By – Lic. Leobardo Tenorio
The National Anticorruption System (“NAS”) includes several fines applicable to individuals and entities that carry out certain actions provided in the General Law of Administrative Responsibility.
In May 2015, as a result of constitutional reforms, Mexico established the NAS in order to coordinate efforts between governmental authorities and governmental institutions in order to fight corruption. In July 2016 several laws were enacted or amended to prevent and fight against corruption. The regulations came into effect in July 2017.
Among the laws that were enacted and amended were:
- The General Law of the National Anticorruption System establishes, among other provisions, the basis for coordination among the different levels of government.
- General Law of Administrative Responsibility that includes, among others, the responsibilities, and obligations of public servants, in addition to “serious administrative misconducts” and sanctions applicable to public servants and non-public servants.
- Law of Control and Accountability of the Federation, in addition to amendments to the Law of Fiscal Coordination and the General Law of Government Accounting, that strengthen the capacity of the Chief Audit Office of the Federation to fight corruption.
- Organic Law of the Federal Court of Administrative Justice that converts the Federal Tax Court into the Federal Court of Administrative Justice. This governmental entity will now be able to sanction both public officials and private individuals for grave offenses.
- Organic Law of the Attorney General’s Office, to create the Special Prosecutor’s Office for Combating Corruption, as an autonomous body for investigation and prosecution of acts of corruption.
- Federal Penal Code to establish sanctions that strengthen the framework of conduct and sanctions applicable to public servants and private individuals.
- Organic Law of Federal Public Administration for internal control matters of the Federal Executive to strengthen the Public Administration Secretariat’s, in order to prevent and fight corruption.
Serious Administrative Misconducts
The General Law of Administrative Responsibilities establishes, among other provisions, acts and sanctions relating to individuals and entities linked to “serious administrative offenses”, same that include:
- Bribery of public servants, directly or through third parties.
- Unlawful participation in administrative acts.
- Influence peddling.
- Use of false information in administrative procedures to obtain authorizations, benefits, and advantages or to harm any person.
- Obstruction of investigations relating to administrative faults.
- Collusion in public contracts or arrangements with competitors.
- Misuse of public resources or failure to render accounts that establish the destination of said resources, for anyone who receives, manages, administers, or has access to same.
- Undue hiring of former public servants who have served as such during the previous year, who possess privileged information as a result of their previous position, and that such information is used to obtain a benefit or advantage in the market or with their competitors.
Sanctions to Private Persons or Entities
The General Law of Administrative Responsibilities establishes various sanctions for private parties, including:
Individuals:
- Economic penalties that can reach up to two times the profits obtained or, if there are none, up to MXN$11,323,500 (approximately, USD$666,088.23)[1].
- Disqualification for a period of three months to eight years, to participate in acquisitions, leases, services, or public works.
- Compensation for damages and losses caused to the Federal Public Treasury.
Entities:
- Economic penalties that can reach up to two times the profits obtained or, if there are none, up to MXN$113,235,000 (approximately, USD$6,660,882.35).
- Disqualification for a period of three months up to ten years to participate in acquisitions, leases, services, or public works.
- Compensation for damages and losses caused to the Federal Public Treasury.
- Suspension of activities for up to three years.
- Dissolution of the entity. It is important to emphasize that the fact that the administrative, representation, surveillance organs, or partners have been aware of alleged acts of corruption of the individuals belonging to those and the individuals have not been denounced is considered as an aggravating factor for the imposition of sanctions on moral persons.
Integrity Policy
A fundamental aspect established by the General Law of Administrative Responsibilities is that in the determination of the liability of legal persons under this law, an assessment will be made regarding if they have an “Integrity Policy” that includes, at least:
- Manual of organization and procedures that establish the tasks and responsibilities of each area, chain of command, and leadership.
- Code of Conduct duly published and informed to staff.
- Adequate and effective systems for control, monitoring, and auditing compliance with integrity standards throughout the organization.
- Appropriate complaint systems, both within the organization and to the competent authorities, in addition to disciplinary processes and concrete consequences for those who act contrary to internal norms or Mexican law.
- Adequate training and training systems.
- Human resources policies that prevent the incorporation of people who may create a risk to the integrity of the entity.
- Mechanisms to ensure the transparency and publicity of their interests. This implies that organizations should ask themselves what the best practices are to implement the elements of the “Integrity Policy” established in the National Anti-Corruption System.
Derived from the NAS there are actions that an entity may carry out to prevent acts of corruption or to report them. Also, it is important to be aware of the acts that are sanctioned and of the sanctions themselves.
We can assist you in answering any questions or comments regarding the NAS, actions that may be carried out or policies to be established, among other actions.
[1] All amounts in Pesos are updated for 2017. The US dollar amounts are expressed by using an exchange rate of MXN$17.00 per USD$1.00
Leobardo Tenorio-Malof | ltenorio@tplegal.net
Héctor Torres-López | htorres@tplegal.net
Alejandro Pedrín | apedrin@tplegal.net
Mauricio Tortolero | mtortolero@tplegal.net
Daniel Gancz-Kahan | dgancz@tplegal.net
