PEMEX Suppliers in Pandora Papers Underscore Corruption Issue

The owners of at least four major providers of Mexico’s national oil company PEMEX have appeared in the infamous Pandora Papers. Though their practices are not illegal per se, the issue has implications for the NOC as well as for the government’s anti-corruption platform.

A report from El Pais outlines the companies involved and furthermore highlights that at least two of the companies continue receiving contracts under the López Obrador administration. Experts explain that the practice of using offshore accounts is not illegal if the funds are used to acquire real estate or yachts, as was done by the implicated companies. Nevertheless, offshoring is associated with corruption: “The resources to buy the yacht may come from tax evasion or acts of corruption, in this case we are already talking about something else, here it concerns money laundering," explained Luis Pérez de Acha, a tax lawyer, to El Pais.

The entirely legal structure Pérez mentions has indeed been used by three out of the four companies mentioned in the papers: Directors of Grupo R, Oceanografía and Navieros del Golfo used offshore accounts to acquire luxury yachts and real estate. Blue Marine, a company that operated during the previous administration’s term, used a complex structure aimed at  fostering personal savings up to foreign investments. This structure is not illegal by itself either if these savings and investments do not entail any money laundering.

Despite the apparent legality of the matter, a company’s appearance in the Pandora papers needs to be assessed in a wider context. Oceanografía, for example, has fallen from grace after investigations into its contract law starting in 2013. Owner Yáñez Osuna was subsequently arrested and jailed, though legal representatives point out that the deal with the yacht was entirely legal. A businessman linked to the company called Navaéz Tovar has also been extensively named in both the previous Panama papers and the Pandora papers. The case of Blue Marina has also been extensively discussed in Mexican media, as several outlets link them to fraud and collusion.

The López Obrador administration has long alleged that corrupt practices in the past have weakened the NOC and are slowing down the government’s efforts to come to its rescue. The trial of former PEMEX boss Emilio Lozoya, who led the company during the Peña Nieto administration, has become a key investigation as part of the wider anti-corruption platform of López Obrador. Now that the Pandora papers show that PEMEX still finds itself in murky financial waters, at least through presence of its contractors, it becomes clear that much work needs to be done to foster a truly transparent oil and gas sector and root out corruption.