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Thursday
Jun132019

Mexico joins the anti-bribery enforcement bandwagon

Anti-corruption law has never been thought to hold much sway in Mexican affairs. Despite a nominal prohibition of bribery and graft and an abundance of recent corruption scandals, the country’s history of minimal enforcement has fostered an expectation of impunity. The message to those who invest in Mexico’s economy has been clear: You can follow your own compliance program as a matter of internal policy, but there is little risk of sanction should any of your officers go astray.

That may no longer be the case. In his successful campaign for office last year, Mexico’s President Lopez Obrador promised an administration that would fight corruption by taking on the “mafias of power” -- politicians and industry magnates who have enriched themselves through dubious federal contracting practices.

Last week, in keeping with that promise, the Lopez Obrador administration froze the assets of Emilio Lozoya, the former CEO of the state-owned oil and gas company Petroleos Mexicanos (Pemex), and Alonso Ancira, the CEO of Altos Hornos de Mexico (AHMSA), one of Mexico’s biggest multinational companies.

The allegations revolve around AHMSA’s 2014 sale to Pemex of a fertilizer plant for $475 million. Investigators reportedly consider the price to have been severely inflated and believe bribery played a role in the transaction. The asset freeze was followed by a pair of arrest warrants; Ancira has been detained and is in Spain awaiting extradition, while Lozoya remains wanted by Mexican authorities.

Enforcement of applicable law is critical to maintaining an ethical business climate and driving healthy investment. Six months into his six-year term, President Lopez Obrador has shown a willingness to pursue these enforcement measures, and we are likely to see the issue receive increased attention.

It’s a good time for national and multinational companies investing in Mexico to pay renewed attention to their compliance programs and the implementation of anti-corruption best practices.

_____

Martha Mallory, pictured above, is TRACE’s Business Development Manager for Latin America. 

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