Mexico’s president is facing the most damning charge yet — and his reputation is crumbling

Enrique Pena Nieto
Mexico’s President Enrique Pena Nieto attends an event at Los Pinos presidential residence in Mexico City July 17, 2015. REUTERS/Henry Romero

Mexican President Enrique Peña Nieto may have been much more involved in steering government contracts to businesses owned by his friends than previously thought, The New York Times reports.

Newly released documents revealing that the companies of Juan Armando Hinojosa Cantú, a longtime friend of the president, have won more than 80 government contracts and received at least $US2.8 billion in state money.

Hinojosa and the president have a decades-long relationship, dating back to Peña Nieto’s time as a government aide in the state of Mexico.

Observers, including opposition legislators, allege that this relationship is the reason so many contracts have been granted to Hinojosa’s firms.

And an expert told The Times that the clearest sign of the president’s role in the awarding of contracts may have arisen, ironically, from a contract that was canceled.

‘The president has said he does not meddle in contracts’

In early November 2014, Peña Nieto unexpectedly canceled a $US3.7 billion high-speed rail project that had been won by a consortium that included Hinojosa’s firm, Grupo Higa.

The government said the contract was canceled to “ensure there were no doubts about the project.”

Pena Nieto Mexico

In any case, the cancellation highlighted just how involved in the contract process the president can be.

“The president has said he does not meddle in contracts, and that he did not participate in the request for bids,” Haydeé Pérez, executive director of the Mexico City-based research group Fundar, told The Times.

“That is not true: If he can verbally cancel a contract when there is no institutional mechanism for that, then he is also able to deliver those contracts.”

Days after the cancellation, it was revealed that Peña Nieto’s wife, Angelica Rivera, had bought a home in an exclusive Mexico City neighbourhood on “unusually favourable terms” from a subsidiary of Grupo Higa.

While the president’s wife claimed she bought the home in question with her own money, the transaction appeared to many be an act of influence-peddling.

Enrique Pena Nieto
French President Francois Hollande welcomes Mexico’s President Enrique Pena Nieto and his wife Angelica Rivera for a dinner at the Elysee Palace in Paris, France, July 16, 2015. REUTERS/Philippe Wojazer

‘The power … descended from Peña Nieto’

Hinojosa moved to the state of Mexico in the 1980s and began building ties to influential politicians. In 2000, he donated thousands of dollars to Peña Nieto’s party, the PRI (which that year lost the presidential election, ending its seven decades in power), and eventually won a number of government contracts.

From 2005 to 2011, Grupo Higa received more than a half-billion dollars in government contracts while Peña Nieto was governor of the state of Mexico.

“There was evidence that the power that Grupo Higa had descended from Peña Nieto,” Francisco Cruz, an author who has written about the president and his connections, told The Times. “In 2011, I asked for all the contracts his company had just in the State of Mexico,” which added up to $US1.8 billion, Cruz added.

Grupo higa

During his 2012 presidential campaign, Peña Nieto used a home owned by one of Hinojosa’s firms as an office, while another firm let him use its helicopter for free.

Since Peña Nieto’s election, Hinojosa’s firms have secured major deals. According to The Times, these include a $US74 million no-bid contract to renovate the presidential aeroplane hanger, a road-widening project that has grown in value to $US127 million, and a controversial aqueduct project in northern Mexico.

The Times notes that Hinojosa’s 37% stake in the aqueduct project could be worth nearly $US1.3 billion.

Mexico construction corruption
A girl holds a sign during a demonstration against the Monterrey VI hydraulic project in downtown Monterrey, February 8, 2015. The Monterrey VI hydraulic project proposes the construction of an aqueduct on the Panuco River, according local media. The sign reads, REUTERS/Daniel Becerril

Un momento inoportuno

These reports have emerged as Mexico and Peña Nieto’s government have been battered by crises and challenges.

The November report about his wife’s home purchase came six weeks after 43 students were apparently abducted, murdered, and incinerated by corrupt police in league with drug gang members in southern Mexico. Furthermore, military and police forces have been accused of killing dozens of civilians on multiple occasions.

The country is also facing an increasingly severe migrant crisis, and on July 11 Joaquin “El Chapo” Guzmán, the world’s most powerful drug lord, broke out of a maximum-security prison for the second time — likely with help from prison personnel.

Chapo guzman mexico tunnel
Mexico’s Attorney General Arely Gomez Gonzalez (2nd R) looks into the entrance of a tunnel connected to the Altiplano Federal Penitentiary and used by drug lord Joaquin ‘El Chapo’ Guzman to escape, in Almoloya de Juarez, on the outskirts of Mexico City, July 12, 2015. Attorney General’s Office

Peña Nieto has also taken heat for other purported financial improprieties: The Mexican president reportedly misrepresented both how he acquired a piece of property outside of Mexico City and the value of that property on official disclosure forms filed in 2013.

For many, continued reports of apparent collusion and influence-peddling harken back to the seven-decade rule of the PRI in Mexico, a period characterised by patronage and corruption.

Nieto protest teachers
A group of protesters set fire to the wooden door of Mexican President Enrique Pena Nieto’s ceremonial palace during a protest denouncing the apparent massacre of 43 trainee teachers, in the historic center of Mexico City late November 8, 2014. REUTERS/Edgard Garrido

It has also stirred anger to see a small group of politically connected people and companies profit at a time of lacklustre economic performance. Mexican GDP grew 1.4% in 2013 and 2.1% in 2014; projections for growth in 2015 have been lowered to around 3% from a high of 4.2% earlier this year.

According to the World Bank, 52.3% of Mexicans lived in poverty in 2012 — and 2 million more have fallen into poverty since then.

And for others, the allegations lay bare the nature of the government Peña Nieto is running.

Nieto speaks on July 17 REUTERS/Henry Romero

“The message is: It doesn’t matter how talented, how innovative, how capable you are as a businessperson,” economist Fausto Hernández told The Times.

“The only thing that really matters is your political connections.”

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