The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10. Presenting a live 90-minute webinar with interactive Q&A Mexico's New Anti-Corruption Laws and Implementing Regulations: Private Entities and Individuals in the Crosshairs Understanding Key Provisions, Ensuring Compliance and Mitigating Legal Risks Today’s faculty features: 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific TUESDAY, NOVEMBER 8, 2016 Matteson Ellis, Member, Miller & Chevalier, Washington, D.C. Diego Sierra, Partner, Von Wobeser & Sierra, Mexico City, México
Transcript
The audio portion of the conference may be accessed via the telephone or by using your computer's
speakers. Please refer to the instructions emailed to registrants for additional information. If you
have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.
Presenting a live 90-minute webinar with interactive Q&A
Mexico's New Anti-Corruption Laws
and Implementing Regulations: Private
Entities and Individuals in the Crosshairs Understanding Key Provisions, Ensuring Compliance and Mitigating Legal Risks
Corruption Perception Ranking by Transparency International
Mexico
United States
United Kingdom
Bribery risks- Mexico
7
Source: Fraud and Corruption Survey in Mexico, KPMG 2008. Casar, María Amparo, México: Anatomía de
la Corrupción.
Companies subject to FCPA Actions based on Mexico Activities
8
Mexico’s new anti- corruption laws and implementing regulations
• May 27, 2015. Constitutional amendments on anticorruption matters were published in the Official Journal.
• The reform creates the National Anticorruption System (“NAS”), a coordinating “agency” between authorities of all levels of government competent in prevention, detection and sanctioning corruption.
• July 18, 2016. President Peña Nieto enacted Anticorruption legislation. Noteworthy, the General Law of Administrative Responsibilities enters into force in July 2017.
9
New Legislation Amendments to Existing Laws
General Law of National Anti- Corruption System
Organizational Law of the Federal Public Administration
General Law for Administrative Responsibilities
Organizational Law of the General Attorney’s Office
Organizational Law of the Federal Administrative Law Tribunal
Federal Criminal Code
Law of Audit and Rendering of Accounts
10
National Anticorruption System
11
Prevention Detection Sanction
Administrative Offenses and Corruption
Auditing
Accounting for Use of
Public Funds
Determines coordination mechanisms between the authorities at all levels (federal, state and municipal) of government regarding:
General Law of the National Anticorruption System
In force July 19, 2016
National
Anticorruption
System
Coordinating
Committee
ManagingCommittee
of NationalAuditSystem
Representatives of State
Anticorruption Systems
Committee of Citizen Participati
on
12
General Law of the National Anticorruption System
13
General Law of the National Anticorruption System
NAS ExecutiveSecretariat
Internal Control Bodies with in government
agencies
Government Agency
Executive Commission
TechnicalSupport Agency of the NAS
CoordinatingCommittee
14
General Law of the National Anticorruption System
Coordinating Committee
Ministry of Public Service
Representative of the Federal
Judiciary
Committee of Citizen
Participation
National Institute for Transparency,
Information Access and
Personal Data Protection
Superior Audit of the Federation
Federal Administrative
Justice Court
Special Anticorruption
Prosecutor
15
General Law of the National Anticorruption System
Designs, promotes and evaluates anticorruption policies
Implements mechanisms and principles for collaboration with audit and control authorities
Issues annual report containing progress and results of implementation of anticorruption policies and programs
Requests information from public institutions about compliance with national anticorruption policies
Implements National Digital Platform (“NDP”) where anonymous reports will be uploaded for investigation. (NDP to include list of companies and/or individuals sanctioned for corrupt acts.)
Determines coordinating mechanisms between the National and the State Anticorruption Systems
Coordinating Committee
16
General Law of the National Anticorruption System
Involves 5 citizens appointed by the
Senate based on their contributions
to fighting corruption
Their mandate will last for five
years
Responsible for liaising with social
and academic organizations
Committee of Citizen
Participation
Ministry of PublicService
Superior Auditor of
theFederation
Local Audit Agencies
Local Secretaries of PublicService
17
General Law of the National Anticorruption System
• Interagency coordination mechanism between the responsible bodies for government audit in the various levels of government.
• Will determine collaboration actions and mechanisms between its members.
• Managing Committee involves representatives of Superior Auditor of the Federation, Ministry of Public Service and 7 members of the Local Audit Agencies.
National Audit
System
NAS National Digital
Platform
Assets evolution, disclosure of interests and proof of tax
declaration system
System of public officials involved in public
procurement
Information and communication system of the National
Anticorruption System and the National Audit System
Public information system of procurement
System for public accusations of administrative offenses and
corrupt conducts
National system of sanctioned public officials, individuals
and corporations
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General Law of the National Anticorruption System
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General Law of Administrative Responsibilities
Into force July 19, 2017
PreventionMechanisms
- Public officials’ ethics code
- Recommendations from the NAS Coordinating Committee
- Selection of members of the internal organs of control of the different government agencies
- Self-regulation mechanisms including internal control systems and programs of integrity for companies
- Collaborating agreements with chambers of commerce and business associations in order to bolster an integrity culture
- Credit for having integrity programs once companies are under investigation
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General Law of Administrative Responsibilities
Accountability
- Assets evolution, disclosure of interests and proof of tax declaration System
- National System of sanctioned public officials, individuals and corporations
- Assets declaration and disclosure of interests
- System of public officials involved in public procurement
Acts or omissions of public officials who engage in:
Nonperformance of powers,
functions and commissions.
Failure to report acts or omissions that
may result in administrative
offenses.
Ignoring instructions of their superiors
when they are related to public
service.
Delay in presentation of assets and tax
declaration/ disclosure of
interests.
No providing accounts of the performance of
their duties.
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General Law for Administrative Responsibilities
Serious Administrative Offenses
Acts or omissions of public officials, such as:
Bribery Embezzlement Deviation of public funds
Misuse of information
Obstruction of justice
Abuse of authority
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General Law for Administrative Responsibilities
Serious Administrative Offenses
Acts or omissions of public officials, such as:
Acting under conflict of
interest Improper hiring
Hidden enrichment/
failure to disclose conflict of interest
Influence peddling
Concealment Contempt
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General Law for Administrative Responsibilities
Individual and corporate conduct involved in administrative offenses
Bribery Use of false information
Influence peddling
Improper hiring of
former public officials
Wrongful exercise of
public funds Collusion
Obstruction of powers for
investigations
Unlawful participation in administrative
procedures
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General Law for Administrative Responsibilities
Private offenses by private persons in a special situation
- Candidates for elected office
- Members of electoral campaigns
- Members of changing administrations in the public sector
- Leaders of labor unions in the public sector
Demands, requests, acceptance, receipt or claims to receive any benefit not included in compensation in exchange for granting or offering an undue benefit in the future, were the person to obtain the position of a Public Official
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General Law for Administrative Responsibilities
Sanctions against public officials
Publicor private
admonition
Temporary disqualificat
ion from holding
public office
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General Law for Administrative Responsibilities
Fine up to twice the benefit obtained or up to USD 608,700
Disqualification from participating in public procurement up to 8 years
Compensatory damages and lost profits to the public treasury
Sanctions on individuals
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General Law for Administrative Responsibilities Sanctions on companies
Fine
• Fine up to twice the benefit obtained or up to USD 6,087,000
Withdrawal
• Disqualification from participating in public procurement up to 10 years
Damages
• Payment of damages, compensatory damages and lost profits to the public treasury
Suspension • Suspension of company’s activities for up to 3 years
Dissolution • Order to liquidate the company
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Federal Criminal Code
Crimes for corruption, committed by private persons
Bri
be
ry
Individuals or corporations that give or promise to give, any improper benefit to a public official to perform or omit an act related to the official’s
duties.
Use
of
fals
e i
nfo
rma
tio
n
Contractors, licensees, assignees and holders of concessions which generate and use false or modified information with respect to incomes or profits, when legally obliged to present such information, when such information is concealed. B
rib
e o
f fo
reig
n o
ffic
ials
Individual or corporation that offers, gives, promises to give money or any other gift to foreign officials in order to obtain or maintain undue advantages in the development or performance of an international commercial transaction
Infl
uen
ceP
ed
dli
ng
Individuals who without being authorized to legally intervene in public affairs, claim to have influence over public officials with powers to make decisions regarding such affairs, and intervene in such affairs to promote the unlawful resolution of such affairs
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Abuse of Authority
Wrongful exercise of
oficial power
Intimidation Influence peddling
Public oficial scoalition Crimes
committed by public officials
Federal Criminal Code
Distinctions with the FCPA
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NAS FCPA
Subject persons Individuals, corporations and
public officials.
Individuals and corporations.
Scope Foreign and local officials. Foreign officials.
Prohibited acts Administrative offenses committed
by public officials and individuals
and corporate acts involved in
serious administrative offenses.
Bribery of foreign officials.
Books and records and internal
controls failures.
Facilitation payments Not allowed. Exception for facilitation or
expediting payments made in
furtherance of routine
governmental action.
Strict liability Liability independent from the
corrupt intent.
Anti-bribery provisions require
corrupt intent; accounting
provisions approach strict
liability.
Distinctions with the FCPA
33
NAS FCPA
Books and records Not contemplated in legislation. Yes, accounting provisions cover
books and records.
Corporate liability Yes, corporations can be held liable. Yes, corporations can be held liable.
Sanctions Public officials:
Public or private admonition; suspension of
employment, position or commission; termination of
employment; temporary disqualification to hold
public office and fine.
Individuals and corporations:
Fine; disqualification from participating in public
procurement; indemnity for damages, compensatory
damages and lost profits to the public treasury;
suspension of activities and corporate dissolution.
Up to USD 2 million per violation
(anti-bribery provisions); up to USD
25 million (accounting provisions),
plus possible disgorgement of profit.
Distinctions with the FCPA
34
NAS FCPA
Credit for compliance
programs
For the imposition of sanctions, integrity
policies of the corporation will be considered.
Not statutorily, but U.S. Sentencing
Guidelines provide credit for
compliance programs.
Credit for self-
disclosure and
cooperation
Sanctions could be reduced for corporations
filing charges for administrative offenses or for
cooperating with investigations.
Not statutorily, but U.S. Sentencing
Guidelines provide credit.
Indirect liability Not necessary to establish corrupt intent for
administrative offenses.
Permits indirect liability for acts of
third parties.
Statute of limitations Minor administrative offenses: 3 years
Serious administrative offenses/ individuals
and corporations acts involved in
administrative offenses: 7 years
5 years
Distinctions with the FCPA
35
NAS FCPA
Jurisdiction Public officials, individuals and
corporations acting in Mexico,
including foreign companies.
U.S. individuals and
corporations worldwide; foreign
individuals and corporations
acting within U.S.; companies
listed on U.S. exchanges (U.S.
issuers) and their employees
acting worldwide; and agents
acting on behalf of a covered
individual / corporation
Enforcement Administrative and criminal. Civil and criminal.
Negotiated plea agreements. Settlement agreements
permitted under certain
circumstances.
Corporate settlement
agreements are negotiated
regularly.
Enforcement of the NAS: OECD Working Group
Findings of OECD Working Group: Follow up to Mexico Phase 3 Report & Recommendations (2014)
Has no foreign bribery prosecutions or convictions
Anti-corruption law does not create corporate liability for foreign bribery without identification or conviction of relevant individual and without proof that the bribery was committed within the means of the corporate entity
Made meaningful updates to MLA procedures
Begun training prosecutors in anti- corruption techniques
36
Enforcement of the NAS: Committee of Citizen Participation
Committee of Citizen
Participation
Leads the Coordinating
Committee of the NAS
Head of the decision making body of the
Executive Department of the NAS
37
Guarantees independence, effectiveness and impartiality of the National Anticorruption System as organized civil society will be responsible for enforcement
Enforcement of the NAS: International cooperation
Coordinating Committee empowered to take part in international collaboration mechanisms for fighting
corruption
Mexican authorities must collaborate with international
authorities for the strengthening of investigations,
share international best practices and fight against
corruption
38
Enforcement of the NAS: Whistleblower Provisions
39
Companies will benefit from potential leniency in administrative sanctions when they self-disclose or collaborate in investigations
Benefit of sanction reduction:
Individuals that have perpetrated or participated in a serious offense and confess may obtain a reduction, under certain conditions, of 50 to 70% in monetary penalties imposed and even elimination of debarments imposed
Enforcement of the NAS: Corporate intervention
40
Suspension of activities
Corporate dissolution
If corporations obtained an economic benefit and
participation of the Board of Directors, audit committee or
partners is established
In those case where the legal entity in question is used to
systematically incur in administrative offenses
or
Compliance Expectations (art. 25 of the GLAR)
Organizational and proceeding manual, comprehensive and complete, in which the roles and responsibilities of each of its areas are defined, specifying the different chains of command and leadership throughout the structure
A code of conduct duly published and shared among all of the company’s members, with systems and mechanisms of real application
Adequate and effective supervision, audit and control systems to constantly and periodically examine compliance of integrity standards throughout the organization
Adequate reporting systems, both inside the organization and outside with the competent authorities, disciplinary procedures and specific consequences for those who act contrary to the internal regulations or Mexican legislation
41
Required Components of Integrity Policies
Compliance Expectations (art. 25 of the GLAR)
Appropriate systems and processes of training on integrity policies
Human resources policies designed to prevent the hiring of people who can present an integrity risk to the company. These policies under any circumstances shall not authorize discrimination.
Mechanisms to ensure, at all times, the transparency and
disclosure of interests.
42
A company’s Code of Conduct may reduce the applicable penalty.
Integrity Policies
Compliance Options for Companies
• Collaboration agreements between Ministry of Public Service and individuals or corporations for the implementation of self-regulation mechanisms taking note of international best practices about control, ethics and integrity in businesses.
