What are the recent developments in Mexico in the fight against corruption?*
A National Anti-Corruption System was created on July 18, 2016 based on constitutional amendments passed by Congress in 2015.
The secondary legislation which followed these amendments included four new laws and amendments to three existing laws which were passed by Congress in 2016, notably the General Law of Administrative Responsibilities and the Law of the National Anti-Corruption System (among others).
The laws of the National Anti-Corruption System are general laws and therefore create obligations and responsibilities for all three levels of government: federal, local and municipal as well as for the private sector.
It requires companies to have in place a mechanism of self-regulation which includes internal controls, an integrity programme and the development of an ethical culture within the organisation. The law also requires that the mechanisms of self-regulation follow international best practices on control, ethics and integrity with the tools to encourage and protect whistleblowers within the organisations.
In addition, the law establishes a wide range of sanctions for individuals and companies who engage in conduct whose intention is to obtain an undue advantage. Further, the law is clear that in determining the level of sanctions against this type of behaviour, the court will consider whether the company has established an internal policy of integrity in line with the requirements of the law.
What does the internal policy of integrity entail exactly?
The internal policy of integrity is therefore mandatory for companies and will include as a minimum the following elements:
- An internal manual of organisation and procedures which set up clearly and comprehensively the functions and responsibilities of each area and the management lines and leadership in its structure.
- A code of conduct which must be published and communicated to all members of the organisation; the code of conduct must have mechanisms and systems for real application.
- Adequate and effective systems for control, monitoring and audit to examine constantly and regularly the compliance of the integrity standards throughout the organisation.
- Adequate systems for whistleblowing both from within the organisation and to the external competent authorities. The system must establish the disciplinary procedures and specific consequences for anyone who acts against the requirements of the internal norms and Mexican legislation.
- Adequate processes and systems for training on the integrity policies outlined above.
- Human resources policies to avoid the employment of persons who constitute a risk to the integrity of the organisation.
- Mechanisms to ensure the transparency of operations and interests.
What about potential sanctions?
The LGRA also defines which acts of private businesses can be penalised in terms of the law including bribery, illegal participation in procurement processes, influence trafficking, use of false information to obtain undue benefits, obstruction of a judicial investigation, collusion, undue use of public resources and the offer of employment to former public officials within a year of their termination as a public official (to avoid the use of privileged information and undue advantages vis-à-vis competitors).
The sanctions for infringement of these requirements of the law include:
- Economic sanctions – the amount calculated as twice the economic benefits and advantages obtained. In cases where no benefits or advantages have been obtained, the misconduct will attract an economic sanction of about 112 million MX pesos regardless, the equivalent of 5.6 million US dollars (calculations of the author).
- Banned from participating in procurement processes – a mínimum of three months, a maximum of ten years.
- Suspension of trading activities – a mínimum of three months, a maximum of ten years.
- Legal dissolution of the corporation.
- Repayment of financial damages to federal, local or municipal governments.
The court will determine whether to impose one or more sanctions depending on the severity of the misconduct. In determining the level of sanctions, the court will consider whether the company had established an internal policy of integrity as a mitigating factor.
Are there any other components to the National Anti-Corruption System?
The National Anti-Corruption System also provides for the creation of a National Digital Platform which will be open to civil society and the general public for consultation. According to the Law of the National Anti-Corruption System, the National Digital Platform will have six information systems as follows:
- A system which includes information on the wealth, declaration of interests and tax declarations of all public officials.
- A system with information on all public officials who participate in public contracts and procurement.
- A system with a list of all public officials and private entities sanctioned by the anti-corruption laws
- A system with information and communications from the National Anti-Corruption System
- A system for public complaints against acts of administrative misconduct and corruption.
- A system of public information about government contracts
(published in the Diario Oficial de la Federación on 18 July 2016 – but in force from 19 July 2017)
Director, CCRC Auditoria y Control Interno S.C.