Mexican flag flies over Pemex building

Mexico's state-run oil company Petróleos Mexicanos (Pemex) lost $300 million in three lawsuits against US companies after accusing them of involvement in buying and processing Mexican fuel stolen by organized crime groups. Pemex was left empty-handed for two reasons: the judge ruled that the company did not provide sufficient evidence for their case, or that the money that would have been repaid could not be collected.

Pemex sued 23 US companies and six individuals in three separate trials for allegedly buying and distributing Mexican fuel that was stolen by drug cartels in the Burgos Basin oil region, which encompasses the states of Tamaulipas, Nuevo León and Coahuila. Pemex sought $300 million in damages, but the company only recuperated $71 million in damages from five companies and one individual because some of the companies did not have assets available to pay the damages.

 

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Pemex and its subsidiary, Pemex Exploration and Production (PEP), presented a first round of claims for the alleged theft, storage and distribution of condensed natural gas on June 7, 2010. On May 29, 2011 and April 10, 2012 the company's attorneys filed additional claims.

*This article was translated, edited for clarity and length and published with the permission of Animal Politico. It does not necessarily represent the views of InSight Crime. See the Spanish original here.

In a preliminary ruling in 2013, Judge Sim Lake from the court in Houston, Texas ruled that "the court concluded that PEP lacks vital evidence in order to confirm the allegations of fraud, breach of contract, warranties, and other allegations." On May 30, 2014, the judge issued a final judgment, reiterating that Pemex did not provide enough evidence to prove its allegations.

Pemex appealed the judgment in March 2015 and lost. The Mexican company was forced to cover the cost of litigation for the involved parties, which amounted to $830,000. Pemex has refused to make the payment, arguing that the company signed a contract with its law firm stating that the firm had agreed to cover all legal costs in the case of an unsuccessful resolution for Pemex. The name of the law firm has not been revealed. 

These cases against US companies were the final three that Pemex launched for the theft of natural gas in 2009. To date, in all of the trials -- in which the total requested damages payment is unknown -- Pemex claims to have been awarded $80 million dollars but has only received $9 million before losing the subsequent three trials.

A Lack of Evidence

In addition to the declassified documents obtained by Animal Político confirming the final judgments of the lawsuits, the defendants lawyers argued that Pemex did not deliver sufficient evidence to support its allegations.

Travis J. Sales of law firm Baker Botts, who participated in the H-10-1997 trial, said in an interview, "I represented BASF and Shell. All claims against both companies were rejected by the court. None of the companies paid anything to Pemex."

Joel M. Androphy, who represented Murphy Energy Corporation in lawsuit H-12-1081 said that Pemex "failed to prove anything. It lost the majority of lawsuits due to not being able to prove that the gas was stolen or that a crime was even committed. They did not have enough evidence. Their case was based on suspicions, there was never any evidence."

SEE ALSO: Coverage of Oil Theft

Mexico's transparency legislation allowed Animal Político to request information in July 2015 on the trials that had already reached resolutions. Pemex responded, "It is not advisable disclose any information, since in addition to affecting the procedural strategy, to make known who the defendants are and the claimed benefits and their reparation, could, according to the laws of Texas [and] the United States, bring actions by the defendants, to the detriment of PEP's assets."

Subsequently, in a document dated October 17, the company added, "Resulting from actions undertaken in the United States, Pemex Exploration and Production received judgments in its favor for more than $80 million dollars. All procedures have been resolved and in all cases Pemex was awarded favorably."

Furthermore, "the results of the legal cases are as follows: the hindering of unlawful selling and distribution of Mexican fuels in the United States; reparation of damages to PEP and a dismissal of the convicted parties' counterclaims."

Attorney Joel M. Androphy, who represented Murphy Energy Corporation, said in a subsequent interview, "I have no idea why they would say the rulings were favorable to them."

In regards to this, attorney Ileana M. Blanco, of the law firm DLA Piper, which represented Pemex in the US court, said, "Our policy is that we are not available to discuss or issue comments on the case. You should speak with the Pemex's public relations office in Mexico for any comments."

Pemex Was Aware of the Alleged Crimes

The first of the three trials began in 2010. Pemex knew "long before" about the alleged crimes after US intelligence agencies provided them with documents making them aware that natural gas had been stolen.

An investigation by these agencies revealed the alleged crime, but during the trials Pemex was unable to provide conclusive evidence.

Official documents indicate that the fuel, allegedly sold by the defendants, was extracted by members of the Gulf Cartel and Los Zetas. Subsequently, it was allegedly transported to the United States with the support of US companies and with the presumed complicity of the Mexican tax and customs authorities.

SEE ALSO: Coverage of US-Mexico Border

On September 18, 2008, US authorities carried out an operation in which 170 people were arrested. Operation Project Reckoning intended to investigate the Italian mafia known as the 'Ndrangheta, and their connections with Mexican cartels in exporting drugs to Italy.

Among the detainees was Luis Ariel Rovers Rodríguez, who later became a witness. He pointed out that since 2006, the criminal organization he worked for trafficked drugs and imported gas to the US. 

Following the arrests in 2008, Pemex's legal counsel received surveillance tapes with conversations between US companies who complained about the arrest of the members of the Gulf Cartel and Los Zetas in the operation Project Reckoning.

On the tape, and later in testimonies before the Court, employees confirmed there had been conversations and business negotiations with the cartel. They admitted to having known about the existence of bribes to customs officials for trafficking stolen fuel.

Court documents in Texas in 2010 mention that "the evidence indicates that Pemex was well aware that Mexican [natural gas] was being stolen in Mexico and sold in the United States at least four years before the first lawsuits began."

When questioned by the Houston Court, Pemex admitted knowing that "it was a victim of robbery since 2006 -- but wasn't aware of the full scale of it."

Pemex explained in an official response to Animal Político that "in June 2007, the US Immigration and Customs Enforcement office provided the government of Mexico with information related to the trafficking of petroleum products stolen from PEP into the United States, as well as the criminal indictment of the company Trammo Petroleum for having received the equivalent of $2 million in products stolen from PEP."

The company added: "As a result of these investigations, the company Trammo provided PEP with an amount of $2.4 million as compensation for the damages caused...As a result of this investigation additional amounts were recovered that were delivered to the Mexican government."

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The Modus Operandi

According to the allegations Pemex presented before the court, the modus operandi of the companies that allegedly bought stolen fuel during the four years was carried out in the following manner: The US companies bought the stolen product and sent trucks loaded with water to Mexico. Those trucks were labeled "naphtha." After they crossed the border they emptied the trucks of water and filled them with the stolen natural gas.

They then created false documentation to justify the possession of the fuel and bribed customs officials in order to cross the border. The trucks returned to Texas and the product was stored to be resold to other companies. Pemex claim this happened to erase clues about the fuel's illicit origin.

In the trial, Pemex accused US companies of trying to evade justice: "Faced with the assertion that the major oil and gas companies did not know they were buying stolen goods, Pemex argues that the sale of the stolen condensate required a concerted conspiracy in the United States to pass the stolen gas across the border and cover its origin so as to distribute and sell it to to the final buyers."

*This article was translated, edited for clarity and length and published with the permission of Animal Politico. It does not necessarily represent the views of InSight Crime. See the Spanish original here.

Investigations

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