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Lozoya speaks out: ‘It’s a cowardly political attack without foundation’

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Emilio Lozoya
Emilio Lozoya has responded to the accusations against him.

Former Pemex CEO Emilio Lozoya has spoken out against the criminal charges he faces, labeling them “a cowardly political attack without foundation against me and my family.”

Lozoya, head of the state oil company between 2012 and 206, is accused of criminal association, operations with resources of illicit origin and receiving bribes from the Brazilian construction company Odebrecht, which has been at the center of corruption scandals in several Latin American countries.

Judges have issued two warrants for his arrest and Interpol last month issued a red notice at the request of Mexican prosecutors, meaning that Lozoya could be arrested in any of the 190 countries where the international police organization has jurisdiction.

A joint investigation by the Mexican news organization Quinto Elemento Lab, the German newspaper Süddeutsche Zeitung and Swiss media company Tamedia revealed last week that Lozoya had entered Germany via Frankfurt International Airport but it is believed that he may now be in Switzerland.

The three media organizations sent him nine questions to which he responded via his lawyer.

Lozoya denied all allegations of corruption and money laundering, asserting that while he was a public official, neither he nor his family received any illicit money from companies or individuals.

Asked about his involvement in two companies registered at the same address in Munich, Germany, Lozoya said that his investments in ELMO Wolfsburg and All-Me Hamburg were declared with the Secretariat of Public Administration every year while he served as Pemex CEO.

He added that his stakes in the companies were purchased with income he obtained as a businessman prior to becoming a government official.

As he has done consistently, Lozoya categorically denied that he received US $10.5 million in bribes from Odebrecht in exchange for helping the company win lucrative Pemex contracts.

Three former high-ranking Odebrecht officials who made that allegation in a Brazilian court could have done so in exchange for reduced sentences, he said.

Asked about Pemex’s purchase of a fertilizer plant at a heavily inflated price from steelmaker Altos Hornos de México while Lozoya was the chief of the state oil company, Coello responded on behalf of his client that the accusation about the overpayment is not supported.

“My client never participated in the approval committees of that transaction,” the lawyer said.

A question about the purchase of a Mexico City house for 2.58 million Swiss francs in December 2012 using money that allegedly came from Odebrecht was met with a defiant response.

“My house in Mexico City was bought in November 2012, a month before I was a public official. How can you accuse a person who isn’t a public official of [receiving] bribes? All the money that was used for the purchase of that property is the product of business activity, of years of work before I was a public official,” Lozoya said.

He also denied that any illicit resources were used for his wife’s purchase of a home in Ixtapa, Guerrero, asserting again that the funds came from income he obtained before serving in the administration of former president Enrique Peña Nieto.

Asked about his purchase of 10 million euros’ worth of shares in a Luxembourg-based company between 2013 and 2014, Lozoya said that he couldn’t comment because he didn’t have the relevant documents at hand.

However, he asserted that it was “absurd” to link the investment to Odebrecht.

Asked to comment on his mother’s arrest, Lozoya questioned how it was possible for her to face charges of receiving money from him before he became a government official.

“What kind of crime is that? Besides the crimes that they accuse us of don’t merit preventative prison in Mexico,” he said.

“. . . Despite that, the government lied and colluded with a judge in Mexico to generate arrest warrants,” Lozoya added.

Coello said last week that the former Pemex CEO will release a video in the next few weeks, revealing the corruption that took place at the state oil company while he was in charge.

The lawyer said that Lozoya will implicate Peña Nieto and former cabinet secretary Luis Videgaray in the looting of Pemex.

He will “tell the story about exactly how everything happened . . . because he knows it perfectly well,” Coello said.

Source: Quinto Elemento Lab (sp) 

Recession fears erased: service sector drove 0.1% growth in second quarter

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The economy grew by 0.1% in the second quarter of 2019, quashing fears that Mexico had already entered a technical recession.

The tertiary, or service, sector drove the growth, according to preliminary seasonally adjusted data published today by the national statistics agency Inegi.

Economic activity in the sector, which contributes to more than 60% of Mexico’s GDP, increased 0.2% between April and June.

The secondary, or industrial, sector, showed no variation compared to the first quarter of the year, while economic activity in the primary sector, which includes agriculture and mining, declined 3.4%.

The modest growth in the second quarter disproves forecasts from many analysts and financial institutions including JP Morgan and the Bank of America, which predicted a second consecutive quarterly contraction after a decline of 0.2% between January and March.

Most economists classify two consecutive quarters of negative growth as a technical recession.

President López Obrador pounced on the flawed forecasts at his morning news conference.

“Their forecasts didn’t work,” he quipped, declaring that “we’re very happy because the Mexican economy is responding” and “this is very good news for the people of Mexico.”

López Obrador said that the constant recession warnings had created uncertainty but added that the new Inegi data would dispel market fears and “the intention to create unease.”

“It was assumed that there was going to be no growth, [the economy] was going to decline, that with two consecutive quarters of declines we had entered into a recession. Well, it turns out that we didn’t . . .” he said.

Compared to the second quarter of last year, seasonally adjusted figures show that the economy grew 0.4% between April and June. During the first half of 2019, the economy grew 0.3% in adjusted terms compared to the same period last year.

William Jackson, an economist at Capital Economics, said the figures painted a picture of a struggling economy and argued that they could encourage the Bank of México to cut interest rates, which are currently set at a 10-year high of 8.25%.

“The key point is that this is still really, really weak,” he said. “We had already been penciling in a rate cut. Given the weakness of the economy and the way inflation is coming down, there is a reasonable chance of a cut in August.”

López Obrador might have penciled one in too. He told Bloomberg News on Monday he believes that Mexico’s interest rate is too high for a decelerating economy.

The central bank is looking to control inflation, he said, “but it is important to lower rates to encourage growth.”

While the president has said that he expects growth of 2% this year and has repeatedly shot down suggestions that the economy is heading for a recession, not everyone in his government has shared the same optimism.

The Secretariat of Finance said yesterday that it expected a second-quarter slowdown while on Monday, Finance Secretary Arturo Herrera announced a 485-billion-peso (US $25.4-billion) stimulus package that he predicted would have an “immediate impact” on the ailing Mexican economy.

Source: El Financiero (sp), El Economista (sp), Reuters (en) 

Tabasco law prohibits protests that block businesses, public works projects

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New legislation in Tabasco prohibits blockades and protest that affect third parties.
New legislation in Tabasco prohibits blockades and protests that affect third parties.

The Tabasco Congress has approved legislation that sets harsh punishments for protests that block access to businesses and highways or obstruct public works projects.

Dominated by members of Mexico’s ruling Morena party, the Congress voted 24 to one yesterday in favor of modifying the state’s criminal code to establish prison sentences from six to 20 years for protesters who adversely affect third parties.

The reform comes as the federal government prepares to build a US $8-billion refinery on the Gulf of Mexico coast in the municipality of Paraíso.

Under the new legislation, demonstrators who “fully or partially block free transit of people, vehicles or other specialized machinery used in public or private works projects” will face jail sentences of six to 13 years and a fine of up to 2,000 minimum daily wages, which adds up to around 169,000 pesos (US $8,900). Those blocking businesses can be imprisoned for up to 20 years.

Morena lawmakers argued that the changes are aimed at stopping groups from using protests as extortion to obtain financial benefits or jobs at the Dos Bocas refinery project.

“The most serious thing is that there is aggressiveness [in the protests] . . . These pseudo-groups now even come armed, they carry out beatings when they’re not given what they want, they detain people in a kind of express kidnapping in order to coerce,” said Exequias Braulio Escalante, a Morena deputy.

“It’s not an anti-protest law. It’s an anti-extortion reform. This is very clear,” said Tabasco government secretary Marcos Medina Filigrana.

Governor Adán Augusto López denied that the changes to the criminal code amount to a ley garrote, or club law, as the legislation has been characterized by critics.

Instead, the reform is aimed at punishing the extortion of union groups with links to Mexico’s once omnipotent Institutional Revolutionary Party, he said.

“It wasn’t a secret for anyone – we even said it during the campaign – that we were going to work to end the extortion and blackmail of union groups, pseudo-union groups – groups that shut off free transit for any reason,” López said.

Erika Guevara Rosas, Americas director at Amnesty International, called the law “a clear violation of freedom of expression in Mexico.”

Nevertheless, the law received the endorsement of President López Obrador, a Tabasco native who participated in scores of protests in his home state – including blockades of Pemex facilities – while cutting his political teeth and called for mass marches in Mexico City after his defeat in the 2006 presidential election.

“. . . There was extortion and it was necessary to establish order. That was the reason for this legislation,” he said at his morning press conference on Monday.

The president declared that the legislation doesn’t violate people’s rights or freedoms.

“Of course, citizens’ rights have to be protected . . . the right to dissent, to protest, to freedom in general, that has to be considered but I have a report that human rights are not affected and citizens’ freedoms are not limited. That’s the report I have and yes, it’s necessary to put an end to extortion and not allow corruption,” López Obrador said.

Contradicting statements made by Morena party lawmakers in Tabasco, the president said the purpose of the legislation was not to stop protests during construction of the Dos Bocas refinery.

“No, that’s not the intent. In the case of Dos Bocas, there’s no opposition in Tabasco, the people are happy, a consultation was carried out in Paraíso, where the refinery will be built and in all of Tabasco the people are happy,” López Obrador said.

The president’s backing of the anti-protest legislation was labeled as hypocritical by some given his history and refusal to condemn teachers’ unions that have long held disruptive demonstrations.

“It’s hypocritical for someone who made his entire career on a reputation for protests and blockades,” said Gerardo Priego, a National Action Party federal deputy.

“Who’s going to define if it’s extortion or not? Won’t his buddies be protesters and his opponents extortionists?”

Javier Garza, a political analyst in the city of Torreón and a former newspaper editor, told The Guardian that López Obrador “benefited from marches and protests and investigative journalism that revealed corruption or ineptitude on the part of politicians he once opposed.

“Now that he’s president, protests and journalistic investigations are going against him – and he doesn’t like it.”

Source: Reforma (sp), Animal Político (sp), The Guardian (en) 

Isthmus of Tehuantepec cargo shipments could increase by 11 times

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A major increase in cargo shipments is predicted between Salina Cruz and Coatzacoalcos, above.
A major increase in cargo shipments is predicted between Salina Cruz and Coatzacoalcos, above.

Modernization of the railway between Coatzacoalcos, Veracruz, and Salina Cruz, Oaxaca, could increase cargo capacity between the two ports by more than 11 times, according to the state-owned Isthmus of Tehuantepec rail company.

The company said the new rail link between the cities – planned as part of the federal government’s Isthmus of Tehuantepec trade corridor project – would allow shipments between the Gulf of Mexico and Pacific coasts to increase from an estimated 443,165 tonnes in 2019 to 5.61 million tonnes annually.

Communications and Transportation Secretary Javier Jiménez Espriú told the newspaper El Financiero that studies for the upgrade of the 303-kilometer railway are currently being carried out prior to the project going to tender.

As part of the trade corridor project, the government also plans to expand the ports in Coatzacoalcos and Salina Cruz. Ten industrial parks are expected to be developed in and around both cities.

Héctor López Gutiérrez, chief of the government’s ports and merchant marine agency, said that 16 companies have expressed interest in building and operating new container terminals at the two ports.

In addition, the Isthmus region is slated to become a free zone, where value added and income taxes will be cut by half.

The entire trade corridor project is expected to cost some 259 billion pesos (US $13.6 billion) of which the government will provide around 100 billion.

Federal authorities will invest 31.2 billion pesos in the expansion of the ports, 23.3 billion on electrical energy projects, 10.4 billion on highway upgrades, 10 billion on natural gas infrastructure, 17 billion on the Salina Cruz and Coatzacoalcos refineries, 1.1 billion on the railway and 440 million on telecommunications, according to a plan presented to the European Investment Bank (EIB).

Rafael Marín Mollinedo, chief of the trade corridor project, said the EIB has expressed interest in participating in the project.

According to a report in the newspaper El Heraldo de México, shipping companies’ use of the Isthmus of Tehuantepec trade corridor will save them as many as four days in comparison with using the Panama Canal.

But the president of the Mexican Shipping Agents Association said in April that any notion that the new rail project will allow Mexico to compete with the Panama Canal is a “pipe dream.”

Cristian Bennett Lira said that at least 200 trains a day would have to run between Salina Cruz and Coatzacoalcos in order for the railway to be able to compete with the 105-year-old United States-built feat of engineering.

Source: El Financiero (sp), El Heraldo de México (sp) 

State of emergency declared for Baja’s electrical system

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Electricity shortages have caused outages in Baja California Sur.
Electricity shortages have caused outages in Baja California Sur.

After a series of blackouts across Baja California Sur on Sunday and Monday, the National Energy Control Center (Cenace) declared a state of emergency on Monday afternoon.

The blackouts started on Sunday night in different neighborhoods of La Paz and Los Cabos and lasted between 40 minutes and an hour and a half. There have also been blackouts in the municipalities of Loreto, Mulegé and Comodú, affecting a total of over 400,000 people.

Around 1:30pm on Monday, Cenace announced an emergency warning because the state’s grid was using part of its operating reserve to cover demand. At 2:57pm, the agency declared a state of emergency because the operating reserve had fallen below 4%.

Cenace did not give any explanation regarding the cause of the blackouts.

The Center for Renewable Energy and Environmental Quality, a renewable energy advocacy organization, blamed the blackouts on the inflexibility of the state’s electrical grid, which it says is operating above its capacity.

On Tuesday, four Baja California Sur state deputies issued a statement saying they had received many complaints and questions about the blackouts from their constituents, and asked the Federal Electricity Commission to explain the problem.

Baja California Sur Civil Protection officials said they are in constant contact with the CFE, and are monitoring hospitals and other facilities where electric power is vital to prevent interruptions.

Source: El Financiero (sp), El Sol de México (sp), Noticias la Paz (sp), El Sudcaliforiano (sp)

Heat wave claims 3 in Mexicali; avoid prolonged exposure: health official

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Laguna Salada: hiking during heat of the day is not advisable.
Laguna Salada: hiking during heat of the day is not advisable.

Unrelenting high temperatures in Mexicali, Baja California, have been blamed for the deaths of three people in recent weeks, prompting a warning by authorities that people take extra care until the heat wave — with daily highs over 40 C — subsides.

State Health Services Director Néstor Saúl Hernández Milán said the first victim was an 85-year-old woman who suffered heat stroke as she collected aluminum cans from the side of the road.

The second victim was a 34-year-old who was exercising in the open air in Puertecitos and the third a 30-year-old woman was overcome by the heat while hiking near the Laguna Salada in the Sonoran Desert. She was admitted to the Mexicali General Hospital on July 14, but died 10 days later.

Hernández told a press conference that the woman’s actions were “irresponsible” and urged residents to avoid prolonged exposure to the heat and to stay hydrated.

“It is irresponsible to go on a hike alone without all of the necessary equipment . . . It is necessary to take precautions to avoid getting sick. The principal risk factor is the exposure time [to heat], and so it is important to remain hydrated and to protect oneself from 11:00am to 6:00pm using light-colored clothing and a hat. It is important not to consume alcoholic beverages or coffee.”

The health director also reminded residents that Mexicali has 123 hydration stations located at different points around the municipality.

Last year, high summer temperatures claimed a total of 13 lives.

Temperatures of 41 to 45 are forecast for Mexicali during the next seven days.

Source: Reforma (sp)

Police officer killed during Chiapas plane robbery

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Scene of the Chiapas plane robbery.
Scene of the Chiapas plane robbery.

A police officer is dead in Ocosingo, Chiapas, after a clash with thieves who robbed a plane carrying hundreds of thousands of pesos in federal aid for local communities.

According to the state Attorney General’s Office, the plane had just landed in the community of Santa Lucía when armed and masked civilians ran up to it, took the crew prisoner and helped themselves to 800,000 pesos (US $42,000) in money destined for student scholarships and other federal programs.

When police arrived on the scene and attempted to detain the robbers, one officer was killed and two others were injured.

After the thieves fled, personnel from the Attorney for Indigenous Justice Office arrived to investigate.

Business owners in Ocosingo say insecurity has worsened since March, and that municipal police stopped patrolling the municipality at the beginning of the year.

Source: Milenio (sp)

Interjet flight cancellations affected 1,500 travelers yesterday

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Departures screen at the Mexico City airport reveals Interjet's late (demorado) flights.
Departures screen at the Mexico City airport reveals Interjet's late (demorado) flights.

The ultra-low-cost airline Interjet cancelled 10 domestic flights in Mexico, affecting 1,557 passengers, according to the consumer protection agency Profeco.

Six of the cancelled flights were scheduled to leave from Mexico City, and the other four from Oaxaca, Mérida, Chetumal and Culiacán.

Numerous other flights were delayed, including international flights from Mexico City to New York, Havana, Bogotá, San Salvador and Chicago, affecting 659 passengers. According to sources who spoke with the newspaper Milenio, a total of 30 flights were delayed on Monday.

Passengers complained on social media, and said they were told by Interjet that the cancellations and delays were due to a shortage of personnel. Passengers also complained that they were not receiving information about the status of their flights.

Complaints of delays continued to appear on social media today.

Profeco has notified the airline that it is required by law to compensate affected passengers. A spokesperson for Profeco said the agency has attended 150 passengers who were inconvenienced.

So far in 2019, Profeco has received 830 complains against Interjet, which has paid over 6.2 million pesos (US $325,000) in compensation to passengers, as well as 506,819 pesos in fines.

If a flight is cancelled, an airline must put the passenger on another flight at no charge, and pay compensation of at least 25% of the cost of the flight.

The company told employees on Monday that it needs to hire 160 pilots in the next 12 months to keep its planes in the air.

Source: Milenio (sp), La Jornada (sp)

Finance secretary announces 485-billion-peso economic stimulus package

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Finance Secretary Herrera announces spending package.
Finance Secretary Herrera expects 'immediate impact.'

Finance Secretary Arturo Herrera has announced a 485-billion-peso (US $25.4-billion) stimulus package that he predicts will have an “immediate impact” on the ailing Mexican economy.

“We have decided on actions that would mobilize 485 billion pesos that would allow us to boost the creation of infrastructure projects, incentivize infrastructure investment and private consumption,” Herrera told a press conference yesterday.

Two-thirds of that amount – 320 billion pesos – will be spent on 1.2 million credits to support investment and consumption, 116 billion pesos will be used to accelerate spending on contracts by bringing forward purchases of goods and services that had been scheduled for 2020 and about 50 billion pesos will go to infrastructure projects.

The Secretariat of Finance (SHCP) said in a statement that a range of public-private projects would be included in the package.

It highlighted a 10-billion-peso waste management project in Nuevo León, a 2-billion-peso urban transportation project in Ciudad Juárez, Chihuahua, and a 1-billion-peso plan to build a desalination plant in Los Cabos, Baja California Sur.

The SHCP said that a state development bank would provide credits to more than 130,000 small and medium-sized businesses and 370,000 micro businesses.

It is unclear how much of the funds in the stimulus package, if any, are new, the news agency Reuters said.

The announcement of the stimulus package comes just days before the national statistics agency, Inegi, is due to publish second-quarter growth figures, which some analysts believe will show that Mexico has already slipped into a technical recession.

The economy contracted 0.2% in the first quarter and the Bank of America, among others, anticipates that data will also show a small contraction between April and June.

A recession would be a significant blow for the eight-month-old administration of President López Obrador, who as recently as last week maintained that he expects the economy to grow by 2% this year even as the International Monetary Fund cut its growth forecast to 0.9% from 1.6%.

The finance secretary didn’t estimate the impact that the stimulus package would have on growth but stressed that it wouldn’t affect the budget.

The SCHP noted in its statement that the global economy is slowing, stating that the main reasons for the deceleration are “trade tensions” between the United States and China and “geopolitical tensions” in some parts of the world including the United Kingdom’s pending departure from the European Union.

Herrera, who is new in the job following the sudden resignation of Carlos Urzúa earlier this month, said that “Mexico is not immune” to global headwinds, adding that “because of this we have been thinking about starting a program that aims to help the economy.”

The stimulus package contains “a series of actions that will have an immediate impact on the economy,” he asserted.

Source: Reuters (sp), El Financiero (sp) 

Steel company owner accuses president of political persecution

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Steel company CEO Ancira speaks to reporters after his court appearance.
Steel company CEO Ancira speaks to reporters after his court appearance.

The CEO of a Mexican steelmaker who was arrested in Spain last May and faces extradition to Mexico says he is the victim of political persecution by President López Obrador.

Alonso Ancira, the owner of Altos Hornos de México, appeared before a Spanish judge on Tuesday, where he expressed his faith in the Spanish justice system and his refusal to be extradited to Mexico.

In a conversation with reporters after the hearing, Ancira reaffirmed his innocence and said that López Obrador is investigating Altos Hornos for political purposes.

“The accusation has no legal ends, it has political ends, and when politics gets involved, justice goes out the window,” he said. “. . . I don’t understand why he attacked my business. He’s hurt thousands of workers and he’s putting sources of employment at risk.”

Ancira, who is accused of bribery and money laundering related to the alleged overpayment by state-owned Pemex for fertilizer plants owned by Altos Hornos, offered to buy the plants back from the government.

“Return them to me, if you’re against it, return them,” he said. “It was a transaction that involved banks and international regulators. We’re not talking about buying oranges, dozens of people were involved, and that’s proven . . . If you don’t want them, give them back to me, and give me some time and I’ll pay everything back.”

Ancira was arrested by Spanish police in an airport in Mallorca in late May, based on an international arrest warrant. After spending a month in a Spanish jail, he posted bail of 1 million euros and was released after surrendering his passport and agreeing to appear before the judge every two days.

In September, Ancira’s case will be transferred to another court, which has the power to extradite him to Mexico. The proceedings will last several months.

Source: El Universal (sp)