Spain’s OHL hits a pothole in Mexico over alleged corruption

Residents of Ecatepec earlier this year lifted some of the toll road’s barriers to let vehicles go free in a protest against a toll increase. (Beda Penaloza Garcia)
Residents of Ecatepec earlier this year lifted some of the toll road’s barriers to let vehicles go free in a protest against a toll increase. (Beda Penaloza Garcia)

By Santiago Perez / Wall Street Journal

The Mexican unit of Spanish construction giant Obrascón Huarte Laín is grappling with questions about its accounting and ties to the administration of Mexican President Enrique Peña Nieto.

At the center of both are a series of lucrative contracts that OHL de Mexico won or which were extended under Peña Nieto’s term as governor of the State of Mexico between 2005 and 2011.

The contracts include building and operating a toll road outside Mexico City whose estimated cost has soared to about $3.6 billion. Critics say it could become Mexico’s most expensive highway.

Mexican securities regulators in October alleged the firm applied improper accounting practices related to the toll road that boosted income and asset valuations. The parent company in Madrid has denied wrongdoing and said its accounting was approved by auditors and Spanish financial regulators.

OHL’s share price has fallen 73 percent since April 30 on concerns about further fallout from the Mexican project and a steeply discounted share-rights offering.

This week, Mexico’s Attorney General’s Office said Spain’s anticorruption prosecutors had asked it in October for information about OHL in Mexico. The legal assistance request is in process, the Attorney General’s Office said; a spokeswoman didn’t respond to requests for comment. OHL said its legal departments in Spain and Mexico weren’t aware of a request.

http://www.wsj.com/articles/spains-ohl-hits-a-pothole-in-mexico-1449705931

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