Corruption Scandal Challenges Mexico President-Elect

When the mighty oil workers union accused a former state petroleum chief of corruption earlier this month, the question on many minds was not whether the charges were true, but why the union chose to make them now.

The union, which has its own reputation for corruption, clearly was not taking a moral stand. The case itself had been investigated two years earlier by the attorney general and dismissed. And the target of the attack had long since left the oil company.

Coming as it did just a few weeks before December’s presidential inauguration, the corruption scandal is widely seen as a challenge by Joaquin Hernandez Galicia, the powerful boss of the oil workers union, to his longtime foe, President-elect Carlos Salinas de Gortari.

‘Masterful Play’

“This was a masterful play for power,” said Carlos Ramirez, a reporter who has covered the union for the newspaper El Financiero. “It was purely political.”

The public maneuver was highly unusual because the 200,000-member union is a pillar of Salinas’ ruling Institutional Revolutionary Party, and the former oil chief is a party stalwart.

Yet Adolfo Barrientos, an oil union leader who is also a PRI congressman, stunned his colleagues in the Chamber of Deputies on Oct. 20 when he accused Gov. Mario Ramon Beteta of Mexico state of having embezzled $49 million as head of Petroleos Mexicanos, the state oil company universally known as Pemex. He asserted that in 1985, Beteta oversaw a deal by a company named Flota Petrolera Mexicana to buy two Yugoslav-built tankers with $2.5 million in capital, then lease them to Pemex at a profit of $49 million.

Seven deputies from the oil workers union rallied other PRI congressmen to vote with them and a newly powerful opposition bloc to launch an investigation. In doing so, the union demonstrated its capacity to embarrass the current president, Miguel de la Madrid, who had put his close friend Beteta in charge of Pemex as part of his “moral renovation” campaign.

The move also showed the next president, Salinas, that he can no longer take PRI votes for granted in Congress.

“I don’t know what they want, but this is terrible,” Luz Lajous, a PRI deputy, said. “It is terrible for Salinas and for the party. It is bad for all of us.”

Political analysts and PRI officials have come up with a long and varied list of things they think the oil workers may want, but principally it amounts to power: The union wants a voice in selecting a new director of the oil company, a role in government economic policy and a continued position of strength within the ruling party.

Salinas, who was elected July 6 with the weakest showing ever for a PRI presidential candidate, has proposed to modernize both the economy and his party. On the economic front, he plans to speed up reforms initiated by outgoing President De la Madrid, including selling off state-owned companies such as airlines, the telephone company and copper mines, reducing the size of the federal bureaucracy and opening the country’s borders to further foreign investment--all moves that could weaken the unions.

Salinas and other officials have discussed breaking the giant oil company into several companies for exploration, production and export, a move that potentially could disrupt the power structure of the oil workers union.

Salinas also proposes to restructure the PRI, which is currently organized around sectors or interest groups such as the unions. His associates have said the party should have a regional or geographic base to become more democratic.

“Independent of his weakness, Salinas is still going to be president, and the union knows that,” said Ramirez. “They know they are not going to be able to stop the modernization, but now Salinas is not going to be able to modernize as much as he would have liked.”

Adolfo Aguilar Zinser, an analyst at the Carnegie Endowment for International Peace in Washington, said: “This is meant to show Salinas that he can’t govern and get rid of the guys who put him in office. . . . They are the PRI.”

The oil union was built into an empire by its 66-year-old boss, Hernandez, who is known by his nickname La Quina and who sometimes has been accused of running a parallel government in oil-producing areas. Hernandez turned oil workers into an elite among Mexican labor, earning them at one point up to eight times the minimum wage and giving them a range of benefits in exchange for stability in Mexico’s strategic oil industry.

With Mexico’s economic troubles, oil workers’ wages have been reduced to three times the minimum wage and all workers’ salaries have eroded badly under inflation. A six-month price and wage freeze to bring down hyper-inflation has been more stringent in freezing wages than prices.

Salinas, who was secretary of budget and planning in the De la Madrid administration, earned the wrath of Hernandez in 1984 when he ordered an end to the practice of automatically granting to the union 50% of Pemex contracts for such things as construction, which were then subcontracted at a profit by the union. Today, the union still gets 2% of the cost of contracts let by Pemex for social projects and manages hundreds of millions of dollars worth of services for its workers.

Hernandez reportedly was irate when Salinas’ name was first made public as one of the handful from among whom De la Madrid was expected to choose the official party’s presidential candidate. He is said to have tried to sabotage the eventual decision in favor of Salinas and reportedly was responsible for sending hecklers to a Salinas speech at party headquarters and financing publication of a book entitled “Assassin in the Presidency?” The book told the story of how, at age 3, Salinas had accidentally fired a gun, killing a family maid.

Hernandez has never admitted either allegation.

Some observers speculate that Hernandez has broader ambitions of his own and would some day like to succeed 88-year-old Fidel Velasquez as head of the PRI’s Mexican Workers Congress, the backbone of organized labor in Mexico. Velasquez so far has shown no sign of stepping down.

It is not clear whether Hernandez had Velasquez’s blessing before making his power play with the corruption case, but analysts say that the move could prove useful to Velasquez in his negotiations with Salinas. He could, for example, offer to rein in Hernandez in exchange for wage and political concessions for labor.

Salinas, meanwhile, must decide whether to negotiate with Hernandez and set his sights lower on reform or to confront the union boss and try to break his power.

“If he tries to reform the party, he may be forcing its destruction, but if he doesn’t, he can’t make the party competitive in the election arena,” said Carnegie analyst Aguilar Zinser. “If he takes the fight, he is going to be fighting on several fronts--the party, the opposition, the economy. If he attacks La Quina, it is a confrontation of such Titanic forces in the system that he must win.”

PRI officials say they advise negotiations over confrontation. The dilemma for Salinas, said one, is that while it is in the government’s interest to have a strong union to control workers in such a vital industry, “they also have a lot more resources in their arsenal, the last of which is a strike.”