Mansion-gate: Mexican leader hit by house scandal

Scandal engulfs Mexican president

The president of Mexico is ensnared in claims that his home is that last week won—and then quickly lost—a huge government contract.

But the allegations are unlikely to complicate Enrique Peña Nieto's efforts by to introduce more private sector competition into Mexico's economy, especially in its critical energy sector, said Reggie Thompson, Latin America analyst at global intelligence and advisory firm Stratfor.

Reports over the weekend indicated that a company associated with a planned high-speed rail line in Mexico owns a mansion that is occupied by the presidential family. The $ 7 million mansion is registered to Ingenieria Inmobiliaria del Centro, a firm owned by Grupo Higa, which is associated with a Chinese-led consortium that won a $3.75 billion rail contract last week.

The Mexican government subsequently revoked the rail contract, which was awarded through an uncontested bid, after an immediate outcry from Mexican lawmakers.

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Grupo Higa did not reply to requests for comment from CNBC. The allegations surrounding the president's mansion are based on documents first reported by the Spanish-language website Aristegui Noticias that were independently examined by the Financial Times.

The reports come as Mexico gets closer to auctioning the rights to joint ventures with state energy giant Pemex, a company that generates 18 percent of Mexico's tax revenue but which has seen its output plunge by 1 million barrels a day over the last decade.

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Mexico's Hydrocarbon Commission is overseeing the auctions, which are being watched widely by international energy and business interests and are expected to come in April or May.

Mexico has "an imperative to conduct a clean auction," Thompson said. "The government wants to keep this cash cow going, and one way to do that is to keep the energy sector productive in such a way that Pemex can remain an effective form of revenue for the Mexican government."

Mexico's President Enrique Pena Nieto
Bernardo Montoya | Reuters

Any perception of misdoing is unlikely to cause public uproar in Mexico, whose citizenry is fairly accustomed to crony capitalism within the government, Thompson said. However, it could add to who suspect the government played a role in the disappearance of dozens of Mexican students in September.

Nieto was already under intense pressure over the disappearance of 43 students who were taken into custody by police following a protest over school funding and have not been seen since. They're now feared dead.

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Chinese Premier Li Keqiang said on Tuesday that he regretted that last week's rail deal was rescinded, adding that he hopes that companies from China are treated fairly by Mexico in the future.

For the full Financial Times story, click here.