Former Chief of Pemex Surrenders in Houston

A two-year struggle by the former head of Mexico’s oil monopoly to avoid extradition to face charges in an embezzlement scandal may soon end after his arrest this week in Houston.

Rogelio Montemayor, the former director of Petroleos Mexicanos, or Pemex, surrendered to U.S. federal authorities Monday. He has until Aug. 11 to appeal the decision Friday by U.S. District Judge Lynn N. Hughes to grant his extradition.

Mexico has been seeking Montemayor’s arrest since May 2002, when it asked the United States to arrest him in Texas, where he had fled. Montemayor had been free on bail until his surrender.

Mexican prosecutors say Montemayor played a central role in the “Pemexgate” scandal, one of the most audacious cases of corruption in Mexican history. They say he helped divert as much as $140 million in Pemex funds to the Institutional Revolutionary Party, or PRI, which ruled Mexico for 71 years before President Vicente Fox took office.

Investigators say most of the money went to finance the campaign of PRI presidential candidate Francisco Labastida, who was Fox’s opponent in the July 2000 election.

Julian Angulo Gongora, who is president of the lower Chamber of Deputies’ governance committee, said Tuesday that the case confirmed suspicions that the PRI had used Pemex as its cash source.

“There was always that suspicion among the opposing parties that [Pemex] funds were being diverted, but in terms of evidence that we could access, this amount is really something unheard of,” Angulo said.

Mexico’s chief auditor said the funds were transferred from Pemex accounts to those of the country’s main oil workers union, known by its Spanish initials, STPRM. The transfers were concealed as loans or as funding for social projects and worker benefits. The money was never repaid, invested or received by the union rank and file. Instead, it was channeled to the PRI.

In his decision approving the extradition, Hughes said he found “probable cause that Montemayor committed both crimes” of misappropriation and making illegal payments.

Several other former Pemex executives and union leaders are under investigation. Prosecutors filed charges in October against STPRM chief Carlos Romero Deschamps, but a judge granted an injunction staying his arrest.

In March 2003, the PRI was fined $98 million for receiving illegal funds from the union.

Mike DeGeurin, Montemayor’s Houston-based lawyer, did not grant requests for comment. He has argued in court that the charges were politically motivated and that his client was following “historical practices” between Pemex and its union. Montemayor was not culpable because the company’s leadership “ratified” the transactions, DeGeurin said.

Montemayor, a longtime PRI leader and former governor of the state of Coahuila, was named Pemex director in December 1999, when the presidential campaign was heating up. He replaced Adrian Lajous, a longtime Pemex executive with a reputation for independence.

“Before, a functionary could violate the law and nothing happened, only political disgrace. Now, Mexico is clamoring for the end of impunity,” Angulo said.

George Grayson, a Mexico specialist at the College of William and Mary in Virginia, said that the pending extradition would be significant for Mexico in its anti-corruption campaign, but that he expected the punishment to be mild.

“Several factors indicate that [Montemayor] will receive a light sentence, possibly avoiding prison altogether. He has great lawyers,” Grayson said. “It will be difficult to convict him for embezzlement, inasmuch as the PRI has paid a huge fine for Pemexgate.”