Mexico Is Investigating Ex-President Enrique Peña Nieto, Top Official Says

By Juan Montes and José de Córdoba (WSJ)

Updated Feb. 19, 2020 7:02 pm ET

Probe into former leader linked to bribery case against ex-Pemex CEO arrested in Spain last week

MEXICO CITY—Mexican law-enforcement officers are investigating former President Enrique Peña Nieto as part of the country’s highest-profile corruption case in years, a senior Mexican judicial official said.

The probe into the former leader is part of a broad case against Emilio Lozoya, the former head of state-run oil company Petróleos Mexicanos. Mr. Lozoya was arrested in Spain last week and is awaiting a hearing on Mexico’s request for his extradition. Mexican prosecutors have accused him of receiving millions of dollars in bribes from Brazilian construction firm Odebrecht SA and Mexican steelmaker Altos Hornos de México SAB.

Mexican government investigators, citing 2016 testimony from Odebrecht executives and other evidence, say Odebrecht paid $9 million to Mr. Lozoya to secure Pemex contracts while he was a top campaign official during Mr. Peña Nieto’s 2012 presidential campaign, and after he was named Pemex chief. They say Altos Hornos paid Mr. Lozoya $3.5 million to ensure the sale of a decrepit fertilizer plant, Agronitrogenados, to Pemex for a vastly inflated price.

“The attorney general’s office has evidence that the corruption of Lozoya in Agronitrogenados and Odebrecht reaches to the highest level,” the senior official said, referring to Mr. Peña Nieto. “The extradition and [any possible] confession of Lozoya are elements that together with ongoing investigations will decide if the former president is charged in the future.”

Mexico’s investigation into the Odebrecht allegations was opened in early 2017 but didn’t lead to any charges until after Mr. Peña Nieto’s term expired at the end of 2018.

If Mr. Peña Nieto is eventually prosecuted, it would be the first time any modern Mexican president faced corruption charges in court. In any case, charges aren’t likely in the short term, since Mr. Lozoya’s extradition alone might take several months, legal experts say.

Mr. Peña Nieto couldn’t immediately be reached for comment. In the past, he has denied any wrongdoing, as has Altos Hornos. The company’s chairman, Alonso Ancira, who was arrested in Spain in May 2019, also denies related charges against him. He is fighting extradition to Mexico in Spanish courts.

Before becoming a fugitive in May, Mr. Lozoya said he was innocent. After his arrest in Spain, his Mexico-based lawyer Javier Coello Trejo, speaking to a Mexican television station, said his client “didn’t act on his own,” implying that he was following orders from his superiors. As head of Pemex, Mr. Lozoya reported directly to Mr. Peña Nieto.

Mr. Coello Trejo said he didn’t know whether Mr. Lozoya would fight extradition to Mexico.

Odebrecht has admitted to bribing governments across Latin America and elsewhere in exchange for contracts as part of a plea bargain with U.S. authorities in 2016. The scandal has already landed scores of former top officials across Latin America in jail, including former presidents of Peru, Panama and Brazil.

Mr. Peña Nieto’s 2012-2018 term as president was marked by widespread corruption scandals and helped pave the way for the landslide victory of President Andrés Manuel López Obrador, who campaigned on a promise to end government corruption.

Mr. López Obrador, a left-wing nationalist, has long said he didn’t want to pursue past corruption scandals against his predecessors. Last week, he played down expectations that the case against Mr. Lozoya would lead to Mr. Peña Nieto. “My position is that the president should not be persecuted,” he told reporters.

Some political analysts, however, say a case against the unpopular former president, who left office with a record-low approval rating, might boost Mr. López Obrador’s own popularity at a time when Mexico’s economy isn’t growing and crime has hit record highs. Mr. López Obrador still enjoys high popularity—his approval ratings hover in the 60s—but growing numbers of Mexicans give him low marks on the economy and crime.

“Bringing Peña Nieto to court would be a political life preserver for this government,” said Jorge Chabat, a political analyst at the University of Guadalajara. If it happens at all, Mr. Peña Nieto would be brought to trial toward the end of Mr. López Obrador’s presidential period, possibly boosting political returns, Mr. Chabat added.

Indeed, Mr. López Obrador has suggested that “the people” should decide through a referendum if presidents from the 1990s to now—a period he says was marked by the ransacking of public coffers—should stand trial.

“If the people’s opinion is to bring the former presidents to trial, we would have to do it,” he said.

The senior judicial official, however, said bringing Mr. Peña Nieto to court would depend solely on Mexico’s Attorney General’s Office, which by law acts independently of the president and not any popular vote as envisioned by Mr. López Obrador.

“The Attorney General’s Office would bring any case against former presidents as an exercise of autonomy, not President López Obrador as a result of his consultations,” the senior official said. “They are two worlds: the political and the judicial.”

Mr. Lozoya, a former investment banker with a master’s degree in economic development from Harvard University, was one of the principal promoters of the historic overhaul that opened Mexico’s oil industry to private investors in 2013 after nearly eight decades as a state monopoly. Analysts said his arrest is certain to give ammunition to critics of the changes, including President López Obrador.

Mr. Lozoya is a prince in the political dynasty around Mexico’s former ruling party, the Institutional Revolutionary Party, or PRI, which governed Mexico for most of the 20th century, and which returned to power with Mr. Peña Nieto in 2012 after being in the wilderness for 12 years. Mr. Lozoya’s father served as energy minister and his grandfather was governor of Chihuahua state.

Prosecutors say Mr. Lozoya bought two mansions with proceeds from the bribes, one in a luxury Mexico City neighborhood, the other at a beach resort.

Mr. Lozoya’s arrest ended a monthslong manhunt for the former top executive, who was fired as Pemex CEO in 2016 after the company ran into debt problems under his leadership.

The senior official said Mr. Lozoya, who was captured in La Zagaleta, a luxurious neighborhood in Málaga last week, was shielded at his Spanish hideout by a wealthy friend. Before reaching Spain, Mr. Lozoya spent time in Germany, Holland, Italy and Russia, the judicial official said. At the time of his capture, Spanish police said Mr. Lozoya had been helped by his “high purchasing power and his international connections.”

In his first asset declaration as a public servant in 2013—the year after he was named head of Pemex—Mr. Lozoya listed an art collection worth more than $1 million, which included a Picasso and a Dali. He also listed ownership of five Patek Philippe watches worth $200,000.

Write to Juan Montes at juan.montes@wsj.com and José de Córdoba at jose.decordoba@wsj.com