China firm may sue over cancelled rail contract in Mexico

The Chinese company whose US$4.3 billion high-speed rail contract was cancelled by Mexico threatened legal action amid news reports that one of the bid partners built a home for first lady Angelica Rivera.

"Our company is extremely shocked" by the revocation, China Railway Construction Corp said, according to Xinhua. "We will resort to legal means to protect the company's legitimate interest when it's necessary."

Mexico rescinded the contract last week, citing "doubts and concerns" about the winning group, which included four Mexican partners. One, Constructora Teya, is part of Grupo Higa that built a home for President Enrique Pena Nieto's family in Mexico City, news website Aristegui Noticias reported on Monday.

Pena Nieto's office said in a statement the first lady bought "real estate assets" from Ingenieria Inmobiliaria del Centro and continues to make payments. The statement did not connect the home of Rivera, a former soap opera star, to the president's decision to scrap the train deal.

The Aristegui Noticias report said the home, which it referred to as the "White House", was still registered to Ingenieria Inmobiliaria, a unit of Grupo Higa.

Pena Nieto may suffer some political damage if Mexicans suspect the builder got preferential treatment in the rail bidding because of ties to the presidential couple, according to political consultant Alfonso Zarate.