The US gas trading company Whitewater Midstream is under investigation in Mexico and the United States “for the delivery of contracts under suspicion of corruption, abuse of trust and influence peddling,” the Federal Electricity Commission (CFE) reported on Friday in a release. The company signed three contracts with the state electricity company between 2016 and 2017, said the agency, and is under investigation “since it is a recently created company, which did not have assets, experience in the sector or financial solvency and, who were awarded multi-million dollar contracts by CFE ”.
An investigation by EL PAÍS exposed the ties of more than 20 years between Whitewater executives and Guillermo Turrent, who, as CEO of CFE’s private subsidiary, CFE International, awarded the contracts. Turrent has known Whitewater founder Matthew Calhoun and one of its top executives, Arlin Travis, since at least 2000. The three worked together at Royal Dutch Shell in California between 2000 and 2001, as recorded in documents that are part of an open case of possible excessive charges to the State of California. Whitewater began winning multi-million dollar contracts with CFE months after it was founded, and its employees worked in CFE International’s offices as the subsidiary prepared to bid for one of the contracts that they ended up winning.
Between 2016 and 2017, CFE entered into various contracts with the WhiteWater Midstream company and its subsidiaries called WWM Logistics, LLC and Waha Connector, CFE said on Friday. “WhiteWater, such a company, is undergoing an investigation process, both in Mexico and in the United States,” the authorities reported. “There is a gas pipeline contract in the United States, which was unnecessary for the purposes and needs of CFE, which was assigned without a transparent and competitive bidding process that would guarantee the best conditions for the Commission and the Mexican State,” the report adds.
“Such a contract for billions of dollars and for more than 20 years, was not approved by the governing bodies of the CFE, and did not have the approval of the Ministry of Finance and Public Credit,” the statement continues. Additionally, CFE International, a CFE subsidiary that works as its private arm in the US, signed two natural gas supply contracts with WhiteWater.
“The contracts with this company are unfavorable and unbalanced, with leonine clauses and conditions such as that CFE cannot terminate a 15-year gas contract under any circumstances, it cannot penalize the private company under situations of non-compliance in the supply, the amounts of CFE’s guarantees to the company are out of the market and the volumes of gas are increasing and without being linked to the needs of CFE’s generation plants, ”the state-owned company assures.
CFE sought to carry out a process to renegotiate the terms of the contracts, but WhiteWater executives refused to reach an agreement, the state-owned company said. “CFE will exercise, in accordance with its own law, legal actions, both in civil and criminal terms, in Mexico and the United States. They will seek to define and award responsibilities of former CFE officials who delivered these contracts, as well as to hold their accomplices in such a previously non-existent company responsible. ” CFE also assured that there are former CFE officials who are being investigated.
In response to the EL PAÍS investigation, Whitewater reported on July 7 that it had initiated an arbitration process against CFE International for non-payment.
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Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.