Mexico: Legal Framework To Implement The New Anti-Corruption Strategy In Mexico

The new "General Law of Administrative Responsibilities", commonly referred to as the "Three out of Three Act" was published on July 18, 2016 repealing the previous "Federal Law of Public Servants Administrative Responsibilities". The "Three out of Three Act" along with the General Law of the National Anti-corruption System and the Law of the Federal Court of Administrative Justice will enter into full force and effect as of July 19th, 2017 when these laws are published by the same Decree 1. These laws as a whole are perceived as the cornerstone of the national strategy to prevent, fight and eradicate corruption in the country.

"General Law of Administrative Responsibilities" ("Ley General de Responsabilidades Administrativas")

The "General Law of Administrative Responsibilities" (hereinafter referred to as the "Law" or the "Three out of Three Act") as well as being applicable to all public servants in Mexico, it will also be applicable to physical or moral persons from the private sector and, it includes setting forth the application of sanctions once a private party is linked to a serious act of corruption carried out by a public server. The scope of this law covers from not serious acts, serious administrative failures and very serious administrative misconduct to which acts of private parties may be linked. Accordingly to this law, a private party may be sanctioned if it is linked with a responsible public servant involved in the Commission of a serious administrative misconduct.

For the purposes of this Law, public entities are considered the State-owned Productive Entities or companies2, as well as those on which the Mexican State exercises any control, likewise, the different branches (executive, administrative and judicial) or authorities and public agencies or bodies. Additionally, State entities are also shareholding companies, which have State control. Consequently, the scope of law application is comprehensive since its scope applies to federal, local (state) and municipal jurisdictions. To determine private legal entities liability, it must be taken into account if such legal entities have an anti-corruption policy as defined by law. To count with this policy may mitigate the sanctions in which they may incur.

The Law allows the possibility that Ministries of State enter into cooperation agreements with individuals involved in public procurement, aimed to guide them in the creation of self-regulatory mechanisms. Such self-regulation mechanisms will allow the inclusion of internal controls incorporating the best relevant international practices, in addition to the afore-mentioned anti-corruption policies.

It is set forth that the public servants must submit three different kind of statements. Actually, the name "Three out of Three Act", as it is commonly referred to, gets its name from the fact that public servants will have to submit the following three statements: (i) statement of ownership of real estate (properties); (ii) Declaration of any possible conflict of interest or biased action derived from a family, professional, labor or business relationship; and (iii) tax return. The above-referred statements will be uploaded in the National Digital Platform as described below.

The Law considers various serious administrative misconducts committed by public servants. It is precisely regarding these faults that the liability of a private party could be established; thus an individual could be subject in terms of this law to a penalty. It is necessary that a public servant is found guilty of having committed a serious administrative fault and that there is a link to the private individual or party. The law sets forth as serious misconducts of a public servants the following: bribery, embezzlement, the diversion of public resources3, misuse of information, abuse of office, acting under conflict of interest, acting concealing a conflict of interest, hidden enrichment, concealment or cover up, obstruction of justice and contempt. It is noteworthy to mention that when these misconducts are committed, the authority will assess if the public servant sought a benefit for himself or for a third party derived from a family, professional, labor or business relationship.

The misconducts that a private individual would have to commit in order to be linked to a serious administrative misconduct of a public servant are the following: bribery, unlawful participation in administrative procedures, use of false information, obstruction of investigative powers, collusion, misuse of public resources4 and the hiring of former public servants with less than 1 year of having being separated from their position, if it is intended to receive any benefit from the privileged information that such server obtained due to its former public position. It is important to mention that the private individual who is involved in these cases, will become jointly liable with the public servant regarding the economic penalties imposed by the authority; without prejudice of the liability imposed to the private individual based on his own misconduct.

The private parties could be subject to penalties that range from: an economic sanction paying back as much as the double of the obtained benefit, compensations, ineligibility to enter into processes (tenders, agreements) of the public sector, suspension of activities or even the dissolution of the company in case of repeated or systematic misconducts. The degree or involvement of participation It will also be taken into account to impose the corresponding sanction the degree of participation of the individual, recurrence, the economic capacity of the offender, damage or endangering the public administration and the amount of profit obtained by the individual or moral person, the degree of knowledge that had the administrative entity of the referred misconduct, as well as if when learned about those misconducts such were denounced with the corresponding authorities.

General Law of the National Anti-Corruption System ("Ley General del Sistema Nacional Anticorrupción")

Likewise, the General Law on the National Anti-Corruption System (hereinafter referred to as "Anti-Corruption Law") is created together with the General Law of Administrative Responsibilities to start the implementation of a new National Anticorruption System, which will help the Federal Court of Administrative Justice in the application of the aforementioned legal system.

The basic object of this Anti-Corruption Law will be, on one hand, to prevent and investigate administrative faults or misconducts as well as the acts of corruption carried out by public servants, but on the other hand, will also aim to increase transparency in the management of public administration.

This new system will be composed of a Coordinating Committee, a Committee of Citizen Participation, a Steering National System of Supervision Committee and Local Systems with the purpose to jointly agree on the bases of the System and the strategy for the collection of information of public servants.

In accordance with the Anti-Corruption Law, a National Digital Platform will be established. It will integrate and will connect the various electronic systems that have relevant data and information for the competent authorities5 to access it. Likewise, it will allow any interested party to access the list of disqualified public servants. This system will give users the greatest possible clarity and transparency. An Executive Secretariat will manage it, which is an independent body.

Organizational Law of the Federal Court of Administrative Justice ("Ley Orgánica del Tribunal Federal de Justicia Administrativa")

As a third instrument that integrates this new legal framework to fight against corruption, it is created the Organic Law of the Federal Administrative Court. The Federal Court of Administrative Justice will be the competent or relevant judicial authority in charge of judging the administrative faults committed by public servants.

The above-referred Court shall be aware of the Administrative Responsibilities of public servants and private individuals linked to serious misconducts by the Public Service Ministry and by the internal control bodies of the federal public agencies or entities or by the Federal Superior Audit for the imposition of penalties in accordance with the provisions set forth in the Administrative Responsibilities General Law. This Court is integrated as follows: a Superior or upper Chamber, the Governing and Administration Board and Regional Chambers.

The foregoing has referred to the new legal framework comprised of three laws previously described. Those provisions will be the guiding principles and procedures required to file declarations, in the case of public servants; the guidelines for ethical conduct in the public sphere; a framework of responsibilities (liabilities) applicable for the whole country which does not exempt from liability any particular that is linked to an act of corruption under the cases provided by law; preventive measures and mechanisms to denounce even if citizens decide to do so anonymously.

Through these legal tools, it is intended to offer real instruments to effectively fight against corruption in the country. This is a national turning point to combat corruption. The measures at a given moment have a comprehensive scope of applicability, as detailed above, so it is paramount that individuals that perform activities associated with public administration must know and fully understand what they imply.

The entire framework to combat corruption, as previously mentioned, is integrated in the first place by the General Law of Administrative Responsibilities, which sets forth the key provisions of the new anti-corruption strategy to be implemented in Mexico. In the second place, we find the Law of the National Anti-Corruption System, which acts as an essential instrument to apply the aforementioned strategy. In the third place we find the Organizational Law of the Federal Court of Administrative Justice. Altogether they represent a fundamental step to implement the legal system that supports all the actions that society demands to deal with corruption in the scope of the Mexican public service.

Footnotes

1. Decree by which the General Law of the National Anti-corruption System; General Law of Administrative Responsibilities and the Organizational Law of the Federal Court of Administrative Justice were published in the Official Gazette of the Federation on July 18, 2016.

2. Until now Petróleos Mexicanos and Comisión Federal de Electricidad.

3. It is deemed as diversion of public resources, in terms of article 54 of the Law when a public servant authorizes, solicits, or performs acts for the allocation or diversion of public resources, whether material, human or financial, without having legal basis or going against applicable laws.

4. It is understood as improper use of public resources according with article 71 of the Law, when a private person acts appropriating, misusing or diverting the object for which public resources were stipulated or given; whether these are material, human or financial and/or for any reason the public resources are handled, received, managed, or administered.

5. Any authority that needs to verify if a person is suitable to be appointed as a public officer.

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.

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