FCPAméricas Blog

Mexico Update: Great Strides in Corporate Criminal Liability and Transparency

5.31.2016

Author: Guest Author

Guest post by Jonathan Adams a partner at Baker & McKenzie in Mexico City

The Mexican House of Representatives approved on April 28 of this year a criminal reform bill that modifies ten major laws in Mexico. For the first time in Mexican history, this bill establishes direct criminal liability for companies at the Federal level. Although this bill must still be approved by the Senate, it is based on a prior version of the bill already approved by the Senate. The deadline for implementation of the Constitutional reform is June 18, 2016. The passage of the bill appears to be imminent.

This criminal reform bill is intended to implement the major constitutional amendment of June 18, 2008 that committed the Mexican criminal justice to move from an inquisitorial system to an adversarial system, more similar to the US common law system and moving away from the traditional civil law systems, such as France. The bill runs to over 200 pages, and creates major changes in many aspects of criminal procedure. For our clients, however, the most important change by far is the explicit inclusion of companies as directly liable under criminal law statutes, for crimes ranging from bribery, customs fraud, environmental damage and intellectual property damage, to the full range of financial crimes.

Financial sanctions under Mexican criminal law have not traditionally been high, and they have not yet been defined for the new Federal law. However, Mexico City’s recent corporate criminal liability reforms include fines in lieu of jail time for companies: up to 920 days of profit for each year that an individual would have been incarcerated.

However the details work out, this reform will have far-reaching implications for many areas of law: this is a watershed moment in the Mexican legal panorama.

Another key part of the anti-corruption effort is access to information, or transparency. In Mexico, transparency efforts in the modern era began under President Fox (PAN party) with the 2002 Federal Transparency Law, which created the Federal Institute for Access to Information (IFAI, after its initials in Spanish). The PRI party showed its own commitment to transparency after regaining power in 2012, by passing a constitutional amendment in early 2014 that included state and municipal governments in the transparency law and converted the IFAI to National Instutite for Access to Information (INAI, after its initials in Spanish). The General Transparency Law enacted in May of last year implemented many of the constitutionally mandated changes, but left the 2002 law, which governed state-owned entities (including Pemex and Federal Electrical Commission, among others), badly outdated.

On May 10 of this year, the new Federal Law of Transparency and Access to Public Information went into force in Mexico. It links specific subject-matters to laws that have been enacted since 2002, such as personal data, witness protection and telecommunications. It also establishes more sophisticated mechanisms for classifying information as reserved or confidential, and for requesting and obtaining information. For the anti-corruption efforts of the government, the most important pieces of the new law are specific obligations for state-owned entities, such as Pemex and the Federal Electrical Commission (CFE). Expect continued expansion of access to information on government procurement, which has long been identified by critics as an area of risk for businesses with obligations in the anti-corruption space.

On May 30, the Mexican Congress failed to meet its constitutionally imposed deadline for passing anti-corruption legislation. The implementing legislation for the anti-corruption amendments to the Constitution was passed one year ago. However, there is still hope among Senators that they will be able to come to an agreement on the implementing legislation during a one-week extraordinary session in the second full week of June.

Various issues have complicated the passage of the law, but there are important signs that the legislation may still be forthcoming soon. Political pressures continue to grow, and the matter is getting significant coverage in the national news. Furthermore, although the delay betrays a lack of planning, the reasons for the delay are in some cases valid and deserve to be fully discussed.

First, a citizens’ movement, being supported by the Mexican affiliate of Transparency International, is pushing a companion law that would force politicians to disclose their personal property holdings, tax filings and pecuniary interests that may come into conflict with their governmental responsibilities. Second, some Senators are keen to include provisions on inclusion of corruption in the definition of organized crime and forced disappearances. Others are pushing to include all of the laws that need to be modified to fully implement the Constitutional amendment, as many as seven or even ten. Finally, some have even tried to include the marihuana use reforms that have been discussed in public forums throughout this year.

Although this missed deadline is a note of caution, it should not be considered a death knell for this reform. Indeed, there are significant signs to the contrary. Because of the nature of the political process, the legal reforms should be as broad as possible to gain the acceptance of politicians that represent specific constituencies.

Categories: English, FCPA, Mexico

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