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The Deepwater Horizon oil spill resulted in BP paying out millions in dollars to Mexico to compensate for the damage done. Photo. Charlie Riedel, AP

BP Paid Mexico $25.5M After the Deepwater Horizon Oil Spill, But Victims Didn't See a Peso

Some of a $25.5M settlement from BP could have helped devastated fishermen recover from the catastrophe, but they say they got nothing, according to an investigation by VICE World News and corporate transparency watchdog PODER.
December 17, 2020, 2:00pm

MEXICO CITY - On April 20, 2010, the Deepwater Horizon oil rig operated by transnational oil giant BP exploded roughly 40 miles off the coast of Louisiana, causing the death of 11 workers and the release of over three million barrels of oil into the Gulf of Mexico. The event is now widely considered one of the worst environmental catastrophes in modern history.

Eight years later, the government of former Mexican President Enrique Peña Nieto signed a controversial $25.5 million settlement deal with BP over the Deepwater Horizon disaster. The agreement outraged thousands of affected Mexican fishermen along the Gulf coast; by comparison, the company paid over $60 billion to U.S. interests because the spill occurred in their portion of the Gulf of Mexico. 

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The fishermen claimed their way of life was destroyed and that the meager settlement from the energy giant didn’t include any compensation for the affected Mexican Gulf coast populations. Since the signing of that 2018 deal, the affected fishermen have sent numerous letters to current President Andrés Manuel López Obrador asking him to review their case. They also filed an official criminal complaint with Mexico's attorney general office in September 2020 about the Mexican government's settlement with BP - of which they say they didn’t receive a peso.

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Fishermen in Veracruz told VICE World News that they haven't seen a peso of the million-dollar settlement BP paid Mexico. Credit: Nathaniel Janowitz for VICE World News

New documents obtained by VICE World News and the corporate transparency watchdog PODER raise serious questions about the use of over $5 million of that settlement, which the government continues to refuse to clarify. While the documents appear to show that the money was designated to personal moving expenses for embassy staff around the world, Mexico’s government was unwilling to provide a single invoice or receipt related to its use.

The new documents show that in the final year of Peña Nieto's presidency, over $5.3 million of the settlement was given to Mexico's Secretary of Foreign Affairs (SRE is its Spanish acronym) to reimburse court costs and other fees related to the spill. The remainder was given to various environmental institutions to compensate for the cost of studies related to the spill and future environmental research. The government settlement didn’t earmark any payment whatsoever to affected communities along the Gulf Coast.

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Collage by Cathryn Virginia | Images from Getty and BP

Some of the documents, provided by the SRE through freedom of information requests in 2019 and 2020 via the Mexican National Transparency Institute (INAI), show that the funds had been allocated for the “transfers of federal personal” in its foreign embassies around the world. The documents also show that not only was the money received in 2018, but it was also reportedly spent in that same fiscal year. However, the government refused to provide any receipts or invoices for how the money was spent.

Instead, the SRE provided a 2018 budget spreadsheet that shows massive increases to the budgets of its foreign embassies.

The office in charge of Mexico’s North American embassies received just over $1.8 million, an increase of roughly three times its original budget, while the European office received $1.78 million, approximately 17 times its original budget. The rest was divided between the three regional offices that oversee Pacific Asia, Africa and the Middle East, and Latin America and the Caribbean, the latter of which received the majority.

When repeatedly pressed about how the money was spent through transparency requests in 2020, the SRE's final INAI response in October was sketchy at best.

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The SRE referred to the payment as a "donation" from BP and expanded slightly on how it was used to “cover the expenses incurred by the installation of diplomatic and consular personnel (in this case) at the service of the agencies and entities, when in the performance of official functions within or outside the country, their permanence outside their residence is required temporarily or permanent, including, where appropriate, the transfer of household items.”

Then, when asked to provide examples of what that meant, via receipts, invoices, or any sort of additional documentation showing how the money was spent, the SRE stated in a written response: "that in the records of the management of the payments in question, it is not possible to disaggregate the requested level of detail.”

However, an anonymous source, who worked as a high-ranking official in the SRE in 2018, provided information to the contrary. The source sent VICE World News a list of 234 officials and their diplomatic appointments where the funds were used, and claimed that each official would have been required by Mexican law to have submitted to the SRE both a receipt confirming the transfer of funds signed by the diplomat and an invoice signed by the transportation company.

When presented with this specific information, the SRE still failed to provide any receipts or invoices, nor any other proof about how the $5.3 million was used beyond the 2018 budget spreadsheet.

The spreadsheet is confusing. Numerous offices had their budgets slashed, while others had money assigned without specifying whether it was used or not. Some offices claimed to have spent no money at all.

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The questionable use of settlement funds is only the latest salt on an open wound for the fishermen of Mexico's Gulf Coast who allege they were affected by the 2010 oil spill.

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A fisherman man stands next to his humble boat in the Gulf Coast state of Veracruz. Credit: Nathaniel Janowitz for VICE World News

The revelation of the BP and Mexican government's $25.5 million settlement was the culmination of an investigation published in 2018 by the author of this article and Claudia Ocaranza of PODER, which showed how the Mexican government under Peña Nieto potentially ignored research about the effect of the oil spill on Mexican waters submitted by some of the country’s most respected scientists. Instead, the government pushed forward a reform to privatize Mexico’s energy sector that allowed for numerous deals with BP. The reform allows the oil giant to win new drilling rights in the Gulf of Mexico, and allowed it to open over 500 BP branded gas stations across the country over the last four years.

Meanwhile, a Mexican government lawsuit against BP languished in a U.S court from 2013 to 2018 and blocked affected populations from seeing the government studies about damage from the spill until after the $25.5 million settlement, which was never announced publicly. Mexican fishermen continue to claim to have received no government support before or after the 2018 payout, and over 10,000 remained involved in a class-action lawsuit against BP until 2020.

The leaders of the class-action lawsuit continually pleaded with López Obrador to review their case and intervene on their behalf after he entered office in December 2018. 

Several prominent members of various Gulf Coast communities even came together to file an official criminal complaint in September with the Mexican Attorney General's office against a number of officials, including the former head of the SRE from 2017-2018, Luis Videgaray, and the Mexican ambassador to the United States at the time who signed the voluntary dismissal agreement with BP, Gerónimo Gutiérrez Fernández. 

Videgaray has already been engulfed in scandal since the former head of Mexico's state-run oil company Pemex, Emilio Lozoya, alleged to federal investigators that Videgaray orchestrated Mexico's involvement in the seemingly never-ending Odebrecht bribery scandal that has embroiled politicians across Latin America since 2015. Videgaray declined to comment to VICE World News with regards to the BP settlement. He released a statement in August claiming that the accusations related to his involvement with Odebrecht bribes are not only false, but "absurd, inconsistent, and reckless."

Gutiérrez Fernández has also been connected to Odebrecht; his family are the majority shareholders in Grupo Idesa, a Mexican company that has been involved in numerous business dealings with the petrochemical wing of Odebrecht, known as Braskem. When asked about his connection to BP, Gutiérrez Fernández told VICE World News that he was not involved in the negotiation of the BP settlement and that "I signed the dismissal agreement based upon this instruction and my duties as ambassador," and "in no way was I involved on how the payment for the settlement was used." He also stated that "I had no relation with Braskem nor Odebrecht," and that "during the time I was in government, I had no participation nor involvement in any way with (Grupo Idesa)'s business."

In response to the criminal complaint against Videgaray and Gutiérrez Fernández, López Obrador stated in October that he would ask the Attorney General's office to review the settlement. But unfortunately, it was too late. The class-action lawsuit would be dismissed by the U.S. court two weeks later, after facing numerous legal hurdles related to seeking compensation in a foreign court without government support.

While López Obrador came to power on a platform of fighting corruption in Mexico, there is little evidence that his administration is working to provide clarity on how the $5.3 million was spent, or misspent, by SRE officials both before and after the change of government two years ago. The failure of the current SRE to provide adequate responses to questions posed during this two-year investigation through its legally binding transparency institute compromises the president’s commitment to fighting graft.

Although it seems nearly impossible that the affected Gulf Coast populations will receive any compensation through the U.S. court system, sources within the movement continue to remain optimistic that López Obrador will find a way to leverage BP’s interests in Mexico to finally provide some form of justice for those affected by the oil spill over a decade later.