In the course of a tough electoral campaign, Andrés Manuel López Obrador, the future president of Mexico, pledged to fight corruption like none of his predecessors have ever done.
If he keeps to his word, the compliance function within businesses in the country should receive a considerable boost. Recently approved laws have increased the criminal liability of companies in corruption cases, while providing mechanisms for those who have compliance programs to mitigate eventual punishments.
But there are still doubts whether AMLO, as he is popularly known, will really place corruption at the top of his list of priorities.
Obrador, who is often described as a populist left-winger, achieved a landslide victory in July, grabbing a 53 percent of the votes for president, as well as substantive majorities in both houses of the Mexican Congress.
He will take over the government on Dec. 1. with plenty of political capital to make a drive against corruption, a problem that has unnerved Mexicans in recent years. Several bribery scandals, involving the likes of Wal-Mart, Odebrecht, and even the family of president Enrique Peña Nieto, have caused much uproar with the public.
Once in charge, he will have the tools to make good on his word. Obrador was elected one year after the implementation of a federal anti-corruption structure, known as Sistema Nacional Anticorrupción (SNA), which is complemented by more than 30 similar structures at the regional level. Also last year, a new law, Ley General de Reponsabilidades Administrativas, for the first time made it clear that companies could face criminal charges on corruption cases.
“Companies have increasingly raised their efforts to implement compliance policies. For many organizations, compliance is not about complying with American laws anymore. It is about complying with the Mexican legislation too.”
Adriana Peralta Ramos, Chief Compliance Officer, El Palacio de Hierro
Even then, the inability, or unwillingness, shown by the government to take decisive action against corruption fuels scepticism of Mexicans about Obrador’s efforts to eliminate bribery from the political system and could even impede the much-needed development of compliance in the country.
“Despite the progress made in recent years, it is still hard to talk about compliance in Mexico, especially among mid-market companies,” said Carlos Chávez, a compliance expert at Galicia Abogados, a law office in Mexico City. “Many businesspeople still have the perception that the law has not been applied yet and that it never will. That is why the new government is so important.”
For instance, an anti-corruption law—Ley Federal Anticorrupción en Contrataciones Públicas—was approved in 2012 after a spate of scandals that shook Nieto’s government. Since then, however, not a single prosecution has taken place based on the new legislation, Chávez pointed out. SNA has also been mostly inoperant, and has operated without a leader, since its creation in July 2017.
But Mexicans will have to wait a while before they find out whether Obrador’s pledges are for real, as it will be a whopping five months between the election, which took place July 1, and when he will take over the presidency. Until then, companies and activists will follow his movements closely to evaluate how serious the forthcoming anti-corruption drive is likely to be. Chávez noted that, in the campaign, Obrador was big on proclaiming anti-corruption principles, but failed to disclose the actual policies that he wants to implement. And some of his first announcements on the matter have been received with little enthusiasm by anti-corruption activists.
For example, in early July, a group of 300 NGOs published a letter in which they took exception to Obrador’s view that the Senate should have the final word on the appointment of the country’s independent anti-corruption prosecutor, a position created more than one year ago to lead the SNA but one that remains vacant. As Obrador will control the Senate, they fear he will pick an official who may be amenable to the government’s wishes. The NGOs want the new anti-corruption czar to be selected from a list of three names picked by civil society organizations.
Adriana Peralta Ramos, chief compliance officer at retail group El Palacio de Hierro, said that it is of the essence to strengthen the structure of SNA in order to provide an extra boost to the dissemination of best business practices among Mexican companies.
“My main concern is the government,” she said. “Government entities need to implement compliance as well.”
Ramos, who has worked in compliance for 16 years, including stints in the United States, believes that the function has made significant strides in Mexico, especially via the transmission of best practices via companies exposed to the Foreign Corrupt Practices Act and to the North American Free Trade Agreement. But in the past eight years, she has identified a domestic drive to spread compliance policies across the business sector.
“Companies have increasingly raised their efforts to implement compliance policies,” she said. “For many organizations, compliance is not about complying with American laws anymore. It is about complying with the Mexican legislation too.”
Maybe the next Mexican government will show a similar disposition to up its game. Maybe not. Either way, we probably won’t know for a while.