Water purifiers in Segalmex: the scam of private investment within the public organization

In some of Mexico’s remote communities, the only drinkable beverage is a soft drink. “Then we need to offer an alternative, but a cheap one.” The words came from the mouth of Ignacio Ovalle, then director of Mexican Food Safety (Segalmex). It was June 2020 and the official, a kind of political godfather of President Andrés Manuel López Obrador, presented his latest major project: they were going to install 274 water purification plants in the warehouses of the enormous food supply network for people with less. resources. Behind it, as in numerous initiatives that were conceived with Ovalle at the head of this organization, a corrupt plot was hidden. A group of businessmen had agreed with the parastatal to set up a business that they believed would yield millions of dollars. However, the investors never got their money back and the parastatal lost public funds it had invested in services to keep the plants running. In exchange, it was going to keep those facilities in 2024, but after the first year of production, the purifiers were completely abandoned.

“We have already begun the establishment of 25 plants, to supply purified water to the communities where we are established,” Ovalle celebrated in that press conference accompanied by the Secretary of Agriculture and president of the Board of Directors of Segalmex, Víctor Villalobos. The presentation was made in 2020, but the program had been developed at least a year before. Documents to which EL PAÍS had access indicate that the agreement for the water plants was reached on July 29, 2019, just eight months after López Obrador came to power. The agreement was signed by Diconsa, the agency in charge of food supply that the president merged with the agency in charge of milk, Liconsa, under the name of Segalmex.

The head of Administration and Finance, René Gavira Segreste, arrested last week for illicit use of powers and powers, was the representative of Diconsa. Manuel Lozano Jiménez, the former commercial director of the organization, now under house arrest in Argentina, signed alongside him. The contract, under the name of general collaboration agreement, was signed with the companies Grupo Andareya and MSG Minerales Sintticos Granulados. The person who pulled the strings of these companies was the businessman Fernando Zurita, now arrested for a fraudulent purchase of sugar. His envoy, who signed as the legal representative of the consortium, was Eduardo Murillo Landeros, also detained in the Segalmex judicial case.

One of the documents to which this newspaper had access is an agreement to build 137 purification plants in the northern and central region of the country. There they planned to produce 20-liter jugs of water to sell in Diconsa stores. In the business, the Segalmex subsidiary provided the space, was responsible for the expenses for services such as electricity and drinking water from the public network, storage, distribution of the product, recovery of empty jugs and the initial supply of 500,000 empty 20 liter containers. Companies would have to use “molecular modification technology designed to treat water with various contaminants”, fill containers with treated water and carry out quality controls. The profits went into private pockets.

Segalmex water jugs, in an image shared on social networks.
Segalmex water jugs, in an image shared on social networks.

Diconsa’s forecast was to sell about 10 20-liter jugs per day in each store only in the north-central region, according to Annex A of the General Collaboration Agreement. Then they created another similar agreement for the southern and central region of Mexico. For each agreement, they decided that they were going to start with a minimum production of 3.9 million jugs per month. The sales they had, however, were far below expectations: between 2020 and 2021 they sold only 4.9 million pesos throughout the country. An approximation made by this newspaper, with the idea that the jugs were sold for 15.75 pesos, indicates that the total sales could have been 314,300 throughout the country.

The signed agreement established that the design of the products was the responsibility of both Diconsa and the company, while manufacturing was only the responsibility of the private party. Segalmex was initially in charge of purchasing jugs to “be donated to the beneficiaries of the program,” an acquisition through which they also embezzled public coffers, as reported by this newspaper.

Although the manufacturing of the purifying plants was done through the companies Grupo Andareya and MSG Minerales Sintticos Granulados, the purchase of water was handled with two other companies linked to Zurita: Gainmate Comedores Industriales and Servicios Integrales Carregin, the latter used in a sugar fraud. These two companies were also legally represented by Murillo Landeros. The connection between the companies can even be seen in the documents that record the development of the installation of the plants, which have the Carregin Integral Services logo.

The company Gainmate Comedores Industriales, founded in 2008, changed its purpose as a company at the beginning of 2021 to precisely add water businesses and included: “Provide storage services for drinking water for human consumption, treated water or water derivatives for any “natural or legal person, whether in the private sphere or any public entity.” In that same movement, they appointed Eduardo Murillo Landeros as the company’s representative. Before 2020, it had not received any public tender. This was not the case of Servicios Integrales Carregin, founded in October 2018, which in January 2020 obtained a contract with the mayor’s office of Iztapalapa by direct award.

The first orders that Segalmex made for water jugs to these companies began in May 2020, at least two months before the official announcement, and the last ones arrived in September 2021. By the end of that year, the purification plants had already stopped to produce and were beginning to be abandoned. Beyond the apathy, the paper agreement is valid until September 30, 2024, the date on which the companies are supposed to transfer the plants to Diconsa.

To guarantee that they would comply with the service, the companies gave Diconsa a bond equivalent to 10% of the minimum monthly amount of the agreement, that is, for 391,200 jugs or 6.1 million pesos, which in theory remained in the hands of Diconsa. If private companies do not comply with their responsibilities, the document indicates that there will be no need to go to court or demand forced compliance or payment of damages without a judicial resolution. This newspaper consulted Segalmex about the plants, although it did not receive a response. In addition, he contacted the telephone number of the two companies associated with the manufacturing of the plants, and the person who answered changed his version about whether he knew the companies, first saying yes and then no, finally stating that it was the wrong number.

Interior of one of Segalmex's water purification plants.
Interior of one of Segalmex’s water purification plants.Diconsa

Businessmen who lost their investment

All the plants that were built were built with money from private entrepreneurs. The cost of lifting each one was around 170,000 pesos. Sources familiar with the agreement, who prefer to remain anonymous, indicate that Zurita convinced three close men to invest in this project. One of them was Hugo Rosales Badillo, former Secretary of the Government of the State of Durango, who according to these versions contributed two million dollars in cash. Later, and always according to the same sources, he complained about the lack of progress in the project and managed to recover 10 million pesos through a bank transfer. That banking movement has left him linked to the judicial case.

The second investor was a logging businessman from the State of Chihuahua, who delivered about 18 million pesos through a bank transfer, according to these sources who claim that González never saw that money again. The last to invest was Luis Molleda Cámara, a businessman who was a regular contractor of the Institute of Security and Social Services of State Workers (ISSSTE) and died in 2022. In his case, the amount invested was 160 million pesos, according to people familiar with the negotiations. This newspaper tried without success to communicate with the first two and the family of the third.

The jug scam

As established in the agreement with the purification plants, Segalmex was in charge of purchasing the empty jugs. For this, it signed an agreement for 99.9 million pesos for around 1.8 million containers, of which it only received a third. Last March, EL PAÍS revealed an embezzlement of at least 51.6 million pesos in the acquisition of this product in 2019. The parastatal’s internal calculations indicate that of the total containers purchased, only about 214,000 were used. The reason is that the sale of water was planned to be done in 20-liter bottles. Despite this, the parastatal purchased smaller containers: 605,850 pieces of 11 liters and 605,850 pieces of five liters.

A group of volunteers loads a boat with Segalmex jugs, to be distributed in Macuspana, State of Tabasco, during the floods at the end of 2020.
A group of volunteers loads a boat with Segalmex jugs, to be distributed in Macuspana, State of Tabasco, during the floods at the end of 2020.Segalmex

The scheme of paying all purchases in advance and ordering the product later was a measure that was imposed in the Ovalle Administration. It is not a regular mechanism in public procurement and served to prevent suppliers from delivering in many cases all of what was purchased, causing damage to the public treasury. Thus, the embezzlement within Segalmex exceeded 15,000 million pesos, according to the Superior Audit of the Federation. The scam was repeated with meat, sugar and even batteries, according to what numerous journalistic investigations have revealed. In the case of the purchase of the jugs, only the 20-liter ones were delivered, which were the ones needed to comply with the agreement. An internal analysis recognizes that Segalmex does not know how many jugs it received in total, because the parastatal did not have a complete inventory of its products.

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