Widespread oil theft by drug traffickers deals major blow to Mexico's government

By Steve Fainaru and William Booth
washington post foreign service
Sunday, December 13, 2009

MALTRATA, MEXICO -- Drug traffickers employing high-tech drills, miles of rubber hose and a fleet of stolen tanker trucks have siphoned more than $1 billion worth of oil from Mexico's pipelines over the past two years, in a vast and audacious conspiracy that is bleeding the national treasury, according to U.S. and Mexican law enforcement officials and the state-run oil company.

Using sophisticated smuggling networks, the traffickers have transported a portion of the pilfered petroleum across the border to sell to U.S. companies, some of which knew that it was stolen, according to court documents and interviews with American officials involved in an expanding investigation of oil services firms in Texas.

The widespread theft of Mexico's most vital national resource by criminal organizations represents a costly new front in President Felipe Calderón's war against the drug cartels, and it shows how the traffickers are rapidly evolving from traditional narcotics smuggling to activities as diverse as oil theft, transport and sales.

Oil theft has been a persistent problem for the state-run Petroleos Mexicanos, or Pemex, but the robbery increased sharply after Calderón launched his war against the cartels shortly after taking office in December 2006. The drug war has claimed more than 16,000 lives and has led the cartels, which rely on drug trafficking for most of their revenue, to branch out into other illegal activities.

Authorities said they have traced much of the oil rustling to the Zetas, a criminal organization founded by former military commandos. Although the Zetas initially served as a protection arm of the powerful Gulf cartel, they now call their own shots and dominate criminal enterprise in the oil-rich states of Veracruz and Tamaulipas.

"The Zetas are a parallel government," said Eduardo Mendoza Arellano, a federal lawmaker who heads a national committee on energy. "They practically own vast stretches of the pipelines, from the highway to the very door of the oil companies."

The Zetas earn millions of dollars by "taxing" the oil pipelines -- organizing the theft themselves or taking a cut from anyone who does the stealing, according to Mexican authorities. The U.S. Treasury Department this summer designated two Zeta commanders as narcotics "kingpins," which allows authorities to seize assets.

The Zetas often work with former Pemex employees, according to Ramón Pequeño García, chief of anti-drug operations at Mexico's Public Security Ministry. The former employees "are highly skilled people who have the technical knowledge to extract oil from the pipelines. They are now under the control of the Zetas," Pequeño said.

Across the border

This year, executives of four Texas companies pleaded guilty to felony charges of conspiring to receive and sell millions of dollars worth of stolen petroleum condensate. U.S. law enforcement officials said in interviews that they have no evidence showing that the men were connected to drug traffickers.

During his September arraignment in Houston, Arnoldo Maldonado, president of Y Gas & Oil, pleaded guilty to receiving about $327,000 to coordinate at least three deliveries of tankers filled with stolen condensate to another Texas company, Continental Fuels, according to a court transcript of the hearing.

Asked by U.S. District Judge Ewing Werlein Jr. how the condensate had been stolen from Pemex, Maldonado replied: "I have no idea on that, sir."

Donald Schroeder, a former president of Houston-based Trammo Petroleum, pleaded guilty in May to buying $2 million worth of stolen Mexican condensate, according to a transcript of the hearing. Schroeder re-sold the condensate to another company, BASF, for a $150,000 profit, prosecutors told the court.

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