Mexico: New Energy Opportunities In Mexico Raise FCPA, Anti-Bribery Risks

Sweeping reforms across Mexico's oil, gas and electric markets promise more opportunities for the private sector and increased investment from international firms. However, U.S. companies looking to enter this market will need to stay vigilant to anti-corruption risks and plan ahead to ensure they have adequate anti-corruption compliance structures in place to address these risks. Given heightened enforcement of the U.S. Foreign Corrupt Practices Act, particularly in the energy industry, international energy firms need to pay particular attention to their anti-bribery risks when contemplating potential transactions in Mexico's newly privatized energy markets.

Oil Market Reforms in Mexico

In an interview on February 11, 2014, Mexico's finance minister, Luis Videgaray, announced that Mexico is expediting the schedule for its first oil contracts with private companies and would begin announcing certain private agreements to the market by early 2015. Considered the country's most significant legal overhaul since the North American Free Trade Agreement, Mexico amended its constitution in December 2013 to end the state monopoly on oil. Initially, the Mexican government indicated that foreign crude producers would have to wait until late 2015 to begin bidding on oil fields, but Mr. Videgaray's announcement sends a clear signal that foreign investment is set to move at a significantly faster pace.

The reforms enacted by President Enrique Pena Nieto were designed to end the output slump that Mexico, one of the biggest crude oil resources in the Western Hemisphere, has experienced in recent years. Analysts estimate that by inviting international explorers to drill in Mexico, roughly 2.5 million barrels per day (the equivalent of another Nigeria) will be added to the world's supply. The Mexican government expects roughly $10 billion per year in new revenues from the privatization of its oil industry, resulting in an added 2.5 percent of gross domestic product by 2025. Despite the significant financial impact and the promised expedited contracting process, significant questions remain regarding the ground rules on how licensing, bidding and contracting processes will work. Drilling may also be slowed down by a lack of infrastructure, uncertain tax structures and other to-be-determined standards.

FCPA and Applicable Anti-Bribery Laws Pose Heightened Risks

As international energy companies move into the Mexican market under an uncertain regulatory environment, they must be proactive with regards to the U.S. Foreign Corrupt Practices Act (FCPA) risks that these opportunities bring. The FCPA bars U.S. companies—and their officers, directors, employees and agents—to act with corrupt intent in furtherance of any offer, payment, promise of payment or authorization of payment, money, gifts or anything else of value to any "foreign government official" for the purposes of influencing the official. Foreign government officials are broadly defined under the FCPA, including employees of state-owned companies and other instrumentalities. Additionally, U.S. companies (including their foreign subsidiaries) and foreign companies whose shares are publicly traded in the United States are also subject to the FCPA's accounting and bookkeeping provisions, which require accurate recording of expenses and internal controls intended to prevent bribes from being paid. While the FCPA permits facilitation or "grease" payments—a payment to an official to secure routine governmental action—permitting such payments nonetheless poses FCPA risk and may bring liability under other applicable anti-bribery laws (such as Mexico's anti-bribery law).

Significant risks also exist under the 2012 Mexican Federal Anti-Corruption Law for Public Contracts, a law recently adopted by Mexico to prevent corruption in government contracts. The Mexican Anti-Corruption Law contains provisions similar to the anti-bribery provision of the FCPA, prohibiting offers, payments or anything of value to a governmental official with the intent that the government official fail to undertake his or her lawful duties to provide a benefit or advantage to the offering party. The law applies to all persons and companies that participate in federal public contracts in Mexico, such as bidders, suppliers, contractors and concessionaires. It also applies to all companies and persons who "intervene" in a public contract of a federal nature. While it is unclear what level of involvement in a contract constitutes "intervention," it is likely that shareholders, partners, agents, subcontractors and other representatives could face liability. The law also applies to all Mexican companies and persons that participate in international commercial transactions outside of Mexico that are related to the execution and performance of contracts for the procurement and leasing of goods and services, public works contracts and the issuance of permits and concessions undertaken by foreign governmental entities.

In some respects, the Mexican Anti-Corruption Law is broader than the FCPA and follows the "zero tolerance" approach taken by the United Kingdom in the U.K. Bribery Act of 2010 (UKBA). Like the UKBA, the Mexican law does not make any exception for facilitation payments, and it is generally consistent with anti-corruption conventions ratified by the Organization for Economic Cooperation and Development (OECD) and the United Nations. And, unlike the FCPA that focuses solely on the bribe payor, the Mexican Anti-Corruption Law penalizes both the bribe payor as well as the government official who receives or solicits the bribe payment. Thus, Mexican government officials who participate in or oversee federal public contracts are also subject to the Mexican Anti-Corruption Law. In addition, Mexican officials have an additional express obligation to report any violation of the Mexican Anti-Corruption Law.

Following a number of high profile FCPA enforcement actions in recent years by the U.S. Department of Justice and the U.S. Securities and Exchange Commission, involving the energy sector in general and alleged bribery schemes in Mexico in particular, companies positioning themselves to enter the Mexican oil market should anticipate close scrutiny by U.S. regulators. Further, the Mexican government has clearly signaled its intent to pursue corruption and bribery matters, as evidenced by the recent adoption of its own strict anti-bribery law. The Mexican Ministry of Public Administration has brought a number of investigations in recent years and likely will continue to do so under the new law.

Take Proactive Steps to Address FCPA Risks Upfront

Given the expedited implementation of the energy reforms, the uncertain regulatory environment with regards to drilling and exploration in Mexico and the increased likelihood of anti-bribery scrutiny by both Mexican and U.S. authorities, it is important for energy firms to take a number of steps to reduce their FCPA and anti-bribery risk before the contracting process begins.

First, companies should arm themselves with knowledge and obtain a firm understanding of their specific anti-corruption risk profile for any contemplated transactions in Mexico. Undertake comprehensive risk assessments before entering the market: Who will be your business partners in Mexico? What third parties will you need to engage? And for what functions? With what regulators will the company be interacting, and who on the ground will have contact with government officials or state-owned entities? Do adequate due diligence on any potential local hires, business partners, agents and third parties before engaging them; don't wait until after contracts are won and operations have begun before thinking of potential FCPA/anti-bribery concerns and undertaking the recommended due diligence.

Companies should take stock and reassess their anti-corruption compliance programs now to ensure they are well equipped to meet the challenges of a new market and that they have adequate resources in place before undertaking new projects. If appropriate, consider putting in place a local compliance team to bolster your corporate compliance capacity. U.S. regulators expect that companies will utilize appropriate resources when entering new markets to address their FCPA risk, and building out your compliance program in conjunction with the business's expansion can demonstrate just that.

Firms should also re-emphasize anti-corruption training for any personnel who will interact with foreign government officials. Training should be tailored by job title and function, conducted in the local language, and attendance records kept. Providing FCPA and anti-bribery training to any employees, consultants, agents or other third parties acting on your company's behalf is highly advisable. It is also recommended that employee handbooks contain specific FCPA policies, and that the handbooks and training are available in both Spanish and English.

Finally, all red flags should be promptly investigated and remediated. Look for excessive payments or unusual payment terms for consultants or other third parties, or the engagement of a third party that is not well known in the industry or lacks the capacity to do the work for which it is hired. Other red flags include relationships between anyone on the ground representing your company and the government officials responsible for the contracting or regulatory processes (or their relatives). Plan to audit activities and records related to any contracts won in the Mexican energy market, and require those companies or individuals you work with to certify compliance with the FCPA and applicable anti-bribery laws on a periodic basis.

Mexico's reforms present a game-changing outlook for its energy industry; and if companies proactively address their anti-bribery risks, it is likely that entry to the Mexican market could represent a tremendous business opportunity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions