Mexico to consider changes to Pemex regulatory system

Mexico will review methods for addressing fraud and other issues brought to the attention of internal investigators at state oil company Pemex [PEMX.UL] and could make changes to its control process across all government bodies, a government minister said on Wednesday.

The review is in response to a Reuters report that found congressional auditors issued 274 recommendations between 2008 and 2012 for Pemex to take serious action over contract and other irregularities, but the state oil company acted in only three cases.

"The issue of Pemex needs to be assessed," said Virgilio Andrade, Mexico's newly appointed secretary of the Public Administration Ministry, known by the Spanish acronym SFP. "Not just Pemex by itself, but the general situation of the effectiveness of the internal investigators."

Mexico's Public Administration Ministry oversees teams of internal investigators at Pemex and government ministries who have powers to sanction employees and government contractors.

One of the problems highlighted by the Reuters report is that these internal investigators are effectively part of the government bodies they are supposed to regulate. Internal investigators at Pemex are paid by Pemex and work in Pemex offices.

The system "needs a general assessment" and the ministry's review will be used "as a precedent... for making reforms if they are necessary," Andrade said.

Responding to a question about Pemex's low rate of sanctions following serious recommendations from Mexico's Federal Audit Office, Andrade said his ministry will also investigate "to distinguish the offences related to improper use of resources from the offences that were the result of administrative failures, or decision-making problems."

Andrade was named to his position on Tuesday and tasked with investigating government contracts with construction companies that sold houses to President Enrique Pena Nieto, his wife and his finance minister.

This investigation will be limited to an analysis of any irregularities in the government contracting process, Andrade said, explaining the Public Administration Ministry does not have the power to look into the house purchases.

Separately, Andrade said he does not consider his long friendship with Finance Minister Luis Videgaray to be a conflict of interest in this investigation.

Tags

Pemex, Enrique Pena Nieto, Luis Videgaray, state oil

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