Introduction
Investigation
Results
Administrative proceeding


Introduction

After more than a year of legislative deliberations, Congress recently approved the new Federal Law Against Corruption in Public Procurement.

According to the law, it is illegal to give or offer to give (either directly or through a third party) to a public official any type of bribe or gift for obtaining or retaining a privilege or business advantage in the area of public procurement. This prohibition applies to anyone engaged in federal government contracting in Mexico – both Mexican and foreign individuals and companies – and includes:

  • bidders;
  • participants in tenders;
  • suppliers;
  • contractors;
  • licensees;
  • agents;
  • attorneys-in-fact;
  • brokers;
  • handlers;
  • managers;
  • advisers;
  • consultants;
  • subcontractors; and
  • employees.

Further, the law envisages a two-step procedure involving an investigation followed by an administrative proceeding. In both steps the authorities may use measures of compulsion – including the imposition of fines – to ensure compliance with the procedure.

Investigation

An investigation may be commenced as a matter of course or in response to a formal complaint. Such a complaint can be filed by authorities, individuals, a foreign government or international organisation, anonymously or through CompraNet (an electronic platform used for public procurement in Mexico). In case of the latter, the identity of the person or entity that reports the alleged violations will be kept confidential.

The individuals or legal entities that are subject to the investigation must comply with the authorities' requests for information. The deadline to answer such requests ranges from five to 10 business days, with a potential extension of another 10 business days. Further, the authorities are entitled to access any relevant information relating to the alleged violation, even if such information is privileged or confidential. The authorities are bound to maintain the confidentiality or secrecy of the information obtained, unless it is needed to prove the violation. Furthermore, the authorities may request information from third parties.

Results

If, at the conclusion of the investigation, there is insufficient proof of a violation of the law, the case will be closed, but may be reopened if new facts are uncovered at any time within the statute of limitations, which is 10 years from the date on which the violation occurred.

However, if there is sufficient prima facie proof that the law has been violated, a sanctioning administrative proceeding will commence.

Administrative proceeding

The administrative proceeding commences by formally notifying the alleged offender. Once the offender has been served, it has 15 business days to submit its views and present evidence. During this period, the offender is entitled to plead guilty. In such case the administrative proceeding will be concluded and the penalty imposed on the offender may be reduced by up to 70%.

However, if the offender does not plead guilty, the authorities will rule on the admission of the evidence submitted and will give the offender five business days to submit its closing arguments.

After the closing arguments have been submitted, the authorities have 10 business days to render a final ruling on the matter. The penalties that may be imposed consist of a fine or disqualification from participating in public procurement (or both).

For further information on this topic please contact Luis Enrique Graham or Angelica Huacuja at Chadbourne & Parke by telephone (+52 55 3000 0600), fax (+52 55 3000 0698) or email (lgraham@chadbourne.com or ahuacuja@chadbourne.com).

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.