INTERNATIONAL BACKGROUND OF THE NATIONAL ANTI-CORRUPTION SYSTEM. By: Luis Felipe Ortiz Cervantes

Transcription

1 INTERNATIONAL BACKGROUND OF THE NATIONAL ANTI-CORRUPTION SYSTEM By: Luis Felipe Ortiz Cervantes June 2018 Unfortunately, corruption in Mexico and around the world is not new. As a matter of fact, it is an issue that has been and still is in the agenda of many international organizations and multinationals worldwide. Certainly, there have been regulatory improvements, locally and globally, but every day we face newer and more sophisticated schemes to commit bribes. Today the world is divided in two poles, on one side the countries and international organizations that are pushing and encouraging for more and stricter regulations to prevent and fight corruption, and on the other, countries, mainly developing countries, that are facing greater challenges to enact and implement the appropriate legislation to prevent and fight corruption. For several years now, Mexico has been making efforts at different levels to enact and enforce anticorruption legislation. These efforts go from signing and implementing international treaties and conventions to local legislative projects in which laws and regulations are derogated, enacted and modified such as the recent National Anti- Corruption System ( NAS ). The NAS is comprised of a series of legal reforms that include the Mexican Constitution and other to the enactment of new secondary regulations as we show below: New laws i General Law on the National Anti- Corruption System General Law on Administrative Responsibility Law on Fiscalization and accountability of the Federation Organic Law of the Federal Court of Administrative Justice Reformed laws Tax Coordination Law General Government Accounting Law Organic Law of the General Attorney s Office Federal Criminal Code Organic Law of the Federal Public Administration

2 Mexico s effort is being complemented by the efforts performed at NAFTA s sixth round of negotiations in which Mexico, Canada and the United States of America agreed to update their own local regulations to meet international standards and define as crimes bribery, embezzlement, money laundering and international corruption. ii Now Mexico shall conclude the different pending NAS matters such as the General Public Prosecutor Office, the Anti-corruption prosecutor and the secondary legislation. iii The purpose of this article is to briefly review the main anti-corruption international conventions as well as the United States of America, Foreign Corrupt Practices Act and that will help us to set the context for the improvements achieved by the National Anti- Corruption System. The international anti-corruption regulations A. International anti-corruption conventions Mainly, there are three international conventions that reflect the international community s efforts regarding the anticorruption fight around the world and we will focus on their main purposes and inputs in this arena. I.- Interamerican Convention Against Corruption, Organization of American States (OAS) This first effort was sponsored by the OAS. This Convention represents the first international regulation in this field that actually acknowledges the international relevance of corruption and the need to fight it and help the different States to prevent it. iv The Convention was approved in Caracas Venezuela in In accordance with its Article II, the Convention has two main purposes: 1. The internal efforts that each State shall make to prevent, detect, punish and eradicate corruption v ; and 2. The cooperation among the States Parties to ensure the effectiveness of the measures to prevent, detect, punish and eradicate corruption. vi

3 One of the main innovations of this Convention was the States Parties commitment to take internal steps to help create and strengthen a set of controls so public officials, private persons as well as public institutions and private companies have limited exposure to corruption activities. In other words, this Convention does not only encourage States Parties to punish acts of corruption but also have them compromise to take actions that will help prevent corruption. Another very important aspect that this Convention highlights is to recognize that any effort to fight corruption shall consider the help and coordination of all players and not only the State s. Particularly, it highlights the importance and the need of having an active community on this fight. vii II.- Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of the Organization for Economic Co-operation and Development (OECD) This Convention was ratified in 1997 and went into force in This is the first Convention of its kind that specifically focuses on the offering party of a corruption act. The most recent report published by the OECD states that: most of the international bribes are performed by the big corporations, and generally, with the top management acknowledgement. In the reviewed cases, these bribes represented in average circa 10.9% of the transactions value and 34.5% of the profits. viii The purposes of this Convention are: To eradicate unfair competition caused by bribery. To punish individuals and companies that grant, or promise to grant, illegal payments to foreign public officials to favor or unlawfully benefit their businesses. ix This Convention requires that the States Parties enact legislations on matters of corruption to penalize companies and individuals and impose sanctions for acts of corruption committed by their executives or agents. x Other important aspect of this Convention is that it demands from the States Parties to prohibit the deductibility of the facilitating payments and to make more transparent their accounting records to avoid, as much as possible, the simulation of bribery payments. xi

4 Finally, another relevant aspect is the follow-up performed by the OECD to the different implementation stages in each country, in accordance with their own specific situation. The stage III was finalized in Mexico in 2011 and in October same year, the working group reported back to the OECD all the improvements reached by Mexico. III. United Nation s Convention against Corruption The main opportunity for the Interamerican Convention Against Corruption sponsored by OAS was its reach. It was a very innovative subject; the legal instrument was also very useful nevertheless its effectiveness concentrated only on the signatories countries. The international community was very interested in finding an instrument that would help in the prevention and fight against corruption, but with a broader scope, and that is how the United Nations Convention against Corruption was born. According to the UN, this convention deals with 4 main subjects: (i) Corruption prevention In this regard the most important aspect is the relevance that the Convention grants to the community and the private sector. It demands from the community to show their commitment to fight corruption through an express demonstration of its values such as integrity, transparency and responsibility. Regarding the private sector, the Convention demands from the companies to be more transparent with their accounting records, to work more closely with the government in the fight against corruption and to improve their internal controls (accounting, financial and administrative) that could facilitate the detection of any kind of corruption activity. xii (ii) Criminalization and law enforcement In this aspect, the Convention takes a firm stand and obliges the signatory States to consider as crime the following activities: the bribe (in its different forms) of public officials, nationals and foreign, embezzlement of funds, money laundering understood as money or assets that derive from unlawful acts, including the intention to hide their origin or unlawful nature It is also very important to highlight the fact that the Convention requests the signatory States to reform their local laws, as necessary, and make them as broad as possible to include as many unlawful activities as possible. Additionally, the Convention left to each State Party to determine the kind of consequences a company should be liable for including the kind of criminal, civil or commercial responsibility. xiii

5 (iii) International cooperation In this section the Convention governs the way the States Parties shall work with each other to make the fight against corruption under this Convention more effective. Therefore, the Convention define as cooperation principles the extradition, transfer of sentenced persons, law enforcement cooperation, criminal proceedings among States Parties, among others. xiv (iv) Asset recovery The Convention itself establishes the cooperation and reciprocal help among States Parties regarding asset recovery. The financial institutions play a very relevant role when detecting, keeping and making available the different kind of assets to the corresponding State Party. Under this section, the Convention sets out the basis under which the States Parties should work together to return the recovered assets to the victims or in case of public funds, they return to the corresponding State, so they can reincorporate them to the State s budget and make use of them. xv B. The Foreign Corrupt Practices Act ( FCPA ) of the United States of America Due to the meaningful commercial relationship between Mexico and the United States of America ( USA ) and the consequences of this regulation for all the commercial transactions of the several multinational companies operating in Mexico, we will devote a few lines to highlight its most important principles. This regulation has its origin in the USA back in 1977 because of several bribery scandals that involved around 400 multinational companies. Originally, the FCPA punished American individuals and companies that were involved in corruption activities abroad or involving foreign officials. xvi But, in 1998 FCPA went through an extensive reform mainly to meet the requirements of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and include the following concepts, among many other: (1) include payments made to secure any improper advantage ; (2) reach certain foreign persons who commit an act in furtherance of a foreign bribe while in the United States; (3) cover public international organizations in the definition of foreign official ; (4) add an alternative basis

6 for jurisdiction based on nationality; and (5) apply criminal penalties to foreign nationals employed by or acting as agents of U.S. companies. xvii Additionally, the FCPA includes certain regulations related to accounting records and internal controls that the companies shall keep. These regulations set out the way the companies should keep their accounting records, the way to reflect any expense related to facilitating payments -when applicable-, management obligations regarding accuracy of the revealed information and the kind and level of responsibility of the different parties involved in a bribery act. xviii i Vázquez, Daniel, Cardona Luz y Ortiz Horacio, 2017/06/12, Los Derechos Humanos y la Corrupción en México, Síntesis Ejecutiva, Comisión Nacional de Derechos Humanos. ii Esquivel, Lindsay, 2018/02/28, TLC castiga soborno y corrupción; dan certeza a inversiones, Periódico Excelsior, tomado de iii iv Página de la Organización de los Estados Americanos, Secretaría Jurídica, tomado de v Página de la Organización de los Estados Americanos, Secretaría Jurídica, tomado de vi vii Página de la Secretaría de la Función Pública tomado de viii Página de la Organización para la Cooperación y el Desarrollo Económicos tomado de ix Página de la Secretaría de la Función Pública tomado de x xi xii Página de la Organización de las Naciones Unidas, tomado de xiii idem xiv xv xvi Tarun, Robert, Basics of the Foreign Corrupt Practices Act, Abril 2006, Latham and Watkins xvii A resource guide to the U.S. Foreign Corrupt Practices Act, Criminal Division of the U.S. Department of Justice and the Enforcement Division of the U.S. Securities and Exchange Commission, 2012, page 4. xviii **********