National Anticorruption System

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Galicia Abogados

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Galicia Abogados
The afternoon edition of the Official Gazette of the Federal Government of even date hereof, features the Decree amending the Mexican Federal Constitution on anticorruption matters.
Mexico Criminal Law
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  • The Decree amending the Mexican Federal Constitution on anticorruption matters was published today.
  • The creation of the National Anticorruption System sets the bases for new anticorruption legislation and new rules both for public officers and private parties.

The afternoon edition of the Official Gazette of the Federal Government ("DOF") of even date hereof, features the Decree amending the Mexican Federal Constitution on anticorruption matters (the "Decree") . Even though the Decree partially comes into force the day following its publication in the DOF, the relevant provisions relating to aggravated administrative offenses of both public officers and private individuals and entities, as well as the creation of the National Anticorruption System (Sistema Nacional Anticorrupción) shall enter into force once the national statutes (leyes generales) on this matter are issued by Congress, during the course of next year.

I. Background

The corruption phenomenon has been an issue in the national political agenda for several years now. In this respect, on June 12, 2012 the Federal Anticorruption in Public Contracts Act was published in the DOF. Such legislation was a response to the corruption scandals that at such time became publicly known because of the proceedings conducted in other jurisdictions pursuant to their anticorruption laws (as an example, proceedings involving Pemex, the Federal Electricity Commission and the Mexican Social Security Institute in the United Stated pursuant to the Foreign Corrupt Practices Act).

Likewise, Mexico is party to several international treaties on anticorruption matters1 and has included in its legislation several provisions aimed at fighting corruption, such as the aforementioned Federal Anticorruption in Public Contracts Act, the Federal Criminal Code (which specifies as a criminal offenses certain acts of corruption, such as corrupt influence (tráfico de influencias) and bribery (cohecho) both to national and foreign public officers), and the Federal Public Officers' Liabilities Act.

Notwithstanding the foregoing, recent acts of corruption and conflicts of interest involving public officers, civilians and private entities have evidenced that the legal and institutional anticorruption framework in Mexico is far from adequate. In his speech of enactment of the Decree, the Executive stated that the Anticorruption Index of Transparency International puts Mexico in place 103 among 175 countries and that, in his view it was unacceptable that Mexico ranked so low in such index.

As we have mentioned before in the context of prior legislative changes, the real impact of the Decree will be seen in the ability and willingness to apply the law and encourage the respect to the rule of law in our country.

II. National Anticorruption System.

The Decree creates the National Anticorruption System as an entity to coordinate all competent authorities (local, state and federal) to prevent, detect and sanction administrative offenses and acts of corruption, as well as in auditing and controlling the use and distribution of public funds. Such system shall have a Citizen Participation Committee comprised by five distinguished Mexicans.

The intent behind the creation of the National Anticorruption System is being able to combat corruption in a transversal manner, taking as axes the different levels of government, as well as the public and private sectors.

In addition to the fight and punishment of corruption, the System will be also in charge of promoting the culture of legality and preventing the corruption phenomenon through recommendations, training and other similar measures.

III. Powers of Congress on anticorruption matters.

Based on the doctrine of general laws applied by the federal courts as set forth in the 20072 Supreme Court decisions, that acknowledges the existence of general laws that can validly interfere in all partial jurisdictions that comprise the Mexican State [with respect to which] the Constituent Congress [...] explicitly waives its power to distribute jurisdiction among the political entities that comprise the Mexican State [and] that have their origin in constitutional clauses that mandate [Congress] to enact them, the Decree empowers Congress to issue two general laws: [1] the general law that sets forth the bases of coordination of the National Anticorruption System and [2] the general law that distributes jurisdiction among the different levels of government to establish the administrative responsibilities of public officers, their obligations, the applicable sanctions for aggravated acts and omissions of public officers and citizens, as well as the proceedings for the imposition thereof. Such general laws shall be enacted no later than May 28, 2016.

Additionally, Congress is empowered to enact the law creating the Federal Court of Administrative Justice (Tribunal Federal de Justicia Administrativa) ("TFJA") , endowed with constitutional autonomy, as a successor of the Federal Tax and Administrative Court (Tribunal Federal de Justicia Fiscal y Administrativa).

IV. Powers of the General Comptroller of the Federation (Auditoría Superior de la Federación).

One of the main aspects of the Decree is the strengthening of the auditing powers of the General Comptroller of the Federation, including: [1] the power to review the national accounts during the fiscal year in "real time", eliminating the principles of annuity and after-the-fact review, without eliminating its powers to audit previous fiscal years; [2] extending the period of review of the public accounts to the entire succeeding fiscal year; [3] the public nature of the general and individual reports issued by the General Audit of the Federation with respect to the public accounts, [4] the power to review the use of the proceeds of public debt when the local and state entities contract debt guaranteed by the Federation, as well as the use of federal resources and federal participations by the states, [5] the power to determine responsibilities and to request the application of sanctions against public officers and civilians, and [6] the audit of trusts that operate with public resources.

V. New constitutional status of the TFJA.

The TFJA retains the same powers that the Federal Court of Tax and Administrative Justice had, but it becomes a constitutional autonomous entity and is now endowed with new powers to sanction aggravated administrative offenses of public officers of the Federation and, in certain cases as set forth in the Constitution, public officers of the states, municipalities, the Federal District and its territories, as well as civilians and private entities involved in aggravated administrative offenses.

VI. Liabilities.

The Decree sets forth a distinction between aggravated and ordinary administrative offenses. On the one hand, aggravated administrative offenses will be investigated by the General Comptroller of the Federation and the internal control departments of each agency and the TFJA, or its equivalents in the several states, shall be in charge of imposing the relevant liabilities. On the other hand, administrative liabilities considered by applicable laws as ordinary (i.e., not aggravated) shall be investigated by the local internal control departments of each agency.

The administrative liability for public officers can entail a simple reprimand, suspension, dismissal and disqualification, as well as economic sanctions (fines). Such liabilities will be imposed according to the economic benefits obtained by the responsible public officer and the patrimonial damages caused to the State by her acts or omissions, in each case pursuant to the general law to be approved by Congress.

With respect to liabilities that can be imposed on civilians, the Decree establishes that the competent courts shall determine their liability based on their participation in acts related to aggravated administrative offenses and, in should the case be, such courts may impose administrative liability consisting of: economic sanctions (fines), prohibition to participate in public procurement (acquisitions, leases, services and public works) and the payment of the damages caused to the public finances.

Additionally, in the case of legal entities or corporations, the same shall be directly sanctioned if the commission of acts qualifying as aggravated administrative offenses is made on behalf or for the benefit of such entity. In such cases, if it is evidenced that there is an aggravated administrative offense and provided that the entity or corporation obtained an economic benefit therefrom and it is established that (i) the management or surveillance bodies of the legal entity or corporation, or the partners or shareholders thereof, were involved in such actions, or (ii) such entity is regularly involved in aggravated administrative offenses, other sanctions can be imposed such as suspension of activities, dissolution or intervention of the entity.

It is worth mentioning that the proceedings to determine the imposition of sanctions are autonomous (i.e., the responsibility of the entity does not depend on the previous declaration of responsibility of the individuals involved).

VII. Conflicts of interest.

In order to prevent and eradicate conflicts of interest among public officers, the Decree sets forth that public officers shall be required to file, under oath, in addition to the traditional patrimonial declaration currently existing, a declaration of interests.

The general law will define the concept of conflict of interest and the form in which public servants shall comply with such declaration.

VIII. Conclusions.

The Decree is an additional step in the long path towards the eradication of corruption in Mexico.

The measurable effects of the corruption added to the negative externalities of this phenomenon are estimated to represent thousands of millions of pesos and an important percentage of the Gross Domestic Product. The costs for corporations are equally high due not only to economic losses but also to the lack of competitiveness and the risk of being extorted.

The National Corruption System, the new powers of the TFJA, the strengthening of the General Comptroller of the Federation and the increased regime of responsibilities are additional tools in the fight against corruption, which naturally makes the Decree a positive step. Having said that, there are still areas of opportunity and issues that were not addressed in the Decree.

For our clients, it is again evident the need to implement periodic training programs in the matters of anticorruption and conflict of interest as well as internal policies and manuals. It is also critical to set appropriate control mechanisms to minimize the legal and reputational risks that a company may face if involved in acts of corruption.

Footnotes

1. Such as the Inter-American Convention against Corruption (OAS; 1996); the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD; 1997) and the United Nations Convention against Corruption (UN; 2003).

2. Amparo under appeal 120/2002. February 13, 2007.

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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