gulf of Mexico.

The auditors alerted Pemex in February 2013, urging it to discipline the employees who handled the contract. Pemex did nothing. About a year later, an explosion aboard the rig killed two workers. The cause of the blast is still under investigation by Pemex.

The rig deal, a Reuters examination finds, is typical of the way Pemex and the government respond to widespread signs of fraud in the company's vast contracting budget: by looking the other way.

Reuters identified more than 100 Pemex contracts signed between 2003 and 2012, worth $11.7 billion, that were cited as having serious problems by the Federal Audit Office of the lower house of the Mexican Congress. The allegations ranged from overcharging for shoddy work to outright fraud. The deals were worth about 8 percent of the $149 billion in Pemex contracts registered in Mexico's federal contracting database in that period.

Pemex almost always disregards these warnings. From 2008 to 2012, the most recent year of available data, the congressional auditors issued 274 recommendations that Pemex take serious action over contract irregularities - either press criminal charges, discipline employees or claw back money.

The company issued responses to 268 of the cases. In only three of them was action taken. The result: A handful of employees received suspensions. Pemex's internal control office dismissed 157 of the cases. As of last month, 108 were unresolved.


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