Emails show how embezzlement of CFE was fabricated

Officials of CFE International (CFEi) in the government of Enrique Pena Nieto are accused of colluding with the inexperienced company Whitewater Midstream LLC which received contracts for the supply of gas and the construction of gas pipelines through bids that were allegedly rigged between 2016 and 2017.

These acts caused the subsidiary of the Federal electricity commission will present losses that are counted in hundreds of millions of dollars from the past six-year term until today.

A series of emails, which is part of the investigations in USA, show how William Turrent Schnaasthen general director of CFEi, shared communications with Stuart Porter, an executive of Denham Capital, company that financed Whitewater with 200 million dollars, together with Ridgemont Equity Partners.

The intention of the exchange of information was to formalize meetings to assure Denham that Whitewater would benefit from agreements to build works and supply gas and thus go ahead with the capital contribution, even before calling for bids.

On May 28, 2016, at 1:14 a.m., Turrent sent Porter an email that read: “Hi Stu, just wanted to thank the Denham and Whitewater group for your time. I hope we meet with you on one or more projects in the future.

Please let me know how you suggest we move forward with the online trading platform. As for Waha, we’ll deal with it with the Whitewater folks. Thanks again and have a good weekend”.

Just 26 minutes later, Stu Porter responded: “Guillermo, it was great meeting you and Javier, we are so excited to start working with you on all fronts.

“I think the best way to get the ball rolling on the ecommerce platform is to have a call next week with my managing Director, Eric Pritchett. On that call, Eric can talk about the platform Potamus and get your vision of what you would like to build for the energy market in Mexico. The next step would be to send you and the WWM (Whitewater) team to Boston for him to talk about the technology we would build and cover anything else you can imagine.

“I’ll be in Brazil next week, but I think I should be able to make any call.”

Stu’s reply states that he was also present at his meeting Javier Gutierrez, CFEi’s director of operations at the time and Turrent’s right-hand man.

Added to this evidence is another. This is a “memorandum of understanding” signed on May 30, 2016 by Whitewater and CFEi. The document established terms for the granting of the gas supply contract called West Texas Supply.

A month later, on July 1 of that year, Denham and Ridgemont transferred the 200 million dollars to Whitewater. The West Texas Supply tender was launched on July 29, 2016. And, in March 2017, the agreement was delivered to the company with conditions similar to those agreed ten months earlier in the previous agreement.

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The correspondence shared between the former Mexican official and the Denham executive, as well as the memorandum, are part of a legal document requested from the justice American, in which it is requested to include the details of the investigations carried out in the United States.

In addition to granting agreements for the supply, without accrediting experience in works for the energy sector, Whitewater obtained another contract from CFEi to build the “Waha Connector”, a gas pipeline 17 miles that would be linked to the infrastructure of the Natural gas plant liquids (NGPL), and thus being able to comply with the gas supply for the subsidiary of the Federal Commission.

The connector work is considered unnecessary. The legal defense of CFEi, promoted from the change of government to the administration of the President Andrés Manuel López Obrador, affirms that there were other pipelines that already connected with the head of Waha, a distribution center located in the west of Texas, and that they could have supplied gas to Mexico ever since.

The list of suspect contracts for Whitewater has been expanded to three. In June 2017, CFEi administrators requested the purchase of 1.5 bcf (billions of cubic feet), equivalent to one billion cubic feet of natural gas per day through the VCP pipeline located in South Texas. This award was given to companies Apache and Trafigura.

However, in February 2018, CFEi entered into an extra contract for 1 bcf per day with Whitewater during 15 years. This agreement is also classified as unnecessary, since the subsidiary receives excess gas every day that it must auction off in the market at a lower price compared to the purchase price, which implies a loss to public coffers in real time.

Experts in the gas sector affirm that 1 bcf a day is enough to supply electricity to 30 million homes.

The rise of Whitewater and the links with CFEi executives

Whitewater Midstream had a stratospheric rise. Within a few months of being created, it became one of the largest suppliers of natural gas in Mexico and a highly visible player in the sector in the United States.

The company was established by Matthew Calhoun in April 2016. Two months later, Guillermo Turrent and Javier Gutiérrez were appointed CEO and COO of CFEi, respectively.

Turrent’s relationship with Calhoun is key to the plot in which contracts were inexplicably awarded to a barely registered company with no experience or assets. Both characters worked together in the decade of the 2000 for the energetic Shell in California, Turrent served as negotiating agent in the purchase and sale of gas between 1998 and 2006, according to a publication in the newspaper The country which was the first medium to reveal the links between these characters.

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Even Matthew and Guillermo were involved in an investigation that was launched by the Federal Energy Regulatory Commission (FERC) in 2002, for a price manipulation scheme that caused an estimated damage of 400 million dollars that affected consumers in California.

In that investigation he was also involved Arlin Travis, who held the position of advisor to CFEi between July 2016 and April 2017. At the same time, Travis also served as advisor to Whitewater, between August 2016 and January 2017. In other words, when the award processes occurred, he was working in both places.

For his part, Javier Gutierrez Becerril she also had a history in the past with Matthew Calhoun. The director of operations of CFE Internacional was also director of Antaeus Groupa company founded by Calhoun in May 2013, three months after Guillermo Turrent was appointed director of modernization for the Federal Electricity Commission.

In July 2013, two months after its creation, it proposed projects such as a natural gas liquefaction plant in Mexico. In addition, it became a minority partner in three CFE gas pipeline contracts. CFEi’s defense, which is fighting for the alleged embezzlement, ensures that there was no contribution of assets.

CFE Internacional is a subsidiary company of the Federal Electricity Commission that was founded in 2015, as part of the decree of the Energetic reform promoted by the administration of then President Enrique Peña Nieto.

At a slow pace

The CFE filed a criminal complaint in August 2021 with the Attorney General of the Republic (FGR) against Guillermo Turrent and Javier Gutiérrez for breaching the Law of Acquisitions, Leases and Services of the Public Sector.

The hearing to charge these two former officials has been postponed three times. Turrent has alleged health problems.

While the name of Javier Gutiérrez appears in a legal document in the United States for the Whitewater case, which also indicates that his impeachment hearing in Mexico has been delayed for various reasons.

In an “Investigative Acts Agreement”, dated December 14, 2022, FGR agent Blanca Flor Ramón Peralta agreed to provide information to Jose Arturo Ceron, director of Contentious Affairs of CFEi, on the status of the investigation folder FED/FEMCC/FEMCC-CDMX/0000513/2021, which establishes that Javier Gutiérrez is accused of the crime of improper use of powers and faculties. The foregoing derives from an improper acquisition of services with public resources.

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The document indicates that the imputation hearing was set for May 23, 2022. However, the defenders demanded more time to know the content of the evidence presented by CFEi.

The new date was set for August 17, 2022. The defense of the former officials once again requested a extension to request new test data from the FGR “essential for his theory of the case.” The judge postponed the hearing for the second time.

The agreement set a new date, for October 26, 2022. However, two days before, Gutiérrez’s lawyers assured that his client had health problems, which would make it impossible for him to appear before the judicial authority, for which reason a hearing was suspended. session again.

In the United States, a civil suit was filed in the District Court for Harris County, Texas, against Turrent and Gutiérrez Becerril, for granting billions of dollars in overvalued and unnecessary contracts to Whitewater.

The two peñista officials presented a motion to suspension, because they will be processed in Mexico. The US court is holding the case on hold as it would violate his right to self incrimination in Mexico.

Guillermo Turrent maintains a continuous activity as a consultant in the fuel market. On December 1, 2022, for example, he offered an interview to the journalist Adela Micha in which he talked about the increase in the price of gas derived from the war in Russia against Ukraine.

Turrent’s Linkedin profile ensures that since January 2019 he has been the general manager of Energy and Infrastructure Advisors.

Is there investor confidence in this sector? Michael asked.

—Well, look, it’s a very thorny issue, the CFE has 24 international arbitrations in gas contracts, in electricity issues and the problem we have right now in Mexico is that we are going from one extreme to the other: from a place of total transparency, with competition, and market generation with the world, to one where we want to being isolated and with strategic associations that are made without competition. Before everyone watched and now no one does. If there is investor confidence, I would say no. There are short-term issues where yes, but long-term, no.

While Turrent offers interviews or conferences in international forums and Javier Gutiérrez dedicates himself to consulting on energy matters, they continue without facing the accusations of colluding with a company headed by their former collaborators. The case remains bogged down in the Mexican justice institutions, since the first hearing for this case has not even begun and in the United States it continues on pause.

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