A corruption watchdog on Friday cleared President Enrique Peña Nieto, his wife and his finance minister of conflict of interest over their purchase of luxury real estate from a contractor who has been favored with several lucrative government deals.
In all cases, Comptroller Virgilio Andrade said, Peña Nieto and the others made the purchases prior to his inauguration in late 2012 and thus are exempt from sanctions.
Moreover, Andrade asserted, neither Peña Nieto nor Finance Secretary Luis Videgaray had any functional control over the bureaucrats involved in any of the 33 bids that the contractors have won under the current administration.
Peña Nieto said the completed inquiry shows that he, his wife and his finance minister acted legally. But he offered a note of contrition. “I am aware and acknowledge that these events led to interpretations that hurt and even angered many Mexicans,” he said. “To all of them I offer a sincere apology.”
Andrade’s independence was immediately questioned during a marathon three-hour news conference in which he was asked about his links to both Peña Nieto, who appointed him to his post, and Videgaray, with whom he has been friends since college.
Questions about the purchase of the house have dogged Peña Nieto and raised unwanted doubts about his presidency by highlighting the posh lifestyle of first lady Angélica Rivera and the cronyism that continues to plague Mexico’s government despite Peña Nieto’s vows to curb it.
There are no conflicts of interests either with President Enrique Peña Nieto or with Luis Videgaray Caso.
Virgilio Andrade, Mexico’s comptroller
Corruption, along with public security and joblessness, are the main concerns of Mexican citizens, polls show. Mexico ranks No. 103 among 175 nations on the most recent list put out by Transparency International, a global coalition measuring public perceptions of corruption.
The scandal over a mansion known as the “White House” in Mexico City’s swank Lomas de Chapultepec neighborhood first erupted in November, when journalists discovered that the chief executive of a major contractor, Grupo Higa, had built the home to Rivera’s specifications and offered it to her on preferential terms.
Only days earlier, the Peña Nieto government, aware that the news scoop was about to break, canceled an award to a Chinese-led consortium that included Grupo Higa to build a $3.75 billion high-speed rail link.
Rivera later said she bought the mansion, with shimmering custom lighting and large entertainment areas, with earnings from her career as a television soap opera star.
Andrade said bank records show that Rivera paid 54 million pesos (about $4.2 million at the then-prevailing exchange rate) to the contractor’s subsidiary on Jan. 12, 2012, holding an eight-year note with annual interest of 9 percent.
The timing was critical, Andrade said. Peña Nieto was no longer in his previous job as governor of the state of Mexico and did not hold any elected office. He didn’t win the presidential elections until July 1 or take office until Dec. 1, 2012.
Andrade said Grupo Higa and its subsidiaries currently hold 22 government contracts with a value of 1.38 billion pesos, or about $82 million at current exchange rates.
Investigators from the comptroller’s office probed 111 federal employees involved in those contracts, and with 11 others given to a company that financed Videgaray’s home, and found no undue pressure to skew bid awards, Andrade said.
Andrade downplayed the value of the bids granted to the companies, saying they amounted to only 0.017 percent of all government bids awarded to private companies since Peña Nieto took office.
Asked about his longstanding personal friendship with Videgaray, dating to their university days, Andrade said the inquiry was conducted “independent of personal situations.” Andrade is technically a subordinate of Peña Nieto, and the president ordered him to carry out the investigation.
Andrade declined to say specifically if he or other investigators had spoken with Peña Nieto or with Grupo Higa’s CEO, Juan Armando Hinojosa Cantu. He said investigators did not examine emails from government employees involved in the contracts, rather relying on their word about whether they’d faced pressure.
He demurred when asked if Peña Nieto, his wife and Videgaray had gotten off on technicalities.
“This investigation has complied with the spirit of the law,” he said.
Videgaray, a 47-year-old MIT-trained economist, is widely considered a protégé of Peña Nieto and a likely presidential candidate himself for the ruling Institutional Revolutionary Party in 2018. He was Peña Nieto’s campaign manager in 2012.
Videgaray bought a home in a golf club in Malinalco, a resort town west of the capital, for 7.5 million pesos (about $581,000) from Grupo Higa on Oct. 10, 2012. Like the other purchase, Grupo Higa held the mortgage and gave a concessionary interest rate of 5.38 percent, far lower than customary in Mexico at the time.
Grupo Higa had owned the house only for a few months, buying it at the same price earlier in the year from Arturo San Román, a tycoon whose companies have won 11 contracts with the Peña Nieto government.
“There are no conflicts of interests either with President Enrique Peña Nieto or with Luis Videgaray Caso,” Andrade said.
Andrade said he did not look into contracts that Grupo Higa won from the state of Mexico during Pena Nieto’s 2005-2011 tenure as governor there. The value of those contracts was not immediately clear.
When the scandal broke over her mansion, Rivera issued a short video saying, in an often-angry tone, that she had paid for it with her earnings but would sell it to ensure no taint spilled onto her husband.
Andrade said Rivera carried out her word, returning the mansion to the Grupo Higa subsidiary in December. Monthly payments that she had made to the company for the mortgage were returned to her, Andrade said, and she gave the company some $635,000 in rental payments for its use from January 2012 until last December.