Mexico conflict of interest scandal snares finance minister

Reuters News
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Posted: Dec 12, 2014 1:56 PM

MEXICO CITY (Reuters) - Mexico's finance minister on Friday denied he faced a conflict of interest after he became embroiled in a scandal engulfing President Enrique Peña Nieto, and welcomed an investigation into his purchase of a home from a government contractor.

On Thursday, the Wall Street Journal reported that Finance Minister Luis Videgaray had bought a house at an exclusive golf resort in the central state of Mexico from Bienes Raices H&G, which belongs to Juan Armando Hinojosa. Hinojosa's companies have won hundreds of millions of dollars' worth of public-works projects during Peña Nieto’s time as governor of the State of Mexico and during his current administration.

Videgaray said Friday he was open to an independent investigation and that the home purchase did not represent a conflict of interest, since he does not assign government contracts and had bought the house before becoming finance minister.

He told national radio that the investigation should look into "not just the transaction which we already know is legal ... but also if this transaction influenced decisions that I have taken, as a public servant."

Last month, the government abruptly canceled a $3.75 billion high-speed rail contract awarded to a consortium led by China Railway Construction Corp Ltd, partnered with a group of Mexican firms including a unit of Hinojosa's Grupo Higa.

It was later revealed that a subsidiary of Grupo Higa owned another luxury house that Peña Nieto's wife, Angelica Rivera, was in the process of acquiring, raising questions about the tender and prompting her to say she would give up the house.

In a separate radio interview, Videgaray said he would not give up his home, for which he paid a total of 7.5 million pesos ($510,830) through a mortgage from Bienes Raices H&G in October 2012, which he paid off in January 2014.

Videgaray, who served as Peña Nieto's presidential campaign manager at the time he acquired the home, defended his unusual decision to take on a mortgage from the real estate firm instead of a bank, saying he had no earnings at the time.

"It would have been very difficult, practically impossible to obtain a bank loan," he said.

Luis Videgaray earns about 145,000 Mexican pesos ($9,896) per month excluding benefits, according to a government website.

($1 = 14.6800 Mexican pesos)

(Reporting by Alexandra Alper and Elinor Comlay; Editing by Simon Gardner and Bernadette Baum)