President orders probe of home purchases

MEXICAN President Enrique Pena Nieto has ordered an investigation of home purchases by himself, his wife and his finance minister from government contractors but he fell short of demands for an independent probe into possible corruption.

Pena Nieto named a former election official to head the Public Administration Ministry (SFP) and investigate whether he and Finance Minister Luis Videgaray had steered big government con- tracts toward businessmen who had sold them homes.

The post had been empty since Pena Nieto took office over two years ago, when he proposed replacing the SFP with a more independent anti-corruption body that has yet to take shape.

‘‘I am conscious that these accusations have created the appearance of something improper, something that really did not happen,’’ Pena Nieto said.

However, the man named to lead the probe, Virgilio Andrade, formerly of the economy ministry, said minutes after Pena Nieto’s announcement that he would only be looking into the contractors’ deals with the federal government rather than the house purchases, which began before the president took office.

A scandal erupted late last year when it emerged that Pena Nieto’s wife was acquiring a multimilliondollar home in Mexico City from a subsidiary of Grupo Higa, part of a Chinese-led consortium that won a $3.75 billion rail contract, since shelved.

Videgaray also bought a home and received a loan from the same company and it emerged that Pena Nieto himself bought a home from a different government contractor.

Videgaray told the Milenio TV channel in comments published in its newspaper on Tuesday that he had an interest rate of 5.31 per cent on a loan he received from Grupo Higa to buy a home built by the contractor.

In 2012, the average home loan rate was 12 per cent, the central bank’s website shows.

Both Pena Nieto and Videgaray say they did nothing wrong under Mexican law.

Andrade said that neither Pena Nieto nor Videgaray was directly involved in awarding any contracts and that his investigation would be limited in scope.

‘‘It will not review the purchases of the houses, but the group of contracts agreed between private individuals and the federal government,’’ he told local radio.

Andrade’s brief includes overseeing ethical guidelines for public servants and establishing protocols governing the relation- ship between contractors and public servants.

Opposition lawmakers and experts have long argued that Mexico needs to establish independent prosecutors to deal with deeply ingrained corruption.

The scandal has stoked Pena Nieto’s deepest crisis since he took office in late 2012.

He was already grappling with the fallout of the abduction and almost certain massacre of 43 trainee teachers in southwest Mexico last year amid spiralling drug gang violence.

Analysts say the housing scandal could further undermine implementation of major economic reforms seen as key to helping stem a slide in domestic oil output and bolstering economic growth.

Pena Nieto also announced yesterday a series of measures to address possible conflicts of interest in the government, including new reporting responsibilities for federal officials.

He said Mexico needed a new framework to address issues of conflict of interest and appointed Andrade to lead efforts.