- Associated Press - Tuesday, July 28, 2020

MEXICO CITY (AP) - A Mexican court held the first hearing Tuesday in what President Andrés Manuel López Obrador said would be a “watershed” corruption case against the former head of the state-owned oil company.

Emilio Lozoya, the former head of Petroleos Mexicanos, said through his lawyers that he had been “used” by “an organized apparatus of power” during the alleged corruption during his tenure at the head of the company, known as Pemex, from 2012 to 2016.

Lozoya did not identify that group, but the wording appeared to suggest he was ready to spill the beans on top officials in the administration of President Enrique Peña Nieto. The hearing wasn’t open to the public.

According to an informal synopsis of the session provided by the court system, Lozoya’s lawyers said they would not argue against the prosecution’s request to the judge that Lozoya be held over for trial on money-laundering charges. Lozoya has reportedly agreed to cooperate with prosecutors and will act as a protected witness in return for possible sentence reductions or elimination of charges.

According to the synopsis, Lozoya reiterated “my commitment to collaborate with Mexican government authorities.” His lawyers described him as having been “used as an unintentional instrument” by others, even though he allegedly used much of the purported bribe money to buy houses for himself or relatives.

Lozoya told the court he was innocent of the charges and would prove it. He fled Mexico and led authorities on a monthslong overseas manhunt. Spanish police arrested him in the Spanish city of Malaga in February, and he was extradited to Mexico in mid-July.

López Obrador said Lozoya’s trial “is a before and after” moment in what the president describes as the main priority of his administration - fighting corruption.

The court opened proceedings via a video link because of coronavirus pandemic restrictions and the fact that Lozoya has been under treatment in a hospital for pre-existing conditions.

A judge ruled that Lozoya could avoid being held in prison and would instead wear a monitoring bracelet and turn in his passport. He will be under guard while in the hospital and, after he leaves, will have to sign in with the court every two weeks. The prosecution has asked for six months to strengthen its investigation in the case, but Lozoya could face more charges and another hearing is scheduled for Wednesday.

Lozoya said he had been “systematically intimidated, pressured and used,” though he did not say by whom. There had been speculation he may have felt pressure to raise money for Peña Nietos’s presidential campaign.

The Brazilian construction giant Odebrecht, investigated throughout the region in recent years for buying big government contracts with generous bribes, allegedly gave Lozoya $4 million to put toward the 2012 presidential campaign of Peña Nieto, López Obrador’s predecessor.

The hearing focused on charges in a 2013 case in which a Mexican firm, Altos Hornos de Mexico, sold an overpriced old fertilizer plant to Pemex after allegedly paying Lozoya around $3.4 million in 2012. According to prosecutors, the money went though accounts controlled by Lozoya and his sister, and they used most of it to buy a house in an upscale neighborhood in the capital.

Lozoya said he had declared the property as required on audit forms that government employees must fill out, but prosecutors said he tried to hide the payments and the transaction.

Prosecutors said Lozoya pushed for the purchase of the fertilizer plant even though it would have been cheaper to build a new one.

López Obrador said the new owner of the plant has since offered to repay as much as $200 million related to the purchase. The president said Mexico hopes to get back some of the money from bribes and crooked contracts, and he criticized the fact that Mexican corruption cases often play out in U.S. courts - and that money recovered in those cases also often remains in the United States. He said he has instructed Mexican diplomats to try to get some of it returned to Mexico.

Odebrecht allegedly kicked in an additional $6 million once Peña Nieto was in office. Some of that money was allegedly used to bribe federal lawmakers into voting for his signature energy reform package, known as the Pact for Mexico, which opened the country’s energy sector to greater private investment.

“Mr. Lozoya is letting it be known that there were these bribes and that the money was used to buy the energy reform and that the money was divided among the parties’ legislators,” López Obrador said last week. He had opposed the energy overhaul.

The president said Tuesday the case “will help a lot, I repeat, in banishing corruption from Mexico.”

He called graft a bigger problem for Mexico than the coronavirus outbreak.

“I am convinced that it is Mexico’s main problem. It is not a pandemic … it is a plague,” López Obrador said.

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