Corruption and multi-million dollar contracts: What we know so far about the CFE-WhiteWater probe

More than a year has passed since the Mexican government launched an investigation against WhiteWater Midstream, a US company that signed multi-billion dollar contracts with Mexico’s state-owned Federal Electricity Commission (CFE) during the presidential administration of Enrique Peña Nieto (2012-18).

In US courts, the CFE is attempting to prove that Guillermo Turrent and Javier Gutiérrez – two former CFE officials – engaged in corruption and influence-peddling when they held their positions during the Peña Nieto administration. WhiteWater appears at the center of the charges. While the case has progressed in US courts, it has stalled in the Mexican judicial system.

Turrent, during his years as director of CFE International – the state firm’s private subsidiary in the US – gave the unknown Texas company several contracts, including one to supply about 15% of the natural gas that Mexico imports daily. Gutiérrez – who held a position close to Turrent – appears in internal documents as an executor of at least one agreement with WhiteWater. Gutiérrez also owns a US company called JG Energy, which is registered at the same address as one of WhiteWater’s founders.

An EL PAÍS investigation published in July of last year exposed, for the first time, the ties between Turrent, Gutiérrez and WhiteWater executives Matthew Calhoun and Arlin Travis. Findings suggest the two Americans – former colleagues of Turrent’s from about 20 years ago – reunited in Texas to open WhiteWater Midstream. Months later, the company won natural gas supply contracts from CFE International, which was headed by Turrent during most of Peña Nieto’s presidency. Emails and documents show possible conflicts of interest and privileged information during the bids. Additionally, both Calhoun and Travis signed contracts with the CFE before coming together to create WhiteWater.

If the terms of the contracts are fulfilled over the next two decades, the total payments to WhiteWater would amount to billions of dollars – especially since natrual gas prices rose sharply in February of 2021. After Mexico refused to pay, WhiteWater began arbitration processes.

Under the direction of Manuel Bartlett – one of the most powerful allies of Mexico’s President Andrés Manuel López Obrador – the CFE hired a renowned law firm in the US to prove to the neighboring country’s judges that the energy deals with WhiteWater were struck in a corrupt manner. In Mexico, the state firm took the case to the Anticorruption Prosecutor in the Attorney General’s office.

Antaeus Group may be involved

Recently, findings by CFE lawyers in Texas point to a third company that is involved in this saga. Federal court documents show that CFE has had previous dealings with a firm that precedes WhiteWater, but is led by at least one of the same players. Founded by Matthew Calhoun in 2013 – just months after Turrent joined the CFE – the Antaeus Group is listed as a beneficiary in several CFE contracts in Texas. Mexico’s state energy firm claims to have evidence that, before being a CFE official, Javier Gutiérrez was one of the principal executives (either owner or founder) of the firm.

According to a document from the US Federal Energy Regulatory Commision, the Antaeus Group received the rights to build a natural gas pipeline from the CFE. However, they never built the pipeline: Antaeus rented out the rights to another company, which would build and operate the pipeline in exchange for $2.1 million per month. CFE’s current management considers that this was “orchestrated” to benefit Antaeus, a company that was never capable of completing the project in the first place.

A recent transcript from the hearing revealed a CFE attorney making the argument to a judge that Antaeus Group is “apparently a precursor to WhiteWater Midstream, which was formed by Matt Calhoun and others. From 2013 to 2016, there are what appear to be at least four efforts – some successful and some unsuccessful – by Gutiérrez and Turrent to do business with Calhoun through the Antaeus Group.”

The judge replied: “When I read both sides – but particularly what you’ve given me – there’s an indication that Antaeus is up to no good.” The lawyer responded in the affirmative.

Civil lawsuit for $1 million in damages

On September 21, CFE International sued former officials Turrent and Gutiérrez for breach of their duties by awarding “unnecessary and overpriced” contracts to WhiteWater. The civil lawsuit, filed in a federal court in Houston, demands that the men pay at least $1 million in damages.

“This case arises from the rampant corruption, cronyism and conflicts of interest through which defendants Turrent and Gutiérrez awarded billions of dollars of unnecessary and overpriced natural gas supply and pipeline contracts to WhiteWater Midstream,” the text reads. “The economic toll inflicted on the CFE Group is estimated to be at least in the hundreds of millions of dollars, and the harm to CFE International [alone] more than $1 million, with the total amount of damages to be proven at trial.”

CFE court setback

To learn more about the links between Turrent, Gutiérrez, Travis and Calhoun, CFE went to two courts in the US with “discovery” requests. These would have forced those involved to hand over correspondence, transactions and other types of records that their companies had with CFE International. In Calhoun’s case, the company involved is the Antaeus Group; in Travis’s case, it’s Arbor Glen, while Gutierrez’s is JG Energy, which was registered to Calhoun’s address in Texas, according to the CFE’s findings.

However, on August 17, the case against the men suffered a setback when a federal judge dismissed two of the discovery requests. The judge determined that there is no clarity as to the scope of the investigation in Mexico and said that “there is no indication that the Mexicans are actually pursuing it,” according to a transcript of the hearing in Austin. He recommended that the state firm’s defense team approach US authorities to reach a Mutual Legal Assistance Treaty (MLAT): an agreement between two or more countries for the purpose of gathering and exchanging information in an effort to enforce laws.

“I know the Mexican authorities really need this material… and the MLAT procedure provides them with a basis to get it. But they’re not doing that.”

Case stalled in Mexico

Compared to the findings and advances achieved by CFE’s lawyers in the US, the state firm’s legal defense in Mexico appears to be stalling. Gutiérrez has been accused of possible corruption in various contracts he signed as an official with CFE International, but only one of the contracts is with WhiteWater. Meanwhile, Turrent is not being investigated in Mexico at all for his dealings with the Texas company. Instead, he is being questioned about a contract signed with an international consulting firm, completely unrelated to WhiteWater.

Gutiérrez’s last two hearings in Mexico were postponed, meaning that the case has not moved forward. The next hearing is scheduled for October 26.