Lindita Ciko and Eduardo Rodriguez - Mexico's New Anticorruption Framework, Part II

Mexico’s anticorruption framework is not akin to global anticorruption laws such as the FCPA, the UK Bribery Act and Canada’s CFPOA because it does not have extraterritorial jurisdiction.[1] The anticorruption framework is similar to domestic anti-bribery laws that most countries have had for a long time, but it is heavily influenced by current anticorruption best practices. As such, once implemented, it will be a great indicator of how the country deals with its historical corruption problem and serve as an example in the fight against grand corruption.

As discussed in the previous post, the anticorruption framework was drafted and enacted amidst a series of corruption scandals involving very senior members of government and political parties. A particularly important aspect of this legislation is the grassroots effort—unprecedented in Mexican politics—that shaped the legislative agenda and pressured Congress to enact the measure. Specifically, one of the seven laws in the framework, the General Law of Administrative Responsibilities (Ley General de Responsabilidades Administrativas, “LGRA”; also known as “Ley 3 de 3” or “Law 3 out of 3”), was drafted and presented to Congress by civil society groups[2] through a mechanism called a “citizens’ initiative,” which obliges Congress to discuss a bill presented by the public when backed by verified signatures of 0.13 % of registered voters.[3]  The name of the bill is derived from the three obligations it presented to public officials in order for the public to hold them accountable: a declaration of income and properties before and during their public appointment; a declaration of potential conflicts of interest; and, proof of annual payment of taxes. As enacted, some of the aforementioned requirements were scaled back significantly; mainly, the three declarations will not be filed publicly due to privacy concerns. The LGRA entered into force on June 19.

Prior to the enactment of the anticorruption framework last June, Mexico lacked a comprehensive anticorruption regime. A number of provisions addressing corruption were scattered throughout the federal penal code and other laws, including the recently enacted Federal Anti-Corruption Law on Public Procurement and the Federal Law of Administrative Accountability of Public Officials, both of which were replaced by the laws of the national anticorruption framework. [4] Additionally, coordination between the federal and state levels in this area was absent and enforcement was a challenge. The anticorruption framework addresses these two issues by creating a comprehensive, national anticorruption system and outlining the role and obligations of government institutions with respect to enforcement.

The anticorruption framework, through Articles 65-72 of the LGRA, imposes the following obligations and civil penalties to private parties and public servants:

Private entities and individuals:

Proscribed conduct:

  • Bribery: Promise, offer or give undue benefits to public servants.
  • Wrongful participation on one’s own behalf or on behalf of a third party in proceedings from which they are barred
  • Use influence, economic or political power, real or fictitious, for the purpose of obtaining a benefit or advantage from a public servant
  • Submit false or forged information for the purpose of obtaining an authorization, a benefit, or advantage.
  • Collusion in federal, local or municipal public contracting
  • Hire former public servants who are served during the previous year who possess privileged information directly acquired by reason of their employment or position in public service, and directly allow the contractor to benefit in the market or place him or her in an advantageous situation.
  • Improper use of public resources whether material, human or financial.

The law places special emphasis on candidates for elected positions, members of electoral campaigns or transition teams between public sector administrations, and leaders of public sector unions. Such persons are prohibited from demanding, requesting, accepting, receiving or intending to receive any of the additional benefits, either for themselves, for their election campaign or for their spouse, blood relatives, civil relatives or for third persons with whom they have professional, business or employmnet relationships, or for partners, or companies of which the public servant or persons mentioned above is part, in exchange for granting or offering an undue advantage in the future, if he or she becomes a public servant or elected official.

Penalties:

Individuals:

  • Monetary sanctions up to twice the amounts of the profits obtained, and in case of not having obtained any profit, 100 to 150 thousand times the daily value of the Unidad de Medida de Actualización[5] (75.49 MXN for 2017)
  • Temporary debarement from participating in acquisitions, leases, services or public works, for a period between three months and eight years.
  • Compensation for damages caused to the federal, local or municipal Public Treasury.

Private Entities:

  • Monetary sanctions up to twice the amount of the profits obtained, and in the case that no profit was obtained, 1000 to 1 million 500 thousand times the daily value of the Unidad de Medida de Actualización[6] (75.49 MXN for 2017).
  • Temporary debarement from participating in acquisitions, leases, services or public works, for aperiod between three months and ten years.
  • Suspension of activities for a period between three months and three years.
  • Compensation for damages caused to the federal, local or municipal Public Treasury.
  • Dissolution of the respective entity.

Public servants:

Obligations:

  •  Publish the following three declarations
    • 1) asset declarations 
    • 2) declarations of possible conflicts of interest, and
    • 3) tax returns
  • Denounce acts and omissions that they notice in the exercise of their functions that may constitute administrative misconduct.
  • Refrain from demanding, accepting, obtaining or seeking to obtain, directly or through third parties, any benefits not included in his or her remuneration as public servants, in order to fulfill his or her public duties.
  • Refrain from authorizing, soliciting or performing acts for use or appropriation by them or their spouse, blood relatives, civil relatives or for third parties with whom you have professional, employment or business relationships, or for partners or companies of which they form part.
  • Refrain from using privileged information, obtained on the basis of their functions, for private advantage or benefit.

Penalties:

  • For non-serious administrative misconduct:
    •  Public or private warning
    • Suspension
    • Removal from employment or position
    • Temporary debarement from working or serving in the public service and from participating in acquisitions, leases, services or public works.
  • For serious administrative offenses:
    • Suspension
    • Dismissal
    • Monetary penalties (up to two times the profit obtained)
    • Temporary debarment from working or serving in the public service and from participating in acquisitions, leases, services or public works.

The penal code sets out the following criminal penalties applicable to private entities and individuals and public servants:

  • Corruption: 1 to 20 years in prison.
  • Unlawful use of public office: 1 to 7 years imprisonment.
  • Abuse of authority: 1 to 9 years in prison.
  • Collusion (public servants): 2 to 7 years in prison.
  • Unlawful use of power and authority: 6 months to 12 years imprisonment.
  • Forgery and obstruction of justice by a private party (contractor, licensee, assignee): 3 months to 9 years in prison.
  • Extortion: 3 months to 2 years in prison.
  • Intimidation so that no complaint or information is submitted in the alleged commission of a crime: 2 to 9 years in prison.
  • Illegally granting contracts, concessions, permits, licenses, authorizations, etc. as a public servant: 3 months to 12 years in prison.
  • Influence peddling: 2 to 6 years in prison.
  • Bribery: 3 months to 14 years in prison.
  • Graft: 3 months to 14 years in prison.
  • Illegal enrichment: 3 months to 14 years in prison.
  • Offenses against the administration of justice: 3 to 10 years.

The law outlines a number of mitigating factors that include the seriousness of the offence, voluntary disclosure of the misconduct and cooperation with the investigation.  The law incentivizes voluntary disclosure by reducing fines and the period of debarment, provided however, that the disclosure is made prior to the initiation of the investigation.
The framework establishes a mechanism similar to the FCPA’s deferred prosecution agreement called a consent decree, which if complied with by the offender, may suspend and even extinguish criminal liability.

In the post that follows, I will review the various steps in the implementation of the anticorruption framework and their status as framework enters into force. The effectiveness of Mexico’s national anticorruption framework will be evident as its various institutions get up and running. 

 


[1] Mexico ratified the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions amending it Criminal Code to establish the offence of bribing a foreign public official in 1999.

[2] More information on the Ley 3 de 3 citizen’s initiative is available at: http://ley3de3.mx/es/quienes-somos/.

[3] The 2014 reform allowing outlining the procedures governing citizens’ initiatives is available here: http://www.dof.gob.mx/nota_detalle.php?codigo=5345226&fecha=20/05/2014.

[4] The seven laws of the National Anticorruption Framework (Sistema Nacional Anticorrupción, “SNA”) are the following:

1. The General Law of the National Anticorruption framework (Ley General del Sistema Nacional Anticorrupción, “LSNA”)

2. The Organic Law of the Administrative Justice Federal Court (Ley Orgánica del Tribunal Federal de Justicia Administrativa, “LOTFJA”)

3. The General Law of Administrative Responsibilities (Ley General de Responsabilidades Administrativas, “LGRA”)

4. The Organic Law of the Attorney General's Office (Ley Orgánica de la Fiscalía General de la República, "LOFGR")

5. The Organic Law of the Federal Public Administration (Ley Orgánica de la Administración Pública Federal, “LOAPF”)

6. Articles 217, 217 Bis, 221, 222, and 224 of the Federal Penal Code (Código Penal Federal, “CPF”)

7. Articles 10, 55-66 of The Law on Audit and Accountability of the Federation (Ley de Fiscalización y Rendición de Cuentas de la Federación, “LFRCF”)

[5] A monetary reference unit calculated by the Mexican government for the payment of liabilities.

[6] A monetary reference unit calculated by the  Mexican government for the payment of liabilities.