Norway’s Sovereign Wealth Fund Divests from Pemex Over Corruption Concerns

Norway’s $1.8 trillion sovereign wealth fund has divested from Pemex, citing corruption and lack of transparency. Allegations date back to 2004, with the Council on Ethics noting the involvement of former executives in bribery. Pemex continues to face its own financial challenges and leadership changes amidst ongoing corruption concerns.

Norway’s sovereign wealth fund, the world’s largest at a staggering $1.8 trillion, has made headlines by completely divesting from Mexico’s state-owned oil company, Petróleos Mexicanos (Pemex). This decision, announced on Sunday, is predominantly rooted in concerns over corruption and lack of transparency, as per the fund’s Council on Ethics. It is a significant move given the fund’s global stature and its established ethical investment principles.

The Council on Ethics does not take this decision lightly. They noted that investigations hint at numerous corruption allegations connected to Pemex throughout the years 2004 to 2023. In their assessment, they emphasized that former executives at Pemex could be involved in receiving bribes on multiple occasions, calling the situation alarming.

For context, the ethical watchdog’s report highlighted high-profile corruption scandals, including the notorious Odebrecht scandal and the legal troubles of former Pemex CEO Emilio Lozoya. The imprisonment of Lozoya, connected to the fraudulent sale of a fertilizer plant in Veracruz, underscores the ongoing issues within Pemex, which have persisted for two decades.

The wealth fund operates under stringent guidelines from Norway’s parliament and has been regarded as a pioneer in environmental, social, and governance practices. As of June, its holdings in Pemex were valued at an estimated $138 million, indicating a significant financial stake prior to this divestment.

In response to the divestment announcement, Pemex communicated with the Council, claiming it had been forthcoming with information requests. Nevertheless, the Council maintained its stance, outlining that while Pemex has an anti-corruption framework, details on its active functioning remain insufficient. The watchdog’s report observed gaps in data about corruption incidents reported in 2017, raising further questions.

The report didn’t shy away from detailing troubling accusations about favoritism towards selected suppliers, with bribes allegedly exchanged for easing contracting processes. Multiple former employees have been implicated, leading to legal resolutions in the United States, which further tarnishes the company’s already beleaguered reputation.

In terms of leadership changes, Pemex is currently facing financial difficulties, with debts reaching around $100 billion. Previous economic support promised by the López Obrador administration is expected to continue under President Claudia Sheinbaum’s guidance. Recently appointed CEO Víctor Rodríguez Padilla aims to pioneer new business strategies aimed at attracting investments and expanding deepwater oil exploration.

However, amid these plans, Pemex reported significant financial losses, including a staggering net loss of 43.3 billion pesos (approximately $2.2 billion) for the first quarter of 2025, alongside diminishing oil output. This paints a challenging picture for Pemex as it navigates its future and seeks stability.

As Pemex enters this new chapter under fresh leadership, it remains to be seen how effectively they will address the ongoing corruption issues and restore confidence among investors and stakeholders alike.

The world’s largest sovereign wealth fund, Norway’s $1.8 trillion fund, has divested entirely from Pemex due to persistent corruption concerns. The Council on Ethics cites multiple, unresolved corruption allegations linked to Pemex and insufficient transparency. In the midst of restructuring and new leadership under CEO Víctor Rodríguez Padilla, Pemex faces considerable challenges, including significant debt and operational losses, as it strives to regain investor trust and modernize its practices.

Original Source: mexiconewsdaily.com