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Sempra under investigation, says Mexican press

Charges of corruption, influence-peddling, money-laundering, and organized crime

Tugs follow a liquified natural gas carrier as it prepares to dock at Sempra's Baja facility
Tugs follow a liquified natural gas carrier as it prepares to dock at Sempra's Baja facility

The Mexican press reported this past weekend that Sempra Energy is under investigation by the Department of Homeland Security.

Imagen del Golfo, a news agency in Veracruz, reported that Sempra is being investigated for corruption, influence-peddling, money-laundering, and organized crime. Other Mexican media to report on the investigation have been La Jornada of Mexico City and Proceso.

The investigation centers around a case that has been kicked back and forth over the past several years and reported several times in the Reader.

Rodolfo Michelon, who had a high accounting position with Sempra in Mexico, in 2011, filed a whistle-blower complaint charging that Sempra had used several dubious financial ploys — bribes, essentially — to build a liquefied natural gas plant near Ensenada. In 2003, Marathon Oil was well ahead of companies wanting to build such a plant in that area of Mexico. Suddenly, Baja condemned Marathon property.

Through a law firm, Marathon hired the international detective firm of Interfor to check out what happened. Interfor reported that the Baja governor at the time had accounts in the offshore tax and secrecy havens of Switzerland and the Cayman Islands and had been giving preferential treatment to Sempra.

However, the Securities and Exchange Commission and Federal Bureau of Investigation permitted Sempra to hire its own law firm to investigate itself. The outcome was predictable: the law firm paid by Sempra found the company clean. Michelon's claims were dismissed. San Diego lawyers Gary Aguirre and Dan Gilleon, however, found more evidence and filed another Michelon whistleblower complaint with the Securities and Exchange Commission.

Aguirre told me that a Homeland Security agent in Texas has asked him for Michelon's whistleblower complaint to the securities agency. Gilleon told me that Michelon has talked with the Homeland Security agent.

I called Sempra for comment and have not heard back. If the company comments, I will post it.

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Tugs follow a liquified natural gas carrier as it prepares to dock at Sempra's Baja facility
Tugs follow a liquified natural gas carrier as it prepares to dock at Sempra's Baja facility

The Mexican press reported this past weekend that Sempra Energy is under investigation by the Department of Homeland Security.

Imagen del Golfo, a news agency in Veracruz, reported that Sempra is being investigated for corruption, influence-peddling, money-laundering, and organized crime. Other Mexican media to report on the investigation have been La Jornada of Mexico City and Proceso.

The investigation centers around a case that has been kicked back and forth over the past several years and reported several times in the Reader.

Rodolfo Michelon, who had a high accounting position with Sempra in Mexico, in 2011, filed a whistle-blower complaint charging that Sempra had used several dubious financial ploys — bribes, essentially — to build a liquefied natural gas plant near Ensenada. In 2003, Marathon Oil was well ahead of companies wanting to build such a plant in that area of Mexico. Suddenly, Baja condemned Marathon property.

Through a law firm, Marathon hired the international detective firm of Interfor to check out what happened. Interfor reported that the Baja governor at the time had accounts in the offshore tax and secrecy havens of Switzerland and the Cayman Islands and had been giving preferential treatment to Sempra.

However, the Securities and Exchange Commission and Federal Bureau of Investigation permitted Sempra to hire its own law firm to investigate itself. The outcome was predictable: the law firm paid by Sempra found the company clean. Michelon's claims were dismissed. San Diego lawyers Gary Aguirre and Dan Gilleon, however, found more evidence and filed another Michelon whistleblower complaint with the Securities and Exchange Commission.

Aguirre told me that a Homeland Security agent in Texas has asked him for Michelon's whistleblower complaint to the securities agency. Gilleon told me that Michelon has talked with the Homeland Security agent.

I called Sempra for comment and have not heard back. If the company comments, I will post it.

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Comments
8

Sempra talk to you? That's a scream. There will be a big behind-the-scenes push to stop this investigation. Dueling government agencies will engage in favor-swapping, power plays, and who-knows-what-else. But the investigation might, just might, continue and if it does, things could get verrrry interesting.

One question I have, and one I cannot answer now, is the effect this will have on the price of Sempra stock.

Aug. 11, 2014

Visduh: Yes, I didn't expect a response from Sempra, but occasionally it does reply to me. Yes, there will be a clandestine attempt by U.S. government people to thwart this.

Of course, there was such a deal earlier. The FBI and SEC both let Sempra hire a law firm to investigate itself. This is a laugh. A law firm hired by a company has an obligation to represent the company. This is how the SEC let John Moores off the hook. Former San Diego lawyer Charles La Bella was in the middle of both of those capers. The FBI and SEC will probably cook up something again.

But remember: Gary Aguirre has beaten the SEC before. He can possibly do it again.

Sempra's stock probably won't be affected. Even in the remote chance Sempra doesn't wiggle off the hook with U.S. government help, its penalty will have little effect on earnings. Best, Don Bauder

Aug. 11, 2014

SEMPRA RESPONDS. Sempra spokesperson Paty O Mitchell got back to me at 5:22 p.m. The company's statement: "The allegations made by Mr. Sanchez Ritchie [a colleague of Michelon] and Mr. Michelon were false. The company cooperated fully with the government, providing it with documents and making employees available for interviews. The U.S. Department of Justice and the San Diego U.S. Attorney's office notified the company in 2011 that they had concluded the investigation and did not intend to take any further action. We are not aware of ay further investigation by the government on this matter."

Aug. 11, 2014

That was the sort of complete denial that we would have expected. But is Sempra really "not aware of ay further investigation by the government on this matter?" I'd guess they know as much as, or more than, anyone about what's going on, and that it is not good. Sigh.

Aug. 11, 2014

Visduh: It is hilarious that Sempra says it got cleared by the U.S. Department of Justice and the San Diego U.S. attorney's office. Of course. Sempra was permitted to hire its own law firm to determine whether the company broke the law.What do you expect? Best, Don Bauder

Aug. 12, 2014

If I was trying to build an LNG terminal in Mexico and had to bribe government officials, I would ask the foreign supplier of the gas to pay the bribes so it couldn't be traced back to me. These types of payments are pretty standard in most other countries. That's why I don't think they're going to tie the bribes, if any, to Sempra. The employees of the foreign gas suppliers involved in any bribes probably received Bangalore neckties to shut them up. Sempra is as clean as a hound's tooth as Ike used to say.

Aug. 11, 2014

Burwell: I have known hounds with bad breath that could be traced to unclean teeth. Yes, many U.S. companies passing bribes in foreign countries have others do the dirty work. But some get caught, too. Best, Don Bauder

Aug. 12, 2014

MORE MEXICAN MEDIA COMMENT ON ALLEGED INVESTIGATION. More Mexican media are commenting on the alleged Homeland Security investigation into whether Sempra bribed Mexican officials to get its LNG plant near Ensenada.

The website Encuentro29.com says that former officials of the Ministry of Agricultural, Territorial, and Urban Development are under investigation over "a number of issues that are a little shady."

Encuentro29.com says that San Diegan Alan Bersin, assistant secretary of the international office of the Department of Homeland Security, was one of the persons applying pressure to the U.S. Attorney's office to back off any investigation of Sempra. Bersin is a former U.S. Attorney in San Diego.

The website says unauthorized payments landed in the Cayman Islands secret account of Baja California Governor Eugenio Elorduy Walther, but the publication says these payments are "not documented." Best, Don Bauder

Aug. 12, 2014

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