Mexico Cancels Trafigura’s Fuel Import Permits in Crackdown
Mexico Cancels Trafigura’s Fuel Import Permits in Crackdown
(Bloomberg) -- Mexico has cancelled fuel-import permits awarded to commodities trader Trafigura Group in a crackdown of alleged corruption among companies that compete with state-owned oil producer Petroleos Mexicanos.
Trafigura had five permits for gasoline, diesel and jet fuel revoked or not renewed on Monday, while Mexican fuel distributor Windstar also had three gasoline and diesel permits revoked, according to a government document. Windstar didn’t immediately respond to requests seeking comment.
“We see no valid basis for the suspension of import permits for Trafigura Mexico,” Trafigura said in response to questions. “Trafigura complies with applicable laws and regulations in the jurisdictions in which it operates.”
Top commodity traders have faced bribery and corruption investigations in a worldwide probe that has spanned jurisdictions from the U.S. and Switzerland to Brazil and Mexico.
The government of Mexican President Andres Manuel Lopez Obrador says the moves are necessary to rid the country of corruption. Critics argue that Lopez Obrador is stamping out private sector investment in order to give Pemex the upper hand in energy markets.
Pemex won’t give new work to Trafigura for at least the remainder of Lopez Obrador’s six-year term due to investigations. Other commodity trading houses are also under review.
In July, Mexican tax authorities suspended as many as 58 companies from importing refined products and chemicals to crack down on alleged tax evasion, including railroad operator Ferromex and the local arm of Kansas City Southern. Spain’s Repsol SA was also among 24 companies that were banned from exporting activities.
The government has also embarked on a series of legislative changes that aim to remove rights to import and sell fuel altogether from the private sector, which would effectively restore Pemex’s former monopoly.
Another bill approved by congress earlier this year seeks to give Pemex more control over national gasoline and diesel distribution, and give the government greater freedom to suspend private companies’ fuel permits.
While these changes have yet to come into effect due to protracted legal battles, officials have slowed down private sector investment by delaying the awarding of new permits and at least three fuel import terminals have been shut in the past month and a half, according to national newspaper Reforma.
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