Controversial Mexican oil union boss resigns amid graft charges

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MEXICO CITY (Reuters) – The longtime head of Mexico’s powerful oil workers union, Carlos Romero Deschamps resigned on Wednesday, a day after the president hinted he should step down to face allegations of wrongdoing.

The departure of Romero Deschamps could allow President Andres Manuel Lopez Obrador to take a firmer grip of the future of national oil company Pemex, the world’s most indebted.

Lopez Obrador this week said Romero Deschamps was under investigation, and on Wednesday revealed the union boss could face prosecution over two complaints filed against him.

In a statement, Romero Deschamps defended his record as union boss, pointing to positive changes for workers that include improvements in pensions and healthcare as well as salary increases.

But Romero Deschamps said he was resigning and that there was no longer “the cooperation that must exist between workers and administration to promote projects that allow Pemex’s true progress towards consolidation.”

Romero Deschamps was a federal lawmaker with the opposition Institutional Revolutionary Party (PRI), which ruled Mexico for most of the past century, five times. He served three times in Mexico’s lower house of Congress, and twice in the Senate. The posts gave him immunity from prosecution.

After assuming leadership of the oil workers union in 1993, he wielded considerable power, keenly aware that taxes levied on the giant company accounted for a large chunk of the federal government’s annual budget.

In 2000, Romero Deschamps was accused of helping divert 1.5 billion pesos from Pemex accounts to the presidential campaign of the then PRI contender Francisco Labastida.

While a government audit later revealed anomalies covering 2.3 billion pesos in the so-called Pemexgate scandal, Romero Deschamps himself escaped unscathed. Others were not so lucky and were punished and fined.

Now Romero Deschamps and “other people” face two complaints for “the crime of (financial) operations with funds of illegal origin,” according to information provided by the financial intelligence unit of Mexico’s finance ministry.

Earlier this year, sources said the attorney general’s office had accused him and several relatives of illicit enrichment and money laundering.

Romero Deschamps has previously denied all charges.

Past media reports of the lavish lifestyle of him and his family, which included trips on private jets and the purchase of a yacht and luxury sports cars, despite his modest official salary, had stoked accusations of corruption.

In 2012, his daughter Paulina posted pictures of a trip to Europe on her Facebook (NASDAQ:) page, including images taken in private jets and five-star hotels along with her British bulldog traveling companions.

The photos created a media storm in Mexico, and the Facebook page was taken down shortly afterwards.

Lopez Obrador on Tuesday suggested that the veteran union leader and politician might consider quitting to address the allegations.

Lopez Obrador, who was himself a PRI member until the late 1980s, won office by a landslide in 2018 after years of campaigning against corruption.

The veteran leftist has promised to boost the fortunes of Pemex, which has suffered more than a dozen years of declining oil output, at a time when the company’s payroll continued to rise.

For decades Pemex has been dogged with accusations that it is a hotbed for graft and kickbacks. Most of Pemex’s employees are members of the oil workers union.

Manuel Limon Hernandez, a close confidant of Romero Deschamps, was picked to succeed him, according to the media reports, which cited sources inside the union.

Limon Hernandez, who served as the union’s treasurer for over a decade up until last year, is also a federal congressman with the PRI representing the oil-rich state of Veracruz.

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