Mexico officials remain quiet about alleged corruption case involving US energy company

During the administration of Enrique Peña Nieto (2012-18), a US company with close ties to a Mexican energy official received hundreds of millions of dollars in contracts from the Comisión Federal de Electricidad (CFE), Mexico’s state-owned electrical utility. The Texas-based firm, WhiteWater Midstream, began to attract attention as far back as 2018, when sources in Mexico expressed astonishment at the size of the contracts awarded to the inexperienced startup.

Given his penchant for seeking the spotlight, incumbent Mexican President Andrés Manuel López Obrador has remained uncharacteristically quiet about allegations raised against the US firm and key executives who served during the Peña Nieto years. The director of the CFE, Manuel Bartlett, has also held his tongue regarding the WhiteWater case, even while his company is working to prove wrongdoing both in Mexican and US courts. The López Obrador administration, meanwhile, insists on limiting participation of private companies in the Mexican energy sector.

Guillermo Turrent, during his years as director of the state firm’s private arm CFE International, gave the unknown Texas company several contracts, including one to supply 15% of the natural gas that Mexico imports daily. The contracts with WhiteWater became particularly problematic in February 2021, when extremely low temperatures sent natural gas prices soaring in Texas. The CFE – under the direction of Bartlett – refused to pay the elevated costs, resulting in the companies entering arbitration proceedings. In July 2021, EL PAÍS published an investigation that exposed ties between Turrent and WhiteWater executives dating back to 2000. Later that month, the presidency issued a joint statement with the CFE, in which they reported that Mexican and US authorities had launched separate investigations into WhiteWater Midstream “for granting contracts on suspicion of corruption, breach of trust and influence peddling.”

To date, there are at least seven known contracts between CFE International and WhiteWater, valued at billions of dollars over the lifetime of the deals. Two other former CFE officials, Javier Gutiérrez and José Guadalupe Valdez – both having held positions close to Turrent – appear in internal documents as the executors of at least one of the agreements with WhiteWater, according to what the CFE has stated in hearings before Mexico’s Anticorruption Prosecutor. Among their most important findings is a US company owned by Gutiérrez – JG Energy – which received more than $250,000 while the former official worked at the CFE. JG Energy was registered at the same address as one of WhiteWater’s founders.

The US embassy in Mexico has approached analysts to ask about WhiteWater. Meanwhile, CFE has hired the prestigious law firm Paul, Weiss in Texas to gain legal ground there. The firm has approached a US media outlet to share its findings, suggesting CFE is ready to attract more attention to the case. However, the state utility has not responded to several information requests made by EL PAÍS since last year. The statement made in July 2021 was the last time CFE spoke about WhiteWater.

The case has taken on more relevance since last month, when the US and Canada started consultation proceedings with Mexico as part of the USMCA (the trade agreement that replaced NAFTA in 2020). While the Mexican government has defended its decision to return the country’s electricity monopoly to CFE, its trading partners allege that this violates the trade agreement. Gutiérrez’s lawyers have tried to use recent events to their advantage.

“The AMLO administration has ruthlessly pursued any means necessary to reclaim the Mexican government’s monopoly over natural gas and other energy products, including by revoking permits and cancelling contracts for private sector energy projects, taking possession of American companies’ assets… and threat[ening] to jail his political opponents and prosecute investors who don’t get on board with his energy agenda,” Gutiérrez’s lawyers told the judge in Texas in a written statement, referring to López Obrador, who is popularly known as AMLO.

Analysts agree that tying a case of possible corruption – such as that of WhiteWater – to the trade dispute would be wrong. “It would be like mixing apples and oranges,” says Alejandro Schtulmann, president of EMPRA, an emerging-markets risk consultancy in Mexico City. “The United States is saying that a trading partner is violating the principles of the treaty… it has nothing to do with whether there was a case of corruption involving a Canadian or American company.”

López Obrador and Bartlett are likely being silent over the WhiteWater case because it doesn’t benefit the government politically, says Schtulmann. Turrent and Gutiérrez appear to have acted on their own, without being associated with or protected by any political adversary of López Obrador.

“What we have seen is that corruption is clamped down on when the president can claim political benefit,” says Schtulmann. “We are not seeing systemic progress in the fight against corruption. What we see is a very specific targeting of cases that are politically expedient or that can be politically manipulated to give this government a victory.” The WhiteWater case doesn’t appear to meet these criteria.

Oscar Ocampo, coordinator of the energy area for the think tank Mexican Institute for Competitiveness (IMCO) says: “I am very struck, not only by the president’s silence, but by Bartlett’s, because they tend to be quite a bit more vocal, more strident.”

However, Ocampo notes, calling attention to the possible corruption case of a US company could generate more tension in the bilateral relationship.

“This is likely to do with not creating more tension with the United States on the energy issue. Because in this case, we’re not just talking about the CFE executives… we’re talking about an American company that is involved in this.”