PERSONAL STATEMENT SUBMITTED TO HLS
The cost of corruption in Mexico is equivalent to 9% of the Gross Domestic Product (“GDP”)[1], placing Mexico in the 123rd spot on a list of 172 countries.[2] Acts of corruption executed by the government have always caused outrage in society. The State’s ultimate function is to foster collective wellbeing; it is unacceptable for individuals within the public sector to be dishonest and fraudulent.[3] Certainly, bribery in the public sphere is a threat to security and economic development, but commercial entities and individuals are the perpetrators themselves in many cases.[4] In 2010, 44% of Mexican businesses reported having effectuated extra official payments to government officers.[5]
The colonial period set the basis for corruption as legal structures and customs were affected and became part of Mexican culture and society. For instance, public positions were legally sold by the Spanish Crown which prompted candidates to obtain money from friends and family in exchange for favors and benefits during their period in government.[6] Through history, several legal instruments have addressed and penalized acts of corruption committed by public sphere individuals, including the current Constitution issued in 1917. However, there were no systems of laws that thoroughly regulated, prevented and punished acts of corruption particularly committed by commercial entities.[7]
On May 27, 2015, the Congress of the Union passed a Constitutional amendment that created the National Anticorruption System (“NACS”). The NACS consolidates both private individuals and authorities to prevent, investigate and punish corruption. [8] In connection to the NACS on July 18, 2016, the Congress issued four complementary laws and three law amendments including the new General Law of Administrative Responsibilities (“GLAR”), which made it possible to install the system. As a novelty in Mexican Law, GLAR includes penalties for commercial entities and individuals that perpetrate corruption offences. Under this law, entities whose attorneys-in-fact acting on their behalf obtain benefits through bribery, illegal participation in administrative processes, influence peddling, false declarations, obstruction of official investigations, unauthorized use of public resources or collusion are penalized.
GLAR emphasizes that companies’ “integrity policy” will be considered to determine liability and penalties.[9] Yet, no laws formally require businesses to implement compliance programs nor describe concrete actions for prevention of bribery. Currently, 50% of commercial entities in Mexico fail to have anti-corruption programs[10]. Unlike the United Kingdom Bribery Act[11] (UKBA), GLAR does not determine strict liability offence for companies failing to prevent bribery, which would be an effective method to urge all Mexican companies to immediately implement compliance programs. Due to the lack of these requirements in the GLAR, Mexican authorities must provide guidance that enlightens the application of the NACS and clarifies how entities can install preventive measures and meet the provisions of the law. For instance, the United States Department of Justice published a guide that provides non-binding information on Foreign Corrupt Practices Act (FCPA) compliance for businesses and individuals.[12] This is as excellent example of how authority shall admonish entities and collaborate in the effective implementation of the law.
Moreover, the NACS does not include effective methods for reporting bribery. GLAR does require public officials to report acts of corruption but fails to provide protection or incentives for individuals within private entities to report misconduct. In this regard, the FCPA[13] and Dodd-Frank Whistleblower Program[14] include two figures that promote reporting: whistleblowing and self-reporting. Through the Whistleblowing Program authority is allowed to pay awards to persons who provide information on FCPA infractions. Additionally, for greater accountability, businesses can self-report FCPA violations and receive a reduction of fine or monitoring measures. Implementing similar procedures in Mexico would certainly strengthen NACS enforcement.
In view of the legal loopholes in relation to entities’ compliance, lawyers must advise entities to establish effective internal controls, ethics, and compliance programs or measures for preventing and detecting bribery, in accordance with the OECD Anti-Corruption Ethics Handbook.[15] The private sector and the civil society have an essential role in fighting corruption. Hence, a greater public-private partnership is required to face the challenges that the adoption of the NACS may involve.
It must be acknowledged that the National Anticorruption System is a milestone in the Mexican legal system. However, there are key aspects that the NACS must address in comparison to other anticorruption systems. Ultimately, the extent to which NACS will effectively tackle corruption will be determined by its successful implementation.[16] In a country with so much potential, addressing corruption will ensure improvement in other fundamental aspects such as productivity and competitiveness, social equality and public security.
[1]Casar, M.A. (2016). México: Anatomía de la Corrupción. Retreived from: http://imco.org.mx/wp-content/uploads/2016/10/2016-Anatomia_Corrupcion_2-Documento.pdf
[2]Transparency International. (2016) Corruption Perceptions Index. Retrieved from: https://www.transparency.org/news/feature/corruption_perceptions_index_2016#regional
[3] Herrera, A. (2011) Delitos cometidos por servidores públicos. México: Porrúa.
[4](2017) The Global Competitiveness Report. World Economic Forum. Retrieved from: http://www3.weforum.org/docs/GCR2016-2017/05FullReport/TheGlobalCompetitivenessReport2016-2017_FINAL.pdf
[5] (2010) Survey on Fraud and Corruption. Mexito City. KPMG
[6] Jáuregui, L. (1999) La Real Hacienda de Nueva España: su Administración en la Época de los Intendentes. Mexico: UNAM
[7] Riviera Montes de Oca, L. Evolución de la Responsabilidad Administrativa de los Servidores Públicos y Patrimonio del Estado. México: UNAM. Retrieved from: https://archivos.juridicas.unam.mx/www/bjv/libros/5/2445/18.pdf
[8] (2015) Constitutional Amendments for Combat Against Corruption. Congress of the Union. Published in the Federal Gazette in May 27, 2015. Retreived from: http://www.dof.gob.mx/nota_detalle.php?codigo=5394003&fecha=27/05/2015
[9] (2016) General Law of Administrative Responsibilities. Article 25. Mexico.
[10](2016) Anti-Bribery and Corruption: Rising to the challenge in the age of globalization. KPMG International. Retrieved from: https://assets.kpmg.com/content/dam/kpmg/pdf/2016/04/antisoborno-corrupcion-2016.pdf
[11] (2010) Bribery Act. United Kingdom. §§ 7
[12] (2012) A resource guide to the U.S. Foreign Corrupt Practices Act. Washington D.C.: U.S. Department of Justice: U.S. Securities and Exchange Commission.
[13] (2004) Foreign Corrupt Practices Act of 1977. 15 U.S.C. §§ 78dd-1, et seq.
[14] (2011) Dodd-Frank Wall Street Reform and Consumer Protection Act. Washington D.C. U.S.C. §§ 922
[15] (2013) Anti-Corruption Ethics and Compliance Handbook for Business. Organisation for Economic Co-operation and Development and World Bank. Retrieved from: https://www.oecd.org/corruption/Anti-CorruptionEthicsComplianceHandbook.pdf
[16] (2017) OECD Integrity Review of Mexico Taking a Stronger Stance Against Corruption. Organisation for Economic Co-operation and Development. Retrieved from: http://www.keepeek.com/Digital-Asset-Management/oecd/governance/oecd-integrity-review-of-mexico_9789264273207-en#.Wgny2BP9SV4#page1
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