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AMLO Defends Billionaire, Raising Doubts About His Anti-Graft Promises

AMLO Defends Billionaire, Raising Doubts About His Anti-Graft Promises

(Bloomberg) -- Mexican President Andres Manuel Lopez Obrador campaigned on promises to weed out corruption and crony capitalism. That commitment is being called into question amid new scrutiny of his relationship with the billionaire Ricardo Salinas Pliego.

AMLO, as the president is known, said Thursday he stands by Salinas after a Wall Street Journal report that the media mogul owned equity in a fertilizer company that was bought by the state oil company. The deal is at the heart of a corruption probe over whether officials overpaid for the assets.

AMLO Defends Billionaire, Raising Doubts About His Anti-Graft Promises

“Just because the Wall Street Journal said it doesn’t mean it’s true,” Lopez Obrador told journalists during his daily briefing. “I’ve seen them lying before.”

While Lopez Obrador said in 2011 that Salinas was the leader of a “mafia of power” in Mexico, a group of corporate executives he said needed to be reined in, today the billionaire sits on the president’s business advisory board.

That relationship is being examined amid a probe of Petroleos Mexicanos’s decision during the previous administration to buy Grupo Fertinal. In June, the comptroller concluded Pemex overpaid for a company that was struggling to stay solvent. As part of the deal, Pemex assumed more than $400 million of Fertinal’s debt and then quickly paid it off in full, Bloomberg reported in July. Most of it was owed to Salinas’ Banco Azteca SA, which began lending to the company in 2008.

Salinas may have also profited on the equity side, according to the Journal’s report. Through a complex web of holding companies registered in tax havens, Salinas appears to have had a stake in Fertinal, the Journal reported.

Salinas has denied being involved in any malfeasance related to Fertinal, and Lopez Obrador has repeatedly said that no one is above the law and there won’t be any limits on investigations.

“Grupo Salinas is proud of Fertinal’s successful transaction,” according to a letter that Grupo Salinas sent to the WSJ, later shared with Bloomberg after a request for comment. “The current status of Fertinal is the sole responsibility of its buyers.” The letter didn’t address whether Salinas had an equity stake in the company. In June, Salinas didn’t respond to a question from Bloomberg News about ownership.

Salinas and Lopez Obrador have been getting cozier since the start of the administration, and the executive has strategically positioned his businesses and key collaborators to better align with the new government.

His Banco Azteca is in charge of distributing cards with cash from social assistance programs to millions of citizens. There was no bidding process for the contract, a move that raised questions. In addition, the man who led Salinas’ charity for more than 15 years is now education minister.

Salinas’ fortune has doubled since Lopez Obrador won the election last year to $13.6 billion, according to the Bloomberg Billionaires Index.

To contact the reporter on this story: Andrea Navarro in Mexico City at anavarro30@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Brendan Walsh

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