[23/07/2016].
Dear clients and friends:
On May 27th of this year the President of the Republic issued the Constitutional Reform that seeks to combat corruption in Mexico with the creation of the National Anticorruption System.
The articles of the Political Constitution of the United Mexican States (the Constitution and/or CPEUM for its initials in Spanish) amended are: 22, 28, 41, 73, 74, 76, 79, 104, 109, 113, 114, 116 and 122. The Legislative Branch has one year from the entrance into force of the decree to approve the general laws and the reforms to the applicable legislation. In addition, the adjustments to the Organizational Law of the Federal Public Administration must be made.
The Congress of the Union, the legislatures of the states and the Legislative Assembly of the Federal District must issue the laws and make the corresponding regulatory adjustments within the 180 days after the entrance into force of the general laws.
The main points of the reform are briefly explained below, according to the order of the articles that were amended:
I. Reform of article 22 of the Constitution
Application of the administrative procedure of extinction of ownership for the case of the crime of unlawful enrichment.
II. Reforms of articles 28 and 41
The concept of “Internal Controller” is substituted with the “Internal Control Body", within the organization of the Federal Telecommunications Institute, the Federal Economic Competition Commission and the National Electoral Institute, which will have the powers that the law determines to present the accusations for acts or omissions that may constitute a crime before the Special Investigator in Combatting Corruption or in the competent local authorities, respectively.
III. Reform of article 73
The Congress of the Union is authorized for the issuance of a general law that establishes the bases for coordination of the National Anticorruption System referred to in article 113 of that law, and to issue the law that institutes the Federal Court of Administrative Justice.
In view of the above, the Federal Court of Tax and Administrative Justice is transformed in the Federal Court of Administrative Justice keeping its current competency in tax and administrative matters and adding to it a new competence in the area of imposition of sanctions for serious administrative liabilities on Federal public officials and, in the cases established in the Constitution, on the public officials of the states, municipalities, Federal District and its territorial demarcations, as well as private parties linked to such administrative violations.
The Federal Court of Administrative Justice is also authorized to determine those responsible for the payment of the indemnities and monetary sanctions derived from the damages and losses caused to the Federal Public Treasury or to the assets of the federal public entities.
Finally, the Congress of the Union is authorized to issue the law that distributes competencies in the branches of government in order to establish administrative liability of public officials, their obligations, the sanctions applicable for the acts and omissions and those that correspond to the private parties linked for serious infractions, as well as the procedures for their application.
CONGRESS OF THE UNION
The General Law of Coordination of the National Anticorruption System.
Law of the Federal Court of Administrative Justice with new competency
Law of Distribution of competencies and procedures.
This point of the reform is important since the power of sanction is granted to the administrative courts, thereby guaranteeing an independence and impartiality in imposing the sanctions. Furthermore, the classification of the infractions must be known in order to know which body is competent to hear them.
IV. Reform to article 74
The concept of the federal superior investigation entity changed to the Federal Superior Auditor. Power is granted to the Deputies Chamber to appoint by a vote of two-thirds of its members the heads of the internal control bodies of the
Autonomous Constitutional Organizations that exercise resources of the Federal Expenditures Budget with which it is intended to guarantee their appropriateness to occupy the position.
V. Reform of article 76?
The head of the Ministry of Government Affairs will be ratified by the Senate of the Republic, and will no longer be freely appointed by the President of the Republic.
VI. Reform of article 79
Strengthening of the Federal Superior Auditor (the Auditor). The principles of annuity and posteriority are eliminated and attributes are granted to the Auditor to directly carry out audits during the current fiscal year, resulting from accusations and with the authorization of the head of the Superior Auditor, in order to timely investigate and sanction possible irregular acts. Furthermore, it is authorized to do audits on possible irregular acts committed in prior fiscal years, where in addition it may request and review casuistically and specifically the information of fiscal year prior to the Public Account in review.
The Auditor may inspect local resources when they come from debt that is guaranteed by the Federal Government, and it will inspect the federal resources that are used and exercised by public and private funds and mandates.
The Auditor will prepare individual reports for the Deputies Chamber the last business day of the months of June and October and February 20th of the year following that of the presentation of the public account. In addition, on that last date it will present the General Executive Report of the Results of the inspection of the Public Account. Such reports will be public.
The Auditor is provided with new powers that will allow it to investigate and file in the Federal Court of Administrative Justice and the Special Investigator in Combatting Corruption the liabilities of the public officials and, when applicable, of private parties, for the imposition of sanctions.
VII. Reform of article 108
Obligation of the public officials to present, under oath, their declaration of assets and interests with the competent authorities and in the terms the applicable laws determine. In this respect I consider that special care should be taken to ensure that this obligation is properly regulated in order to avoid that the officers take advantage of gaps in the law that would permit their opacity.
VIII. Reform of article 109 of the CPEUM.
Sanctions are established that may be imposed on public officials and private parties, individuals or entities who engage in acts of corruption.
Public Officials:Sanctions
Criminal Liability
Unlawful enrichment that, during the time of his position, he himself or through another person increases his wealth or acquires goods or acts as owner over them, whose lawful origin cannot be justified.
Forfeiture. Privation of property. Others established in the law.
Administrative Liability
Acts or omissions that affect the legality, honor, loyalty, impartiality and efficiency of his jobs or positions
Warning
Suspension
Dissmissal
Disqualification
Economic sanctions based on the benefit obtained and the damages and losses caused.
Private PartiesSanctions
Criminal Liability
Those established in the law.
Liability in administrative courts for serious infractions
Individuals and entities:
Economic sanctions?
Reparation of the damage to the Public Treasury
Disqualification from participating in acquisitions, leases, services or public works. Additionally for entities:
Suspension of Activities
Dissolution?
Intervention of the company.
* For serious administrative infractions that cause harm to the Public Treasury or to public federal, local or municipal entities, provided the company obtains an economic benefit and the participation of its administrative or oversight bodies or of its partners is evidenced or in cases in which it is seen that the company is used systematically to be linked to serious administrative infractions.
* The sanction will be executed until the final judgment.
It is important to mention that the entities will be sanctioned when the acts linked to administrative infractions are carried out by individuals that act in the name or in representation of the entity and in its benefit. This means that the company can be sanctioned for the actions of representatives, agents, statutory representatives, and even business handlers who act in benefit of the company; in this latter situation the company must have recognized the handling of business to be able to link it to the acts being sanctioned.
It is established that federal, state and municipal public entities, as well as of the Federal District, and the political-administrative bodies of its territorial demarcations, will have internal control bodies authorized to, in the terms established by the law, prevent, correct and investigate acts or omissions that could constitute administrative liabilities; to sanction those different from those that are the competence of the courts of administrative Justice; to review the income, expenditure, management, custody and application of public resources; and to present the denouncements for acts or omissions that could be a crime in the special investigator for combatting corruption.
In this constitutional provision the competence of the local and federal courts is established in turn.
It is provided that serious administrative liabilities will be investigated and processed by the Federal Superior Auditor and the internal control bodies, and their sanctioning will correspond to the Federal Court of Administrative Justice and the respective bodies in the states.
Furthermore, those that the law determines as not serious will be investigated, processed and resolved by the internal control bodies.
The local courts of administrative justice will hear the disputes that arise between the local and municipal public administration and private parties, and will impose the sanctions on the local and municipal public officials for administrative liability and on the private parties that engage in acts of corruption in the terms determined by the laws.
In fulfilling their functions, the bodies responsible for the investigation and sanctioning of administrative liabilities and acts of corruption may not use as a defense the provisions intended to protect the secrecy of tax information or related to operations of deposit, administration, savings and investment of monetary resources. The law will establish the procedures for such information to be delivered to them.
IX. Reform of article 113
The reform of this provision is central since it establishes:
The creation of the National Anticorruption System (SNA for its initials in Spanish)
National Anticorruption System should be understood as the coordinating body among the different authorities competent in the prevention, detection and sanctioning of administrative liabilities and acts of corruption, as well as in the investigation and control of public resources.
The creation of a Coordinating Committee of the SNA.
COMPOSITION
Head of the Federal Superior Auditor
Head of the Special Investigator in combatting corruption
Head of the Secretary of the Federal Executive responsible for Internal Control
President of the Federal Court of Administrative Justice
Representative of the Judicial Council
Representative of the Committee of citizen participation which will be composed of 5 outstanding citizens known for their pursuit of transparency and combatting corruption, which will be elected in terms of the General Law.
The Commissioned President of the guarantor body established in article 6 of the Constitution
Among their functions and powers are the following:
Establishing mechanisms of coordination with local systems.
Designing and promoting integrated policies for investigating and controlling the exercise of public resources, and to prevent, control and dissuade administrative infractions and acts of corruption from occurring.
Determining mechanisms to provide, Exchange, systematize and update the information in investigation and control of public resources and in the sphere of prevention, control and dissuasion of acts of corruption.
Establishing bases and principles for an effective coordination between investigative authorities and control of public resources of all branches of the government.
Preparing an annual report on the results of their exercise and of the application of the policies and programs feeding it, as well as the progress.
Issuing non-binding recommendations to the authorities, so that they adopt institutional measures for institutional strengthening for the prevention of administrative infractions and acts of corruption. ?
Furthermore, the States must establish local anticorruption systems through which the competent local authorities are coordinated.
X. Reform of article 114
Expansion of the statute of limitations on serious administrative sanctions: when the acts or omissions are serious the statutes of limitation will not be less than seven years, which is four more years than the current provision.
IMPLICATIONS OF THE REFORM FOR PRIVATE PARTIES
First of all with regard to individuals, it will be essential for them to be informed of the scope of the reform; this function may be performed by the business associations and professional organizations that advise them. In the case of the entities whose organization and structure are established in the law and its bylaws, it will be important to adopt a corporate governance that promotes transparency and oversight of their acts, in order to avoid liabilities.
Communication and information on the policies and procedures adopted to promote transparency will play a fundamental role; the follow up on their compliance will be what materializes a real advance in the matter of combatting corruption.
To learn more about this topic, please contact:
Lic. Rafael Manuel Sámano Palacios: rsamano@samanosc.com.mx
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