[1]Believe it or not, anti-corruption reform is happening in Mexico. This is highly significant. As FCPAméricas noted in the past [2], for years the country has been criticized by the OECD Working Group for not moving fast enough to implement legal changes necessary to satisfy its commitments under the OECD Anti-Bribery Convention [3]. Mexican President Peña Nieto proposed an Anti-Corruption Commission [4] way back in 2012 as one of his first acts after being elected; and the plan quickly fell flat. True, the country did adopt a strengthened Federal Anti-Corruption Law in Public Procurement [5] that year, but the law did not go far enough [6] to meeting international commitments. The OECD Working Group recently stated [7] that efforts to implement the new public procurement law “are not fully successful.”
Despite these delays, there are now strong signs that real reform is moving forward. The adoption of a new National Anti-Corruption System appears imminent. Here is what companies should know:
Why this is happening now: As The Washington Post reported recently [8], the country has been rocked by a series of high-profile corruption scandals. The media is reporting widely on signs that the President’s wife and his finance minister received preferential support from a company when buying houses in return for channeling government contracts to that company. The National Water Commission minister was recently accused of using a government helicopter for personal matters. Local authorities and police are accused of colluding with a drug cartel in the state of Guerrero resulting in the disappearance of 43 students there.
As a result of reports like these, the President’s popularity has fallen. High-level officials throughout the government also fear being linked to corruption, especially with mid-term elections coming up in June.
In some ways, the dynamic is similar to what Brazil experienced during the run-up to the adoption of the Clean Companies Act in 2014, documented by FCPAméricas here [9]. In that country, it took more than a million people to protest in the streets to encourage elected officials to finally take up anti-corruption legislation that had been stalled for years. In Mexico, public pressure also seems to be pushing officials to act on reform plans that for years had only been under discussion.
The main difference between the Mexico and Brazil situations might be how public frustration is being expressed. In Mexico, people are not necessarily taking to the streets in masses as they did in Brazil. Instead, frustrations are being displayed through social media and mainstream media. Nonetheless, the effects seem to be the same.
What reform entails: The new National Anti-Corruption System would do several things. It would create a Special Anti-Corruption Prosecutor. It would give more power and independence to investigative bodies. Audits of government spending would occur more frequently and would reach federal pesos spent at the state level. The Ministry of Public Administration (SPF) would be given administrative anti-corruption powers, and its head would be appointed by the President and approved by the Congress. Tighter conflict of interest laws would require more disclosure by public officials.
Where reform stands: The proposed National Anti-Corruption System has elements that implicate Mexico’s federal system. This means that the country must first amend its Constitution before the legislation can move forward. On February 26, 2015, Mexico’s Chamber of Deputies approved the Constitutional amendment. Last week the Senate approved the amendment as well. This article [10] breaks down the votes. Notably, there appears to be relative consensus among political parties behind the initiative.
The amendment must now be approved by over half of the legislatures throughout the country. Since Mexico has 31 states and a Federal District, this means approval is required from 17 legislatures. There is a strong sense on the ground that this will indeed happen, especially given the political pressure that politicians are under to show progress on anti-corruption reform. At the same time, some Governors are not pleased with the prospect of federal audits of their own funds.
Once the Constitution has been amended, the Congress can then take up implementing legislation for the new National Anti-Corruption System.
Criticism about reform: Some observers have criticized [11] the proposed reform for not going far enough, in particular with respect to the “Fuero,” a historical component of the Mexican Constitution that establishes a degree of protection against prosecution for certain Mexican officials. Under Article 108 of the Mexican Constitution, the President and high-level officials are limited in the types of crimes for which they can be charged with while serving in office. The Mexican Congress refused to eliminate this protection as part of the Constitutional amendment. This has led to much pushback. The hashtag, “#FueraElFuero,” (“Away with the Fuero”), has been trending.
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