Norges Bank Excludes PEMEX Over Corruption Risk

Norges Bank has announced the exclusion of PEMEX from the Norwegian Government Pension Fund Global (GPFG) portfolio, citing an unacceptable risk that the company contributes to or is responsible for gross corruption.

The decision follows a recommendation issued on Nov. 18, 2024, by the GPFG’s Council on Ethics. The Council based its recommendation on allegations and suspicions of widespread corruption at PEMEX between 2004 and 2023. It cited evidence that multiple employees, including a former CEO, allegedly received bribes totaling millions of dollars. One case alleges the former CEO received nearly US$14 million.

The GPFG held approximately NOK$1.44 billion (US$138.030 million) in PEMEX fixed-income securities as of June 2024. The fund’s ethical guidelines, specifically Section 4(g), allow for exclusion of companies found to pose an unacceptable risk of involvement in gross corruption or other serious financial crime.

The Council on Ethics noted that the volume and duration of the alleged corruption cases, including legal proceedings in the United States, raised concerns over PEMEX’s internal controls and governance. It further stated that PEMEX’s responses to media and public scrutiny lacked transparency and engagement. The company has regularly dismissed published reports as inaccurate or sensationalized, without addressing the specific issues raised.

As a wholly state-owned enterprise with a workforce of approximately 130,000, PEMEX is subject to a governance model that, according to the Council, allows normal control mechanisms to be bypassed. This structural issue, combined with limited public information on PEMEX’s internal anti-corruption efforts, contributed to the exclusion recommendation.

The Council highlighted that while PEMEX does have an anti-corruption system aligned with international standards on paper, the company has not disclosed how that framework functions in practice. PEMEX has also not shared information regarding recent corruption risk assessments, the organizational structure of its compliance efforts, or the outcomes of whistleblowing investigations.

Additionally, the Council observed that PEMEX relies heavily on external authorities to address fraud, noting that the company itself reports little to no involvement in following up on specific corruption cases.

The broader context of enforcement in Mexico was also a factor in the decision. The Council referenced Mexico’s low rankings on global corruption indexes and noted concerns raised by organizations such as Freedom House regarding weak rule of law and high levels of impunity.

Based on these findings, the Council concluded that PEMEX’s efforts to prevent, detect and respond to corruption are insufficient and that the company’s leadership has not demonstrated a strong commitment to addressing these risks.

The exclusion takes immediate effect and applies to all investment activities conducted by the GPFG.