FCPAméricas Blog

A National Anti-Corruption Commission in Mexico? What to Make of the President-Elect’s Proposal

Author: Matteson Ellis

A new President’s first proposal matters. It sets the tone and send a message to citizens and markets. It signals priorities, which means the proposal usually has a better chance of becoming law than those put forth when few are paying attention.

In Mexico, the President-elect Enrique Peña Nieto just announced his first set of proposals since being elected on July 1st. They focus on corruption.

This is particularly relevant given that Peña Nieto’s political party, the oddly-named Institutional Revolutionary Party (PRI), ruled Mexico for 71 years up until 2000, during a period known largely for institutionalized corruption.

According to the press, Mr. Peña Nieto plans to launch a National Anti-Corruption Commission whose purpose is to investigate large corruption cases that so far have escaped judicial action. He also proposes a constitutional reform that will give people greater access to government information. These proposals follow another positive development in Mexico – a new anti-corruption law for public procurements, discussed here.

Could these developments mean that Mexico is turning a corner? The obstacles are considerable. The 2012 Latin America Corruption Survey found Mexico to be one of the four most corrupt countries in Latin America. FCPA enforcement actions against companies like Wal-Mart, Bridgestone, and Tyson Foods highlight persistent risk. A list of common forms of corruption in Mexico can be found here.

Specifically, the proposal for a National Anti-Corruption Commission seeks to eliminate the current agency tasked with investigating large cases, the Ministry of Public Administration. That entity can only pursue corruption cases involving federal officials. This limitation was highlighted when the Wal-Mart investigation broke. Most of the corrupt acts in that case allegedly occurred at lower levels of government, outside of the Ministry’s jurisdiction. The new entity would have broader authority and greater independence. Emilio Lozoya, the President-elect’s advisor in charge of the initiative, recently told Reuters, “Today the Ministry of Public Administration serves as both judge and jury and evidently this, despite its best intentions, has not generated the results that citizens demand.”

Of particular note, Mr. Lozoya in his comments mentioned the Comisión Federal de Electricidad (CFE) as an example of a source of corruption. This was the state-utility at issue in the FCPA case against Lindsey Manufacturing. This, taken together with cases like Wal-Mart, suggests that FCPA enforcement is having an important effect on policymakers in Mexico.

But questions remain about a National Anti-Corruption Commission. FCPAméricas asked Mexican anti-corruption attorney Luis Ortiz of the Ortiz de la Concha law firm to list some of them:

First, from a media standpoint, there is great skepticism. Mr. Peña Nieto will need to offer more, given the ghosts that precede surrounding the PRI’s reputation on corruption and opacity. It will be interesting to watch who will be put in charge of this Commission. Second, little has yet been discussed regarding the constitutionality of these proposals and related empowerment of officials. Third, people wonder how much this will cost and whether the proposals will affect the budget. Will it cost the same as the Ministry it intends to bring down? Fourth, what effect will it have on the recently-enacted anti-corruption law for public procurements since the Ministry that would be abolished is the same that has been given the authority over foreign bribery investigations and other enforcement actions?

Other things to take into consideration are the following: First, the initiative must be presented to the Congress. The President cannot make these reforms unilaterally. The changes would involve the constitutional reform of at least 4 articles, which is no minor task. There is no reason to think this can happen quickly. The recent anti-corruption law for procurements, itself, took years to pass. Second, many political leaders from the “ancient corrupt party” are still in office and do not welcome such criticism of the PRI’s previous years in power. Some opposition leaders might see defeating the proposals as a form of revenge. The President-Elect’s transition team recently expressed that this reform would be associated with no one political party’s name, but current President Calderon said the same thing when proposing anti-corruption legislation before it stalled for years.

Even if the legislation passes, there will still have to be a second period for the National Anti-Corruption Commission to be discussed and implemented. The transition team predicts one year, but many doubt it could happen this fast.

The FCPAméricas blog is not intended to provide legal advice to its readers. The blog entries and posts include only the thoughts, ideas, and impressions of its authors and contributors, and should be considered general information only about the Americas, anti-corruption laws including the U.S. Foreign Corrupt Practices Act, issues related to anti-corruption compliance, and any other matters addressed. Nothing in this publication should be interpreted to constitute legal advice or services of any kind. Furthermore, information found on this blog should not be used as the basis for decisions or actions that may affect your business; instead, companies and businesspeople should seek legal counsel from qualified lawyers regarding anti-corruption laws or any other legal issue. The Editor and the contributors to this blog shall not be responsible for any losses incurred by a reader or a company as a result of information provided in this publication. For more information, please contact Info@MattesonEllisLaw.com.

The author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author.

© 2013 Matteson Ellis Law, PLLC

Matteson Ellis

Post authored by Matteson Ellis, FCPAméricas Founder & Editor

Categories: Enforcement, FCPA, LA Corruption Survey, Mexico, Wal-Mart

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