Foreign Exchange
Foreign Exchange
How a candidate for Arizona governor became ensnared in one of the biggest international corruption scandals in history … and almost nobody noticed.
The Odebrecht scandal sent shockwaves through political regimes on three continents, implicated countless politicians, put billionaires and business executives in jail and led one Latin American former president to kill himself rather than submit to arrest.
But so far, it has left Arizona Democratic gubernatorial candidate Marco Lopez unscathed.
The U.S. Department of Justice called the case against Odebrecht, a global construction giant based in Brazil, “the largest foreign bribery case in history.”
Few Americans have likely heard of Odebrecht and its sophisticated “bribery department” that lined the pockets of powerful politicians across Latin America in exchange for lucrative building project contracts.
That’s probably because the scandal didn’t involve any American politicians — or at least not to anyone’s knowledge.
But documents turned over to the Mexican Attorney General’s Office in its unprecedented corruption investigation show Lopez was among those who lined his pockets with Odebrecht money through his consulting work for former Mexican President Enrique Peña Nieto’s presidential campaign in 2012.
Those documents came from Peña Nieto’s former top campaign lieutenant, Emilio Lozoya, who was arrested in Spain last summer and is now working with Mexican investigators in the case. Last year, they were leaked to Mexicanos Contra la Corrupción y la Impunidad (Mexicans Against Corruption and Impunity), a nonprofit investigative news organization, which published the documents.
The documents show that Lopez’s company, Intermestic Partners/International Strategic Solutions1, received a $35,000 wire transfer from a Swiss bank account for two months’ worth of work on Peña Nieto’s campaign. Lozoya testified and provided transfer logs showing that money was part of a more than $3 million bribe from Odebrecht that illegally fueled the campaign in exchange for an agreement for future inflated public works contracts.
And while $35,000 is just a drop in the bucket of the hundreds of millions in bribes the company showered on Latin American politicians over more than a decade, it’s not bad pay for two months of work. That’s about what the average Mexican citizen earns in two years. Neither Lopez, his campaign nor his business would answer questions about what, exactly, he did on a day-to-day basis to earn that money.
The money was then laundered through the Swiss bank account for Latin America Asia Capital Holdings, Lozoya’s shell business in the British Virgin Islands, to skirt campaign finance laws before being paid to Lopez and other campaign consultants, according to Lozoya’s testimony and the receipts he turned over to Mexican prosecutors.
The leaked documents include invoices that Lopez and the other campaign consultants filed claiming the payments were for work on various South American mining projects. Lozoya testified those were fictitious endeavors schemed up by the campaign for the sole purpose of hiding the source of the funds, according to Mexicans Against Corruption and Impunity.
If you didn’t realize Lopez worked for Peña Nieto, you’d be forgiven. There’s no reference to his work on Peña Nieto’s 2012 presidential campaign in his English language bio, though it’s in the Spanish version.
But the story of Lopez’s work for Peña Nieto — code-named the “Colombia Project” — is hidden in plain sight. It’s just in a language most Americans haven’t bothered to learn.
Lopez declined to be interviewed for this report. His campaign spokeswoman, Grace Papish, said it’s not a “good use of his time” to talk about the Colombia Project and his work on the Peña Nieto campaign, but that Lopez would be happy to sit for an interview about his vision for Arizona.
The campaign offered to answer questions submitted in writing, but then did not reply to an extensive list of questions, including, but not limited to:
What is the Colombia Project?
Why did you write Colombia Project in the subject line of the invoice?
Was it, as Mr. Lozoya has alleged, to cover up the source of the funds?
Did you know you were being paid with illegal bribes from Odebrecht?
Were you paid from a Swiss bank account?
If so, did that throw up any red flags? Did you ask anyone why payment from a presidential campaign was coming from a Swiss bank account? What was the response?
If not, can you provide receipts or invoices that show you were paid through proper channels complying with Mexican campaign finance laws?
Instead, Papish and campaign manager Philip Stein called our reporter and asked to speak off the record to provide “all the facts.” We declined, saying if they have facts to share, they can do so on the record.
They sent the following statement:
“Marco gained a top-secret security clearance and was entrusted by President Obama to lead the largest law enforcement agency in the country. He is a person of honesty and integrity – and any suggestion to the contrary is categorically false.”
His work for Peña Nieto happened after he left government employment for the private sector.
Peña Nieto is now facing an ongoing criminal corruption investigation from the administration of his successor, Andrés Manuel López Obrador, who campaigned on a platform of anti-corruption. It was a popular message following six years of Peña Nieto’s presidency, which was staggering in self-enrichment even by Mexico standards.
The former Mexican president left office in 2018 under a cloud of suspicion for a host of corruption scandals, but his position got infinitely worse in 20202, when Lozoya, his former bagman and appointed leader of the state-owned oil company PEMEX, was extradited from Spain and started cooperating with Mexican prosecutors, naming names and providing receipts for bribes from Odebrecht from the 2012 campaign and through Peña Nieto’s administration.
Several of those documents name Lopez’s business.
The facts of the case throw up “big red flags, absolutely,” according to Lucinda Low, a lawyer and longtime practitioner of the Foreign Corrupt Practices Act who heads Steptoe & Johnson LLP’s anti-corruption practice in Washington D.C.
There’s good reason to believe Lopez knew — or should have suspected — that the money he was paid was illegally funneled around Mexican campaign finance laws.
Mexican political campaigns are largely publicly funded and outside contributions are strictly regulated. A Swiss bank account would throw up red flags. And the British Virgin Islands is the quintessential home for offshore shell companies, Low notes.
Aside from Mexican laws and other potential U.S. law, the Foreign Corrupt Practices Act would definitely cover Lopez, as an American citizen with an American business and American bank account, she said.
The core concept of the FCPA is outlawing direct or indirect involvement in bribery of foreign public officials, candidates for office, political parties or party officials. And it’s a pretty broad statute, Low said.
“And when it happens through shell companies, or even changing (documents) or adding euphemism in documents, those would be viewed as kind of classic red flags that are indicators,” she said.
A web of questionable characters throughout Latin America filed similar invoices, including Juan José (J.J.) Rendón, the Venezuelan political consultant dubbed the “king of black propaganda” who has been accused of employing dirty tricks and blackmail in political campaigns across Latin America. Another firm on the payroll with the bribe money was Bean LLC, better known as Fusion GPS, the D.C.-based political consulting firm that commissioned the Steele Dossier.
Lozoya testified that when consultants filed invoices mentioning the campaign, they were asked to change the invoices to reflect work for mining projects in South America to elude regulators in Mexico and Switzerland, who would have seen red flags if the money were for political purposes, according to reports in Mexico.
Many who Lozoya implicated denied the claims, including Peña Nieto. Lozoya himself denied the allegations that he was the president’s bagman before being extradited and turning into a witness for the government.
None of the political consultants who filed invoices do mining, yet they all used similar code names for the projects they invoiced, such as “Project Colombia Gold” or “Project Iron Ore in Bolivia.”
Lopez’s filed one of these invoices seemingly designed to obscure. In Lopez’s case, the invoice requests payment for the “Colombia Project.”
Both Lopez’s campaign and his business were asked about the Colombia Project, and neither responded to the questions.
To understand how Lopez, the 43-year-old former “boy mayor” of Nogales, Arizona, became entangled in the web of illegal wire transfers that prosecutors in at least a dozen countries are now tracing, you have to understand the roots of the Odebrecht scandal: Operation Car Wash, or Operação Lava Jato, as it’s known in Brazil.
Operation Car Wash started, as the name implies, as an investigation into money laundering in small businesses like car washes and gas stations in Brazil.
But following political and legal anti-corruption reforms in the country, including, for the first time, the ability to strike plea deals, the investigation snowballed.
Soon, politicians were ratting each other out in exchange for plea deals, and investigators followed the trail of bribe money back to Odebrecht, the largest building and mining company in Latin America.
In 2016, Odebrecht admitted in U.S. Federal Court that it had spent 15 years running a massive bribery operation in exchange for lucrative contracts and had shelled out nearly $1 billion in bribes across Latin America. The company agreed to pay a record-breaking fine of at least $3.5 billion, and its former CEO was sentenced to 19 years in prison.
Since then, international criminal investigations have worked with Odebrecht employees to unearth fresh details and receipts showing who was paid off by the Brazilian construction company’s “department of bribery.” Those investigations have toppled Latin American politicians like dominoes.
It’s hard to overstate the scale of the corruption in the case or its impact on Latin American politics. But here’s a quick sample of the fallout:
More than 70 Odebrecht executives were jailed but have agreed to plea deals working with prosecutors.
The vice president of Ecuador was sentenced to six years in jail for his role in the scandal.
Two sons of a former Panamanian president pleaded guilty to money laundering charges in connection to the case.
A public works minister in the Dominican Republic was sentenced to five years in prison for his role in the bribery ring.
A former Venezuelan prosecutor fled the country after alleging that the president there took Odebrecht bribes and a court blocked her investigation.
Two Austrian bankers were recently indicted for their role in the bribery scheme.
A Peruvian ex-president and his wife are currently on trial for corruption charges, while another ex-president was extradited from the U.S. last year to stand trial there. A Peruvian attorney general resigned over his handling of the investigation.
Another Peruvian ex-president killed himself when police came to arrest him on corruption charges.
The BBC described Odebrecht as “the corruption probe that has left politicians around the world looking over their shoulders.” At least a dozen countries still have ongoing investigations, including Mexico.
But just seven months after being implicated in the bribery ring of the century, Lopez wasn’t looking over his shoulder. He was announcing his run for Arizona governor.
Lopez has long been hailed as a rising star in Arizona Democratic circles. After becoming the youngest mayor in Nogales, Arizona, history and then winning a second term, Democratic Gov. Janet Napolitano tapped him to join her administration. He rapidly climbed the ranks, first at the Arizona-Mexico Commission, then leading the Arizona Department of Commerce. When she was appointed as Secretary of the Department of Homeland Security, Lopez followed her to Washington D.C., eventually working his way up to chief of staff at Customs and Border Protection.
After D.C., Lopez started his own international business and political consulting firm, Intermestic Partners/International Strategic Solutions. For the last 10 years, he’s been hobnobbing with Mexico City’s business and political elite. He still serves as a senior adviser to Carlos Slim, the Mexican telecommunications mogul who was once the world’s richest man and is currently fifth on that list.
But Lopez has always had his eye on governorship. Even as a 22-year-old mayor, he predicted that he’d be governor in eight years. He later revised that goal to the governorship by the time he turned 40. He’s 43 now, and his campaign doesn’t appear to pose much threat to Democratic frontrunner Katie Hobbs.
In fact, had he not started his campaign, few would have likely ever connected the dots between him and the Odebrecht scandal.
Lopez didn’t answer questions about if he was paid more than the $35,000 shown on that invoice for his work on the Peña Nieto campaign. He does not have to file a personal financial disclosure statement unless he is elected.
But his campaign finance statements show he poured nearly a quarter-million into his own campaign, suggesting his international consulting business has been lucrative.
Intermestic Partners and International Strategic Solutions are the same company.
Correction: A previous version of this story said Lozoya was arrested last year. It was 2020.