Pemex and Siemens sue each other in New York.
BY JOACHIM BAMRUD
Once they were partners in a refinery project
in Northern Mexico. Now they are suing each other in bitter lawsuits in New
The parties are Mexico’s
state oil company Pemex, Latin America’s second-largest company, on the one
side against German industrial giant Siemens and Korea-based SK Engineering
& Construction Co. Ltd. (SKEC) on the other.
Siemens and SKEC (along
with a local company Grupo Tribasa) formed part of a venture, Conproca, that
won a bid in 1997 to modernize the Pemex refinery in Cadereyta, which is
located in Northern Mexico near Monterrey.
“A consortium of
Sunkyong Engineering Construction, Siemens KWU and Tribasa … outstripped 16
strong competitors for the large scale Cadereyta project,” Siemens said in 1999.
“The size of the
project and the deadline set by Pemex, unique up to the present time in the
world, represent an enormous challenge: just 990 days for engineering,
delivery, assembly and commissioning of the entire plant.”
However, the project was
marred by problems, including delays and additional work. Conproca blamed Pemex
and took its case to arbitration at the International Chamber of Commerce. In
December 2011, the ICC ruled that Pemex should pay Conproca $530 million ($282
million as well as interests) for additional work and interruptions during its
work at Cadereyta between 1997 and 2000. Conproca subsequently filed a lawsuit
at the US District Court in New York to collect the ICC judgment.
Now, Pemex is
countersuing – also in New York -- claiming that the ICC judgment was partly
based on documents executed by officials that were bribed by Siemens and SKEC.
Pemex claims that Conproca initially presented an
unrealistically low bid then paid bribes to keep the contract despite unexpected cost overruns and extensions. A former Siemens
executive testified at the Mexican Solicitor
General's Office on May 6 that the German company paid bribes to Pemex
officials connected to the Cadereyta cost overruns.
“Peter Muller, Siemens
Mexico’s former general counsel, testified that he had seen invoices that a
well known business consultant issued to obtain $2.6 million dollars approved
by Siemens’ Financial Director at the time,” says Michael Diaz, managing partner
at Diaz Reus, which represents Pemex in this case. “According to Muller, the monies paid to the
business consultant were then funneled to a high-ranking official at
Pemex. Muller added that the contract
with the business consultant was merely a cover story for the payment of bribes
to one or more Pemex officials. “
Muller’s testimony came after his lawyer, Luis Rubén Esparza, had tried to
blackmail Pemex to pay $1.3 million for his testimony. After Pemex denounced
him, Esparza was arrested on April 16 on extorsion charges. Meanwhile, Mexico’s
Public Prosecution Office issued a subpoena for Muller to testify regarding his
knowledge of the facts related to the new Pemex lawsuit. “The investigation is currently ongoing,”
According to Reforma newspaper, the businessman who
served as the intermediary for bribes was Jaime Federico Said Camil Garza.
The Pemex lawsuit was
filed at a U.S. District Court in New York in December (case 12- cv-9070),
alleging violation of the U.S. Racketeer Influenced and Corrupt Organizations
(RICO) Act. It asked for $500 million in damages. An amended version was filed on May 8 asking
for $160 million.
On May 24, Siemens and SKEC asked the court to dismiss the case, alleging that
a US court should not have jurisdiction.
details how Siemens and SKEC engaged in a complex scheme to defraud by
submitting manufactured and inflated invoices for payment in the U.S.,” Diaz
says. “Defendants knew, based on the parties’ agreements, that the invoices
would be paid in the U.S. through the Pemex Master Trust’s bank account located
in New York. Siemens and SKEC also
requested that all payments be deposited in Conproca’s bank account in the U.S. The Pemex Master Trust, a U.S. trust, was
Siemens’ and SKEC’s ultimate victim. As
a result of this scheme, the Master Trust wired approximately $160 million from
Pemex’s U.S. bank account to Conproca’s U.S. bank account. “
The lawsuit from Pemex
implicates Cesar Nava, who was the oil company’s legal counsel between 2001 and
2003. Nava is more known as the personal secretary of then-President Felipe
Calderon between 2006 and 2008 and president of the then-ruling PAN party from
2009 to 2010.
The lawsuit claims that
Nava impeded Pemex from recovering $102.8 million from Conproca to compensate
for the cost overruns. He denies the allegation.
Siemens declined to
comment. “For the moment we have no comments on … the Conproca case,” says Deble Kuri, the
spokeswoman for Siemens Mesoamérica.
However, in a statement
to Mexican media (including CNNExpansion) Conproca says it had
not participated in any act of corruption, illegal payment or bribery and that
Pemex has failed to prove its case. On July 3, Mexican web
site 24 Horas quotes another statement
from Conproca saying that Pemex “is desperate” and called Muller’s testimony
Diaz expects that the
Pemex lawsuit against Conproca could last several months or even several years. “If Judge [Louis]
Stanton denies the defendants’ motions to dismiss, this litigation could
continue for months, if not years,” he says. “Although the district court is
not required to issue a ruling by a particular date, it is likely that there
will be a decision shortly after the briefing is complete.”
And Diaz expects that briefing should be finished by the end of July.
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