CFE corruption accusation against former executives advances in US court

A U.S. judge has denied requests by two former executives at Mexico’s state utility to dismiss a case against them for alleged corruption involving contracts worth billions of dollars, according to a transcript of a recent hearing obtained by EL PAÍS. Guillermo Turrent and Javier Gutiérrez, who led the foreign branch of the Federal Electricity Commission (CFE), known as CFE International, are accused of “rampant corruption, cronyism and conflicts of interest” when awarding “unnecessary and overpriced” natural gas contracts to the unknown American company WhiteWater Midstream, according to court documents.

In a hearing on March 17 held in a federal court in Houston, Texas, lawyers representing Turrent and Gutiérrez failed to convince the judge to dismiss CFE International’s civil case against them. They argued too much time has elapsed since the contracts were awarded between 2016 and 2018 and suggested CFE International should have detected the misconduct while the two were working at the company. The transcript of the hearing also shows the judge dismissed the defense’s attempt to stop the proceedings, known as a motion to stay, which alleged the CFE International case against them is a “multi-pronged assault” against Turrent and Gutiérrez.

In July 2021, EL PAÍS revealed long-standing ties between Turrent, Gutiérrez and several executives at WhiteWater Midstream, a natural gas company that began winning contracts from CFE International only months after its creation in 2016. Soon after, the state company announced that authorities in both Mexico and the US were investigating the ties between the executives on both sides of the deals. To date, CFE International has opened seven cases in three US courts, while Mexico’s Anticorruption Prosecutor in the Attorney General’s office is conducting a criminal investigation against Turrent and has an ongoing case against Gutiérrez.

In Mexico, the proceeding against Gutiérrez is moving slowly. A hearing initially scheduled for last year has been postponed multiple times, including one instance in which Gutiérrez claimed he could not attend due to a medical emergency, according to an official document. The next hearing in the Gutiérrez case is expected to be held on April 25. Justice officials have yet to disclose findings of their investigation of Turrent.

The transcript of the hearing that took place in Texas details the CFE International case against WhiteWater. Turrent and Gutiérrez, argues the Mexican company, “precommitted these three major contracts that are at issue to WhiteWater Midstream without engaging in any competitive bidding process and without disclosing that to the board,” said one of the lawyers representing CFE International. The accusations include that the former CFE executives failed to disclose personal and business relationships, side dealings, as well as financial arrangements they had with WhiteWater executives. The state company alleges Turrent and Gutiérrez “conducted sham bidding contests to give a false appearance of fairness and competition, they manipulated the evaluation of the bids that came out of those contests and they lied to the board and outside counsel about what they were doing.”

Turrent and founding executives at WhiteWater Midstream worked together at Royal Dutch Shell in San Diego from 2000 to 2001, during a period known as the California electricity crisis. Their names and ties appear in documents that are part of an open case against Shell that allege the company manipulated electricity prices to overcharge the state, resulting in billions of dollars in losses. In 2016, an administrative law judge at the US energy regulator FERC recommended that Shell pay California $779 million dollars for overcharges.

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