Congress is required to enact secondary legislation to implement these reforms within one year.
On May 27, Mexican President Enrique Peña Nieto signed into law constitutional reforms (the Reforms) designed to strengthen the existing anticorruption legislation in Mexico and to further empower the federal government to investigate, prosecute, and sanction corrupt activity in Mexico. The Reforms create a National Anticorruption System tasked with coordinating all governmental authorities in charge of preventing, detecting, and penalizing bribery and other corrupt activities as well as supervising and controlling the use of federal funds, including those allocated to states and municipalities. The Reforms go beyond previous legislative efforts intended to prevent bribery in contracting processes with the federal government and its instrumentalities.
To further these goals, the Reforms mandate the creation of a Coordinating Committee to, among other tasks, (1) facilitate coordination between federal and local anticorruption systems, (2) prepare anticorruption supervision and control policies, and (3) issue nonbinding recommendations to governmental authorities to prevent corruption.
In addition, the Ministry of Public Administration (Auditoria Superior de la Federación) is granted broad administrative authority to audit and supervise the use of federal funds, and the Administrative Justice Court (Tribunal de Justicia Administrativa) is granted subject-matter jurisdiction over controversies that involve material acts of corruption (the scope of which will be defined in secondary legislation) by governmental officials and private parties. Importantly, secrecy laws that relate to tax and banking matters (which imposed several restrictions on the government’s ability to access government officials’ and private parties’ banking and tax records) will not be applicable to the anticorruption agencies with respect to investigating and sanctioning administrative liability and corruption.
The changes are also expected to have a sweeping effect on private parties. Notably, the Reforms include a whistleblower provision that gives citizens a mechanism to report corrupt conduct to the Mexican House of Representatives. However, the constitutional amendments do not specify whether a whistleblower will have any governmental protection or be entitled to monetary rewards or compensation, and it is unclear at this point if the secondary legislation will address these issues. The Reforms also expand the types of penalties against individuals and private corporations that engage in material acts of corruption and now add suspension of activities, corporate intervention, and corporate dissolution to the existing list of penalties (i.e., economic fines and debarment).
Companies that do business in Mexico should review their compliance programs in light of this new legislation, foster a culture of compliance, and train their local executives, employees, and agents accordingly.