This article was republished with permission from Michael Volkov’s blog, Corruption, Crime & Compliance.
Mexico has amended its laws and administrative procedures to implement a new and aggressive administrative anti-corruption regime. Mexico’s efforts have won praise from the OECD and other anti-corruption interest groups. The law extends new anti-corruption prohibitions beyond the federal level but to Mexican states and local governments.
In the face of continuing controversies surrounding corruption in Mexico, President Pena Nieto, who ran a campaign in 2012 promising to attack domestic corruption, has fulfilled his commitment by promulgating a legislative package as the Anticorruption National System.
The new laws consist of three distinct laws: (1) General Law for Anticorruption National System, (2) Organic Law for the Federal Tribunal on Administrative Justice and (3) General Law of Administrative Responsibilities. These legislative initiatives build on constitutional reforms of May 27, 2015.
The enactment of the new anti-corruption administrative regime is an important step in Mexico’s commitment to battle corruption. Of course, the next hurdle will be the enforcement of this new anti-corruption regime. The new anti-corruption prosecutor’s office will have to demonstrate its commitment to enforcement.
The administrative regime is separate and in addition to existing criminal sanctions against corruption that apply to entities and individuals.
The legislation requires public disclosure by government officials of their assets, statement of income, conflicts of interest and their tax returns. This provision was watered down to exclude entities and individuals that conduct business with the Mexican government from making similar disclosures.
The General Law of Administrative Responsibilities (GL) establishes administrative duties and responsibilities for public servants and private parties, possible sanctions and procedures for applying the sanctions. All legal entities and individuals are subject to administrative penalties for serious administrative offenses, including: bribery, trafficking in influence, use of false information, conspiracy, wrongful use of resources and wrongful recruitment of ex-public servants. The prohibitions apply equally to Mexican companies and foreign companies operating in Mexico.
Under the GL, administrative liability requires proof beyond a reasonable doubt, and the statute of limitations is seven years.
Administrative sanctions for individuals and entities include fines and exclusion from procurement, leases, services or state-owned projects for a term. The maximum fine for individuals is $600,000, and $6 million for entities. Legal entities can mitigate any penalties by maintaining a compliance program and by cooperating with the investigation.
The Mexican law also recognizes whistleblowers. A person who has committed an administrative offense can confess and cooperate with authorities in exchange for a sanctions reduction. Under the new law, the whistleblower can earn a reduction of 50 to 70 percent for cooperating, and even the entire exclusion sanction.
The Mexican law includes general prohibitions on hiring of former government officials for a year after leaving his or her government position. This prohibition could have a significant impact on companies that are interested in retaining former government officials in a variety of industries.