Visit the global automotive industry news blog with Brazil automotive industry news and Mexico automotive industry news.
LatinAmerica: ""Planning your international transfer to Uruguay" guide. 21-page guide by KPMG International.
proceed to download
backLATINtalk June, 2012
Mexican Senate Approves Anti-Corruption Law for Government Procurement
The Mexican Senate passed with 77 votes in favor, 0 against and 0 abstentions on April 25, 2012, the Federal Anti-Corruption Law for Government Procurement (the "Anti-Corruption Law"), in order to include the liability and penalties for individuals and corporations, domestic or foreign, involved in irregular activities when participating in contracting procedures with the federal government; as well as to Mexican individuals or corporations involved in irregular activities when participating in international business transactions.
Scope of consequences for Companies.
Under the Anti-Corruption Law, companies participating in government procurement processes and/or international business transactions, where foreign public officials are involved, could be under investigation and sanctioned if found involved in corruption cases.
The penalties for those companies include:
-Fine for up to two million times the general minimum wage for the Federal District (MXP$ 124'660,000, equivalent to $9'589,230 U.S. dollars1 ), which may be increased by an additional fifty percent if the benefit results greater than the maximum penalty.
-In event of procurement contracts for federal government, when the maximum amount of fine described above is less than thirty percent of the value of the respective contract, the fine will be for an amount of up to thirty-five percent of the value of such contract, when the contract was awarded to the offender.
-Disqualification for contracting with the federal government for a period of up to ten years.
What Does the Anti-Corruption Law say?
-The Anti-Corruption Law applies to:
--- Domestic or foreign individuals or companies, participating in public bidding processes, as bidders, guests, providers, awarded, contractors, licensees, concessionaries, or any analogue parties.
--- Domestic or foreign individuals or companies, that in their capacity as shareholders, partners, associates, representatives, principals or agents, attorneys, brokers, agents, managers, advisors, consultants, subcontractors, employees, or with any another role intervene in any government procurement process on behalf of the individuals mentioned in the preceding bullet.
--- Domestic or foreign individuals or companies participating, directly or indirectly, in international business transactions.
-When participating in federal government procurement processes, liability will arise when any of the following infractions is committed either directly or indirectly.
--- Promising, offering or handing money or any other benefit to a public official or a third party, in exchange for that public official to perform or refrain from doing any action related to his/her duties or those of another public official, to obtain or retain any benefit or advantage, regardless of whether the money or benefit was accepted or received and regardless of the result obtained.
There will also be liability if the promise or offer or money or other benefit is made to a third party that is in any way involved in the preparation of the call for the tender or any other act relating to the contracting process.
--- Perform, with one or more of the parties subject to this Anti-Corruption Law, actions that involve or are aimed to obtain an unlawful benefit or advantage in any federal government contracting process.
--- Perform acts or omissions aimed at participating in public contracting processes, being legally impeded from doing so.
--- Perform acts or omissions in order to avoid the requirements or rules in any public contracting process;
--- Participate directly or on behalf of third parties who are legally impeded from participating in any federal government contracting processes, with the purpose of obtaining the benefits of the procurement.
--- Force a public official to give, sign, execute, destroy or deliver a document or any good, in order to obtain for himself or for a third party a benefit or advantage.
--- Promote or use any influence, political or economic power, real or fictitious, on any public official in order to obtain a benefit or advantage, regardless of the acceptance by the public official or officials or the results obtained.
--- Submit apocryphal or altered documents or information in order to obtain a benefit or advantage.
If the offense is made through an intermediary, that intermediary and the individual or corporation obtaining the benefit or advantage will be punished.
-In international commercial transactions, the domestic individuals or companies involved in such transactions will be liable when themselves or through a third party promise, offer or deliver money or any other unlawful benefit to a foreign public official or to any third party in exchange for the public official to perform or refrain from doing any action related to his/her duties or those of another foreign public official, in order to obtain or maintain a benefit or advantage, regardless of the acceptance or the outcome.
-The applicable penalties are:
For individuals, fine ranging from one thousand to fifty thousand times the general minimum wage for the Federal District (MXP$62,330, equivalent to USD$ 4,794.63; to MXP$3'116,500, equivalent to USD$239,731.76), and disqualification to participate in federal government procurement processes for a term of not less than 3 months nor more than 8 years.
For companies, fine ranging from ten thousand to two million times the general minimum wage for the Federal District (MXP$623,300, equivalent to USD$47,923.07; to MXP$124'660,000, equivalent to USD$9'589,230.76), and disqualification to participate in federal government procurement processes for a period not less than 3 months nor more than 10 years.
In both cases, regarding permits, concessions, authorizations or procedures related to federal government contracting processes or international business transactions, the maximum penalty may be increased up to fifty percent more, when the benefit is greater than such maximum penalty.
Likewise, for actions performed in federal government contracting processes, if the maximum penalty is less than thirty percent of the contract amount, a fine ranging from thirty to thirty-five percent of the amount of the contract will be imposed, if it was awarded to the offender.
-An administrative sanctioning procedure, preceded by an investigation stage, is stipulated in the Anti-Corruption Law for imposing sanctions. The investigation stage may be triggered by a complaint or by the authority's own initiative.
-The Law also provides a procedure for reduction of penalties for those parties who confess their responsibility in any of the offenses listed above.
Actions to Consider
Any company regularly involved in government contracting processes at the federal level or in international commercial transactions, where foreign public officials are involved, should implement strict compliance policies or revise the existing ones; to include clear rules for contracting with governmental entities in Mexico and abroad.
Likewise, it is highly advisable to conduct training sessions for those employees within the company that deal with the Mexican federal government or with foreign governments.
It is also recommended to carry out corporate due diligence to all third parties who may participate as intermediaries in business relationships with the federal government or foreign governments.
Conclusion
The new Mexican Anti-Corruption Law is the result of the global trend against corruption. In Mexico, although there were some provisions designed to prevent acts of corruption, it is not until now that the Anti-Corruption Law is approved specifically to combat corruption. The new Anti-Corruption Law does not only include administrative responsibilities applicable to individuals and public officials, but it also empowers the authorities with effective tools to detect and sanction corruption.
At Baker & McKenzie, our team of compliance experts has extensive experience in coordinating research to identify potential risks arising from acts of corruption and in advising our clients in the design, implementation and monitoring of compliance programs and manuals.
Please do not hesitate to contact us if you require any further clarification on the new Anti-Corruption Law that will be effective once the Executive Branch orders its promulgation.
[1] An exchange rate of $13 pesos per U.S. dollar was considered
Source: Baker & McKenzie - GAI
For more information or to contact Baker & McKenzie, please click here.
Mexico's May auto output rises 2.8%
read on
Brazil Auto Sales Slump In May; Tax Cut May Spur Sales
read on
Brazil: A new way forward - Government hopes to steer automotive growth
read on
Brazil moves to protect domestic industry against imports
read on
Mexico: Automotive industry demand for engineering plastics to hit US$1.3bn in 2017 - study
read on
Vehicle repossessions due to consumer defaults shoot up in Brazil; Auctioneer’s inventory up 66%
read on
Mexico Continues To Be Top Choice for Manufacturing ‘Near-Shoring,’ Says Study
read on
Mexico replacing China for low-cost goods
read on
Mexican Senate Approves Anti-Corruption Law for Government Procurement
read on
What does it take to win in Brazil? Developing your Market Entry Strategy for Brazil
read on
Brazil/Argentina Mercosur differences can be overcome with ‘greater production integration’
read on
A Deeper Examination of Immigration Policies in the Big Six Latin America Markets
read on
Mexico: Sonora’s hot economy is focus of Arizona-Mexico Commission
read on
Here are 3 charts indicating that the price of office space in Brazil might fall this year
read on
Brazil cuts more taxes to revive economic growth
read on
Private equity value creation in Latin America: exit study highlights
read on
Foreign Direct Investment in Latin America Hit Record Highs in 2011
read on
Mexican Manufacturing Sector Logs Strong Growth In May
read on
Mexico: The Competition Is Stiff, Global, and Here to Stay
read on
Mexico’s Pursuit Of ‘Developed Nation’ Status – Analysis
read on
Investing in Mexico: Profit From This New Manufacturing Superpower
read on
In Brazil Now Earning US$ 145 a Month Makes You Middle Class. More than US$ 545 and You're Rich
read on
Nicaragua Tops FDI-GDP Ranking
read on
Mexico Employment Law – Employee Profit Sharing
read on
China-Mexico ties in new stage of growth: Chinese president
read on
Monopolies hold back Mexico's economy with high prices, poor service
read on
Alliance of the Pacific emerges as a potent challenge for Mercosur and Brazil
read on
Drastic cut in EU trade aid; most Latam countries will loose tariff preferences
read on
Brazil has 65 of the top 250 universities in Latam, with Sao Paulo top ranked
read on
Latin America Update: global headlines
read on
subscribe to eJournals
View our blogs:
The Asian Automotive Industry Market
The Brazil Automotive Industry Market
The Chinese Automotive Market
The European Automotive Market
The Global Automotive Market (HR edition)
The Indian Automotive Market
The Mexican and Latin Automotive Market
The U.S. Automotive Market
To visit GlobalAutoExperts Directory, click here.