The Pemex-PRI Affair

Oil, Politics, and Scandal in Mexico

"The government's piggy bank," Pemex's Mexico City Headquarters (Photo: AFP).

Mexican president Vicente Fox's administration is investigating the alleged diversion of more than US$100 million from Pemex, the state-owned national oil company, to Institutional Revolutionary Party (PRI) candidate Francisco Labastida's presidential campaign during the 2000 elections. The PRI lost those presidential elections for the first time after more than seven decades of continuous rule in Mexico.

As news of the investigation was leaked to the Mexican press, the top story in the Jan. 19 edition of Mexico City's left-wing newspaper La Jornada quoted anonymous, "credible" sources who revealed that Pemex transferred the US$100 million to the Mexican Oil Workers' Union, purportedly to cover a large debt from a pending lawsuit, but that the union diverted the money to the PRI's campaign war chest. According to La Jornada, high-level members of the PRI admitted the party didn't have the money to cover Francisco Labastida's presidential campaign, and were forced to go to their friends with hats in hand. La Journada identified Rogelio Montemayor, Pemex's general director at the time, as a close friend of Labastida.

Days later, La Journada weighed in with a Jan. 24 editorial commenting that what was novel about the revelation was that "for the first time there is precise documentation of an operation in which public funds were used to support the PRI —the practice was an open secret, everyone knew, but it could not be proven as long as the PRI remained in power."

In the Feb. 17 issue of the liberal Mexico City newsmagazine Proceso, Denise Dresser agreed: "The Pemex case only discloses what thousands of Mexicans already knew: that the PRI used the oil company as its own piggy bank, its own personal checkbook." She said the current scandal provides a window for seeing what the PRI did to maintain itself as the "official party"—until the year 2000, when the right-wing National Action Party (PAN) won the presidential elections.

Few here were surprised by the news. "This is part of the PRI's history. People have known how the PRI got its votes, and its resources," says Mercedes López, who works in the Mexico City government, run by the opposition Democratic Revolutionary Party (Partido de la Revolución Democrática, or PRD) since 1997. "It's not that there was proof exactly. But people knew."

The investigation has dealt the PRI a severe blow. Some say it will be harder to convince people that the PRI has changed. Miguel García, a computer technician who has participated in citizen projects to monitor elections, agrees. "The PRI's credibility is basically null," he says. "Not even their supporters believe them anymore, despite current efforts to improve the party's image."

In a Jan. 29 opinion piece in La Jornada, Alberto Aziz Nassif wrote that "the Pemex case is the first serious legal proceeding against the old regime, but it surely won't be the last." He said the PRI calculated every variable, "except one—the possibility of losing the presidential elections—since if the PRI had won on July 2, 2000, this case would possibly never have been investigated."

How Now?

High-level officials from PRI presidential candidate Francisco Labastida's campaign, former Pemex executives, and members of the Mexican Oil Workers Union have all been implicated in the scandal. The Fox administration has yet to prove the investigation will produce any concrete results. "A lot of things are coming out in the open," says Miguel García, "and it's not just the PRI that's being implicated. But afterwards, nothing happens."

Some Mexicans believe Fox wants to reveal the truth about the corruption of the past. Amado Avendaño Figueroa, who runs a local, left-wing newspaper in San Cristóbal, Chiapas, is one of them. He insists "there are countless obstacles, even inside the government" and adds that "those who are guilty of such charges, who have economic power in Mexico, are trying to block the process."

Others are not convinced: "This case is being used by the Fox administration to create the image that it's doing something [about corruption] to increase its credibility," says Mercedes López. "But I don't think many other cases like this will come out, because it would generate too many problems between the PAN and the PRI. The new PAN administration needs allies, and it can't risk having the PRI block all its initiatives." The PAN lacks a majority in both the House and the Senate.

Political analyst José Antonio Crespo, of the Center for Economic Research and Education (Centro de Investigación y Docencia Económicas, or CIDE), believes "there's a strong motivation for the Fox administration to prove this case, since if it doesn't, it will pay a price as well."

There is some indication much more than US $100 million passed illegally from Pemex to the PRI campaign. Rafael Zarco Dunkerley, a former Pemex contractor, told Proceso that after President Fox asked him to form a commission to investigate the matter, he discovered more signs of corruption in the campaign. Zarco says that soon after the Labastida campaign began, Pemex awarded hundreds of contracts to companies—in which government officials had economic interests—"in exchange for contributing money to the Labastida campaign." Moreover, Zarco says, the Fox administration has not removed the Pemex officials identified in his investigation as involved in the corruption, but has instead ratified their positions in the oil company.

Impact on Future Elections

Crespo, who also writes a column called "Political Outlook" in conservative Mexico City newspaper El Universal, said in a Feb. 14 phone interview that the recent revelations would definitely have an impact on future elections. "It leaves the PRI with a very negative image for the next national elections in 2003. If the charges are proved and if [the Federal Electoral Board] implements sanctions, the PRI will be discredited in the public's eye." If the PRI does poorly in the next elections, he says, it may see a mass exodus of members. But he emphasizes that all political parties will need to take note of whatever decision the Federal Electoral Board takes, and will likely want to change their practices in the knowledge that their books may be opened in the future.

Crespo predicts the Pemex case will contribute toward setting a precedent for requiring more accountability in the future. And while others insist it's impossible to put a stop to illegal campaign financing, Crespo says the point is "to make it a little more difficult to use illegal funds, a little bit easier to detect them, and for political parties to see that there's a risk involved in failing to comply."

As Rolando Cordera Campos wrote in the Jan. 27 edition of his weekly column in La Jornada, "It's still uncertain where the fireworks set off by the Pemex affair will end up." One possibility is that it will speed up a division in the PRI party. Another possibility, he says, is that the revelation will be used to legitimize the privatizing of the national oil company. Perhaps the worst scenario is that nothing will happen, and "government entities in charge of imparting justice will be further discredited, and citizens will become increasingly skeptical of politics in general."