Locke Lord QuickStudy: Mexican Anti-Corruption Law Enters Into Effect

August 1, 2017

On July 19, 2017, Mexico’s new General Law of Administrative Responsibilities (Ley General de Responsabilidades Administrativas) (“GLAR”) went into effect. The GLAR punishes bribery of government officials, as well as bribery by Mexican persons of foreign public officials. The reach of the GLAR extends to individuals as well as companies. It replaces the 2012 Anti-Corruption Law on Public Procurement (Ley Federal Anticorrupción en Contrataciones Públicas), which as its name denotes, was more narrowly focused on bribery of public officials in public procurement contracts. The GLAR is part of a general expansion of Mexico’s anti-corruption efforts over the last few years.

In addition to separate categories of offenses applicable only to government officials, the GLAR provides in Article 66 that the following conduct will constitute a “serious” administrative offense:

promising, offering or giving any prohibited benefit to one or more public servants, directly or through another, in exchange for said public servants to perform or refrain from performing an act related to their functions or those of another public servant, or abuse their real or supposed influence, with the purpose of obtaining or maintaining, for themselves or for another, a benefit or advantage, regardless of the acceptance or receipt of the benefit or the result obtained.

The GLAR’s non-exhaustive list of prohibited benefits is broadly set forth in Article 52 as any benefit not included in the government official’s remuneration as a public servant, including: money, valuables, movable or immovable property (including by means of a sale at a price notoriously lower than the market value), donations, services, employment, and “other undue benefits.” The list also expressly covers benefits to the public servant’s spouse, family, or third parties with whom he/she has a professional, employment, or business relationship, as well as partners or companies in which the public servant or any of the aforementioned persons are a part of.

The GLAR’s penalty provisions, in Article 81, contain separate treatment of individuals and companies. Individuals can be subjected to economic sanctions up to two times the benefit obtained (with a set penalty if no benefit was obtained), in addition to actual damages and 3 months to 8 years’ debarment from participating in public procurements. Companies are subject to the same sanction of up to two times the benefit obtained (with a higher set penalty if no benefit was obtained), in addition to actual damages and 3 months to 10 years’ debarment from participating in public procurements. For more serious offenses, companies are also subject to a potential three-year suspension of operations and/or permanent dissolution.

Article 25 of the GLAR provides that in determining the responsibility of a company, it will be taken into account whether the company has an “integrity policy” meeting various minimum criteria, such as adequate and effective control, compliance, and audit systems, an adequate self-reporting system, a code of conduct, an organization and procedures manual, and human resources policies tending to avoid the hiring of persons that could generate a risk to the integrity of the company.