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Latino Daily News

Wednesday May 9, 2012

Mexico’s Pemex Denies $30 billion Accounting Fraud

Mexico’s Pemex Denies $30 billion Accounting Fraud

Photo: Petroleos Mexicanos

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Mexico’s state-owned oil monopoly Petroleos Mexicanos has denied any accounting irregularity after a congressional oversight body said it had identified a possible $30 billion fraud.

Leftist lawmaker Esthela Damian, a member of the Party of the Democratic Revolution, or PRD, has proposed a vote on a resolution to summon Pemex CEO Juan Jose Suarez Coppel to appear before lawmakers and clear up the matter.

The alleged irregularity was detected by the federal auditor’s office, which reports to the lower house of Congress.

According to Damian’s resolution, in a Feb. 15 report on federal government accounts in 2010, auditors showed that a 2009 loss of 398.56 billion pesos (just under $30 billion) by Pemex’s exploration and production unit, or PEP, had been eliminated and recorded as an increase in the assets of Pemex’s corporate division, Pemex Corporativo.

It said Pemex gave no technical basis for recording the loss as assets and the company’s board of directors did not authorize the move.

Pemex, for its part, said in a statement that the essence of the observation made by congressional auditors referred to an accounting procedure the company has followed since 1993.

It said that in following that method, the sum in question was recorded in Pemex Corporativo’s books as accounts receivable - under the category of “increase in investments in subsidiaries.”

The company said that as part of that accounting method, the profits or losses of Pemex subsidiaries are transferred to Pemex Corporativo for consolidation purposes.

“As it has every year, Pemex responded punctually to the observations” made by the auditor’s office, the company said.