In 2015, a Mexican contractor — and a close friend of Mexican President Enrique Peña Nieto — moved roughly $100 million into accounts outside the country amid a corruption probe, according to details posted online by the International Consortium of Investigative Journalists (ICIJ).
The documents describing the transactions (which Business Insider has not seen) were part of a massive trove of financial documents revealing the offshore holdings of public officials, businesspeople, and other celebrities.
The records leaked by an international group of media outlets come from the Panama-based international law firm Mossack Fonseca, a global law firm that also provides trust services and appears to have any high-profile clients.
One of those clients, Juan Armando Hinojosa Cantú, the contractor in question, enlisted Mossack Foneska to have him create trusts for accounts worth $100 million after he was investigated for allegedly giving special favours to the Mexican president and his wife, according to an analysis of the documents by ICIJ.
That contractor’s companies have won more than 80 government contracts and received at least $2.8 billion in state money, The New York Times reported last year.
In late 2014, Mexican journalists reported that Peña Nieto’s wife, Angelica Rivera, had gotten a $4 million loan and purchased a $7 million home in an upscale Mexico City neighbourhood from one of Hinojosa’s firms. The home was “built to their specifications on unusually favourable terms,” according to The Times.
The scandal over the first family’s home purchase stayed in the spotlight, and in February 2015, federal comptroller Virgilio Andrade was appointed by Peña Nieto to investigate the alleged wrongdoing. (Andrade is friends with Mexican Finance Minister Luis Videgaray, who was also implicated in the scandal, and he sits on Peña Nieto’s cabinet.)
Hinojosa started moving his money 42 days after the Mexican government opened its investigation into the possible conflict of interest involved in the first family’s home purchase, according to Mexican news site Aristegui Noticias, which saw the Mossack Fonseca documents.
On July 1, 2015, an adviser at financial services firm D’Orleans Bourbon & Associates wrote to Mossack Fonseca, asking for help establishing a trust in New Zealand on behalf of Hinojosa, according to a screenshot of the email obtained by Mexico City-based newspaper Proceso.
The email requested secrecy and assured the transaction, which would help the client with the “restructure of his patrimonial vehicles outside his country of residence,” was urgent, according to Proceso.
The lawyer who wrote the email said Hinojosa had quite a “number of people who greatly dislike him” and that there was “a great deal of negative publicity surrounding the client.”
The email also underscored Hinojosa’s importance, saying he was “one of the most prominent businessmen in Mexico,” according to Proceso.
Mossack Fonseca, according to Proceso, “participated in the design of an international network that consisted of the creation of British companies, Dutch foundations, and New Zealand trusts.” The communications stated that the $100 million in question was “only a small part” of Hinojosa’s portfolio.
When Mossack Fonseca asked for clarification about Hinojosa’s role in the scandal ongoing in Mexico at that time, the firm replied that many of the newspapers linking Hinojosa to Peña Nieto were “owned by some business rivals” of Hinojosa, like Carlos Slim, who owns part of The New York Times.
Allegations of influence-peddling have hurt the Mexican president’s approval ratings. In August 2015, his overall approval rating was 44%, down from 51% the year before. On the issue of dealing with corruption, Peña Nieto’s approval rating fell to 27%, down from 42% in 2014.
Hinojosa hasn’t been charged with a crime, and anonymous company structures hidden in offshore holdings are not illegal. The documents released, however, do show how far high-level politicians and other figures have gone to conceal their wealth and avoid taxes and other scrutiny. Journalists who received the documents said the activities revealed could offer evidence of money laundering, sanctions evasion, drug deals, and other crimes.
A memo from a Mossack Fonseca partner in the leaked documents reads, “Ninety-five per cent of our work coincidentally consists in selling vehicles to avoid taxes,” according to The Guardian.