This week was a tough one for Pemex. On Monday, Estela Damián, the president of the Mexican Congress’ Oversight Committee, announced that an audit carried out at Pemex E&P in 2009 had revealed a hole in Pemex’s accounts of 400 billion Mexican pesos (US$ 30 billion). Damián explained that the money, a result of losses in certain financial instruments held abroad in 2009, was transferred as accounts receivable to Pemex Corporation in 2010. She requested the Secretariat of Public Administration (Secretaría de la Función Pública) to open an investigation, because, according to the oversight committee, Pemex recorded the loss as an increase in investment in Pemex E&P, a move, Damián said, that had not been authorized by the company’s board and did not identify a specific contribution or technical merit.
Of course, reactions to the news in Mexico were mixed. At a time of political turmoil in the country, in the months preceding the upcoming July 2012 elections, many people saw this disclosure as the perfect opportunity to champion their political agendas. Opposition parties were quick to voice their displeasure and asked Juan José Suárez Coppel, Director General of Pemex, to come before Congress and explain the financial irregularities. Meanwhile, reactions from the government and the PAN were subdued.
The following day, Pemex declared that the money was reported that way for accounting purposes. In a press release, the company denied any wrongdoing and explained that following the introduction of the Pemex Law in 2009, the profits and losses of Pemex subsidiaries are transferred to Pemex Corporativo for consolidation purposes, and that the 30 billion corresponded to the acknowledgement of the PIDIREGAS debt by the NOC.
The PIDIREGAS, or Deferred Investment Projects in Spending, were long-term productive infrastructure projects carried out by the company between 1999 and 2008 and funded through a Pemex Master Trust Fund or directly by a contractor. Pemex’s professional board members were also keen to defend Pemex. In a joint statement, Rogelio Gasca Neri, Fluvio Ruiz Alarcón, Fortunato Álvarez and Héctor Moreira backed the company’s claim and stated their trust that this issue will be solved shortly and that the public will be informed soon of the results. They also called on the public to avoid speculation and suspicions until the issue is completely sorted out. However, this was not a satisfactory explanation for Congresswoman Estela Damián, who declared that she would file a lawsuit on the matter against person or persons unknown.
It is still unknown if the Secretariat of Public Administration will open an investigation or not. Such a decision will probably be influenced by politics as everything else in the country is during an election year. But, whatever the final result, the magnitude this issue has taken on only proves how important it is for Pemex to carry out its financial operations more transparently. After all, the company still is one of Mexico’s economic pillars.