(Bloomberg) -- The arrest of a former top government official is a breakthrough for Mexico's crackdown against corruption, but it puts President Andres Manuel Lopez Obrador in a delicate spot.On one hand, the arrest of a one-time head of the nation's state oil company accused of fraud stands as a tangible victory for Lopez Obrador in his crusade against corruption, an issue of overriding importance to Mexicans. But if the case continues to expand, it could involve new and powerful figures and perhaps put national political stability at risk.Emilio Lozoya, the former CEO of Petroleos Mexicanos, is being held without bail in a jail in Spain on allegations he committed fraud worth $280 million, and Mexico has said it will seek his extradition. A longtime confidant of Lopez Obrador's predecessor, Enrique Pena Nieto, Lozoya had been a key member of Pena Nieto's 2012 presidential campaign before being appointed to helm Pemex.Lopez Obrador, who's more widely known as AMLO, has already begun to tamp down expectations that Lozoya's case would actually extend to Pena Nieto. The former president isn't accused of any wrongdoing.'My position is that the president should not be persecuted,' AMLO said Thursday after being asked by reporters about investigating his predecessor.Lozoya, who's being held on corruption allegations involving steelmaker Altos Hornos de Mexico and Brazilian construction firm Odebrecht SA, is the highest-profile arrest yet for Lopez Obrador's anti-corruption push.Ex-Pemex CEO Arrested in Spain, Boosting AMLO's Graft CrackdownAMLO won a landslide victory in 2018 after promising to root out Mexico's endemic corruption. The country ranks 130 among 180 nations in Transparency International's Corruption Perceptions Index.Analysts say AMLO will do everything he can to contain the probe so it doesn't divide Mexico in a way similar to Brazil's experience with the sprawling bribery scandal called Carwash.Carwash, known in Brazil as Lava Jato, ensnared scores of corporate executives and politicians, including former President Luiz Inacio Lula da Silva. The political crisis that ensued helped trigger one of the country's deepest recessions.How AMLO's Plans to Transform Mexico Ran Into Reality: QuickTake'Unlike the Lava Jato investigations in Brazil, Lopez Obrador will remain in control of the investigations, and the signal he has sent so far is that it is unlikely that he will allow the investigations to grow and spread out of control,' said Eurasia Group analyst Carlos Petersen. 'He likely wants to avoid this having deeper economic consequences.'Lozoya's arrest could pave the way for others, Mexico's Attorney General Alejandro Gertz told newspaper El Universal in an interview. 'All the cases that we have already opened, which are more than 10, have a common denominator that you can see very clearly: there is a system, a way of operating.'Lozoya fled from Mexico and had been on the run for several months, hiding from authorities using his vast network of contacts and deep pockets to avoid apprehension, authorities said. Lozoya's lawyers have said he is innocent.He could face up to 15 years in prison, Spanish Judge Ismael Moreno said Thursday. On his arrest, Lozoya was in possession of a drivers license in the name of an alias but with his actual photograph, prompting the court to rule him a flight risk.It's unclear how Mexicans will respond: AMLO is straddling a fine line, because the public may demand a probe of Pena Nieto.AMLO 'has said from the day he was elected that he has no interest in going after his predecessors,' said Maureen Meyer, Mexico expert at the Washington Office on Latin America. 'The challenge will be that if his government is confronted with overwhelming evidence that merits an investigation, if one isn't opened, they will be under extreme pressure and the question of why they wouldn't pursue it.'AMLO appears to understand this and hasn't shut the door completely to a probe.'If the people say there should be a trial, I would be against that because I don't think it's right for the country. But I would respect the decision of the people. We would have to do it,' the president said Thursday.(Adds comment by Mexico's attorney general in 11th paragraph. An earlierversionof this storycorrectedthe name of the oil company in third paragraph.)To contact the reporters on this story: Cyntia Barrera Diaz in Mexico City at cbarrerad@bloomberg.net;Justin Villamil in Mexico City at jvillamil18@bloomberg.net;Amy Stillman in Mexico City at astillman7@bloomberg.netTo contact the editors responsible for this story: Juan Pablo Spinetto at jspinetto@bloomberg.net, Robert JamesonFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.2020 Bloomberg L.P.
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