California Firm Investigated for Links to Mexico Organized Crime: Reports

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US authorities are investigating allegations that California energy company Sempra had links to Mexican criminal groups and bribed prominent Mexican politicians, according to media reports, raising questions about the role of US firms in supporting organized crime in the neighboring country.

La Jornada and Proceso, among others, reported that the California firm Sempra Energy is under investigation by the US Department of Homeland Security (DHS) for money laundering and links to organized crime.

If true, this would be the second investigation into the firm by US officials in the last four years, stemming from a whistleblower complaint by a former Sempra compliance officer. The DHS is also looking into allegations that the company bribed high-ranking Mexican officials, and possible violations of the Foreign Corrupt Practices Act, the news reports said. 

According to internal compliance reports that were included in a lawsuit filed by ex-Sempra controller Rodolfo Michelon, Sempra made millions of dollars of illegal payments in exchange for favorable treatment from the Mexican government regarding new projects, particularly in northern Baja California. The officials who allegedly received the payments include ex-President Felipe Calderon, while he was serving as energy secretary under Vicente Fox, and Eugenio Elorduy Walter, former governor of Baja California. The same reports accuse Sempra of systematically falsifying invoices, allowing them to receive payment for work not completed.

The recent media reports do not give details of Sempra’s alleged collusion with Mexican criminal groups, but internal investigations by Sempra contractors note the prominent role of drug traffickers in Baja California politics and business communities, hinting at the issue of avoiding dealings with these groups.

Furthermore, Elorduy Walter, Sempra’s main alleged collaborator in Mexican governing circles, has long been trailed by accusations that he facilitated drug trafficking. He is a business partner of Manuel Aguirre Galindo, allegedly one of the founding members of the Arellano Felix Cartel that dominated Tijuana and much of Mexico during the 1990s and early 2000s, and who is currently in a Mexican prison awaiting trial for drug trafficking.

InSight Crime Analysis

Regardless of whether or not Sempra is eventually charged in relation to organized crime, this case raises profound questions about conflicts of interest for authorities on both sides of the border.

Mexican media sources have interpreted the case as one of US authorities improperly carrying water for their Mexican counterparts, especially Elorduy Walter. One element of the investigation, for instance, is whether US Attorney Laura Duffy intervened inappropriately to aid both Sempra and the alleged drug trafficker Aguirre Galindo. 

According to La Jornada, in 2011 Duffy closed an investigation into Sempra that covered many of the current allegations, on the basis of a report, essentially compiled by representatives of the firm, which exonerated Sempra.

(As reported by the Washington Post, the Federal Bureau of Investigation (FBI) did close the case following an investigation of a law firm that was contracted by Sempra. There was, however, no mention of Duffy as the lead prosecutor. The FBI also released internal documents of its own investigation of the firm.)

According to La Jornada, Duffy removed all the charges against Aguirre Galindo in October 2013, despite the fact that the US had once offered a $5 million reward for information leading to his capture. Aguirre Galindo was arrested in Mexico City days after this announcement, but thanks to Duffy’s timely decision there was no danger of extradition to the US. Some reporting suggests that Aguirre Galindo negotiated the terms of his arrest with US authorities. This has not been confirmed, however, and Aguirre Galindo remains in a Mexican jail awaiting trial. 

The case has also raised questions about the relationship between Alan Bersin, former US border czar, and former Governor Elorduy Walter. The pair were partners along with several other investors (one of whom was former Sempra executive Donald Felsinger) in Silicon Border, an industrial complex in Mexicali. This put the man responsible for coordinating US border security at one degree of separation from a reputedly significant drug trafficker, Aguirre Galindo. 

There is a tendency in US coverage of Latin America to assume the best of US officials and treat foreign officials with suspicion. This has certainly been the case with Mexico, and it often sparks resentment. But the above cases demonstrate that alleged improprieties are not the sole purview of Mexican officials.

Even beyond Duffy’s and Bersin’s possible missteps, the Sempra case raises broader questions about the US’s political partners in Mexico. Bersin’s investments in the foreign country most relevant to his job raise questions about conflicts of interest, and the timing of Duffy’s withdrawal of charges against Aguirre Galindo has fed conspiracy theories of a US attorney helping out a veteran narco.

But at the same time, even if nothing untoward has transpired, there is enough circumstantial evidence surrounding Elorduy Walter’s career to suggest that he was never going to be an entirely reliable partner for the US. Given the scope of his role — overseeing one of the world’s busiest border crossings and a primary avenue of drug transport to the US West Coast, and leading the government’s response to one of the world’s most powerful criminal groups — this represented a grave handicap to bilateral efforts. 

Unfortunately, there are many political leaders in Mexico who share traits with the former Baja California governor, and many US officials ready to do business with them.

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