Mexico has been engulfed in protests since the disappearance and alleged murder of 43 college students by a drug gang. While he contends with the unrest, President Enrique Peña Nieto also faces a big challenge to his economic agenda because of a scandal involving his wife, former soap opera star Angélica Rivera, and Grupo Higa, a government contractor.

On Nov. 3, the Peña Nieto administration awarded a $4.3 billion contract to build a high-speed railway to a group led by China Railway Construction. Three days later the government canceled the deal, citing general “doubts and concerns.” On Nov. 9, reporters led by prominent journalist Carmen Aristegui revealed that Rivera had agreed in 2012 to purchase an opulent property—called the White House because of its color—from a unit of Higa, a partner in the winning China-led bid. Aristegui’s team further revealed that the Higa unit still held the deed to the house. In response, the first lady said on YouTube that she’d paid 14.3 million pesos ($995,000) of the 54 million-peso purchase price. So the first lady’s mansion is owned by a construction company that has bid successfully for government contracts.

The relationship between Higa and Peña Nieto goes far back. The contractor’s chief rented airplanes for his use when he ran for president. Higa also won millions in government contracts in Mexico state when Peña Nieto was its governor. The government acknowledges he used another Higa-owned house during and after his presidential campaign. He may sustain some political damage if a large number of Mexicans suspect the builder got preferential treatment in the rail bidding because of ties to the presidential couple, says political consultant Alfonso Zárate.

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