Mexico City — It might well be called “Enron-2” or “Enron-South”, after the huge United States corporation now under Congressional investigation for political corruption. But the saga of money laundering, political fixing and multi-million dollar pay-offs to high-level officials by Mexico’s largest energy corporation, could be a political boost for President Vicente Fox.

But will Fox be resolute enough to play the game to its end?

That is the question now being asked as key officials of the Institutional Revolutionary Party (PRI) try to wriggle out of ongoing investigations.

The PRI ran Mexico for seven decades until Vicente Fox grabbed the presidency in July 2000.

The potential targets include the PRI’s former candidate for the presidency, Francisco Labastida, several PRI senators affiliated with the Mexican oil workers’ union and even the country’s previous president Ernesto Zedillo.

Also apparently linked to this convoluted saga are former directors of the state-run petroleum corporation Pemex, the fourth-largest oil enterprise in the world, whose revenues account for a third of the Mexican government’s annual budget.

Code-named “Operation Crudo”, sketchy details of $100-million deals being probed by the president’s anti-corruption czar, Francisco Barrio, appeared on January 19 in La Jordana, a Mexican left-wing daily.

Barrio has since confirmed the investigations into the illicit campaign financing, at the crux of which is 1.1 billion pesos allegedly funnelled from Pemex under the signature of former director Rogelio Montemayor, but without the authorisation of the state enterprise’s administrative council. The money supposedly went to the Oil Workers Union of the Mexican Republic (STPRM) — a wholly-owned subsidiary of the PRI.

According to the Operation Crudo case file, the union then diverted the funds into PRI coffers in a futile effort to rescue the faltering presidential campaign of Fox’s rival Francisco Labastida.

On June 6, 2000, just weeks before Fox and Labastida went down to the wire in a bitterly contested face-off for the presidency, a cheque drawn on a Pemex account and allegedly signed by Montemayor as the first 640 million peso instalment on a loan to the oil workers’ union, reached the desk of PRI senator Ricardo Aranda, the STPRM finance secretary.

The amount was divided and deposited in various party accounts, according to the testimony of three PRI financial commission operators who have been under house arrest since last December.

The PRI fixers also reportedly confirmed a second 460 million peso payment last October — the funds having been laundered through European and Texas banks — apparently destined to cover $200 million in campaign debts.

The complicity of the state monopoly and the oil workers’ union in bankrolling PRI electoral fraud has been a badly kept secret ever since the oil-boom years of president Luis Echeverria (1970-76). Under Echeverria’s successor, Jose Lopez Portillo, Pemex director Jorge Serrano, a Portillo protégé, went to jail for accepting lucrative kickbacks from private tanker owners.

The Operation Crudo trail begins almost two decades back in 1984 when then union strongman Joaquin “La Quina” Hernandez Galicia won a concession to sell six million barrels of “slop” oil — residues left in storage tanks — to a Bahamas-based corporation, Arriba.

But La Quina’s arch-enemy, then budget secretary Carlos Salinas, quashed the concession. After Salinas became president and jailed La Quina on murder and weapons charges, the deal fell apart.

Last year Arriba finally won a California court settlement of $227 million, increasing at $25,000 a day until the union pays up.

It was purportedly to pay off the mounting Arriba debt that the STPRM appealed to Pemex for the $100 million loan. But according to Arriba’s Mexican representative, Andres Garcia, the union has yet to shell out “a single centavo” of the court-ordered payment.

In a written declaration now part of the Operation Crudo case file, then Pemex director Montemayor avowed that he did not need authorisation to extend the billion-peso loan to the oil workers’ union.

Curiously, the agreement that waives prior administrative council approval for the loan was signed on June 5, 2000, one day before the funds were turned over to the STPRM. Montemayor also argued that it was not his business to oversee where the money went next.

Sought by Fox’s corruption fighters, the party bosses are protesting. Senator Humberto Roque Villanueva, now running the PRI’s upcoming party presidential election, warns Fox that “this is not the time to declare war on us” and accuses the president of seeking to revive his falling popularity at the expense of the PRI.

“We are not going to accept persecution,” says an angry Beatriz Paredes, one of two candidates for the PRI party presidency.

Current party president Dulce Maria Sauri alleges that the Fox investigation is aimed at tainting the STPRM and “opening up Pemex to foreign penetration” — highly charged buzzwords in a nation where petroleum is a patriotic fluid. Sauri also voiced veiled threats to stymie Fox’s legislative initiatives and to make this ungovernable country even more so, if the investigation continues.

One reason that the affair has caused the PRI such grief is that the one-time ruling party is currently in the throes of its first post-Fox duel for the party presidency — and whoever locks up that spot will be in the driver’s seat for the 2006 presidential nomination.

Despite the confessions of three PRI members that a billion pesos were diverted to the Labastida campaign, Attorney General Macedo, who received the case from Barrio in January, seems to be concentrating his attentions on the oil company instead of the party.

The vital question is whether the Fox administration believes it has enough to gain from an investigation or whether it is politically expedient to sweep the sordid affair under the carpet.

According to a recent television poll, at least 70 per cent of Mexicans think it will do the latter.

JOHN ROSS, author of The War Against Oblivion – Zapatista Chronicles, has covered PRI affairs for many years.