New Administrative Penalties Against Individuals And Private Companies As Part Of Mexico's Fight Against Corruption - Corporate/Commercial Law - Mondaq Mexico - Mondaq Business Briefing - Books and Journals - VLEX 685906669

New Administrative Penalties Against Individuals And Private Companies As Part Of Mexico's Fight Against Corruption

Author:Mr Ismael Reyes RetanaTello
Profession:White & Case LLP
 
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On July 19, 2017, Mexico's new General Law on Administrative Accountability will take effect, imposing serious penalties on individuals and private companies that violate it, and requiring companies to adopt and implement corporate integrity policies.

On May 27, 2015, the Mexican Constitution was amended to create a National Anti-corruption System. On July 18, 2016, a series of legal reforms were published, which collectively created a legal framework in the ongoing national fight against corruption.

The latest anti-corruption reform includes amendments to existing laws and enactment of nine secondary laws, including the new General Law on Administrative Accountability, which will take effect on July 19, 2017.

Mexican lawmakers have determined that individuals and companies that perpetrate acts of corruption must be subject to the General Law on Administrative Accountability, particularly when linked to administrative violations that are categorized as "gross."

The new law can be divided into two areas: i) prevention, and ii) sanctions.

Prevention

The new law imposes three requirements on individuals and private companies: i) public servant declarations (addressing personal assets, interests, and proof of tax return filings); ii) a hiring protocol, and iii) an integrity policy.

Among these requirements, the corporate integrity policy is of particular relevance, since in determining the liability of particular private companies, enforcement authorities will look to see if companies have a policy in place that includes at a minimum the following elements:

Organizational manual and procedures; Code of Conduct; Control, monitoring, and auditing systems; Reporting systems and disciplinary proceedings; Adequate training systems and processes, and training in integrity measures; Human resources policies, and Mechanisms to ensure the transparency and publicity of their interests at all times. As for the above-mentioned protocol, public servants participating in public procurement will be required to apply certain standards when dealing with private individuals, including formulating and abiding by guidelines for business or personal relationships, as well as disclosing possible conflicts of interest (addressing possible impairment of their objective impartial performance of the functions of public servants due to personal, family, or business interests).

Sanctions

Individuals who carry out acts classified as "gross" administrative...

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