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Corporate & Business
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Federal Law Against Corruption in Public Procurement Jun 2012

I. INTRODUCTION

According to the Organization for Economic Co-operation and Development (OECD): ??the struggle against collusion and all other types of corruption in the tendering process is crucial to the economic development of the countries??

In this concern, and in response to the several international conventions signed by Mexico, such as the Inter-American Convention Against Corruption of the Organization of American States, the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of the OECD, and the United Nations Convention against Corruption; this law is our countries reflection of the international efforts to eliminate corruption in public procurement systems.

It is important to note that as a preventive measure to worldwide corruption, this law, as well as its equivalent in the United States, condemns not only the corrupt practices in our country, but also the ones that are carried out by Mexican citizens in public procurement outside of Mexico.

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II. REMARKS

The objective of the Federal Law Against Corruption on Public Procurement (LFACP) is to establish the responsibilities and administrative sanctions that shall be imposed to individuals or corporations, Mexican or foreign, or their representatives, who commit the crime of bribery in Mexico?As well as punishing individuals or corporations of Mexican nationality who commit the crime of bribery abroad.

Public servants are punished for engaging in such conduct in accordance with the Federal Law of Administrative Responsibilities of Public Servants (LFRASP).

It is important to note that the administrative sanctions, in addition to bribery, also penalize anyone who: promises or offers money; participates in public procurement procedures when ineligible (even when doing so through third parties); as well as anyone who use their economic or political power to impact the decisions, or; submit false or altered documents to obtain advantages or benefits.

The LFACP defines public federal procurement as all the proceedings that are carried out in accordance with the Law of Acquisitions, Leases and Services of the Public Sector (LAASSP), Law of Public Works and Related Services (LOP), and the Mexican Petroleum Law / PEMEX law (LPM).

The Ministry of Public Service (SFP) is the main responsible to investigate, sanction and execute this law in the field of Federal Public Administration and public procurement made with federal funds. It also delegates different federal authorities to apply, in their field of jurisdiction, the LFACP.

In regard to accusations, these can be submitted by public institutions, individuals, or foreign states when the procurement is international. The submission of anonymous accusations is also allowed, so that identity of the individuals that claiming alleged infractions will remain confidential.

Within a framework of modernization, now that the public procurement procedures in our country can be made online (through CompraNet), the submission of accusations can be completed through that website as well.

Once an accusation is received, the competent authority will determine if there exists an infraction. If the authority determines the possible existence of an infraction, an investigation will be commenced.

If from the investigation the authority concludes the possible existence of an infraction, it will issue an agreement which will initiate the penalization proceedings. Once the agreement has been notified, the alleged offender will have a term of fifteen days to make his account, during this time the defendant may submit all evidence that he deems convenient to support his position.

Once the evidence has been offered and submitted, the defendant may present his counter-arguments. Subsequently, and if found guilty, the corresponding sanction will be applied within forty business days.

The Federal Law of Administrative Procedures (LFPA) will serve as a supplementary law to this procedure.

The penalties for this offenses may be:

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1. In case of individuals:

-Fine of $62,330.00 (Sixty Two Thousand Three Hundred Thirty Pesos 00/100 M.N.) up to $3�116,500.00 pesos¹ (Three Million One Hundred Sixteen Thousand Five Hundred Pesos 00/100 M.N.).

-Disqualification of 3 months up to 10 years.

2. In case of legal entities:

-Fine of $62,330.00 (Sixty Two Thousand Three Hundred Thirty Pesos 00/100 M.N.) up to $124�660,000.00 pesos (One Hundred Twenty Four Thousand Six Hundred Sixty Pesos 00/100 M.N.)

-Disqualification of 3 months up to 10 years.

In all cases the authority must take into account: the gravity of the infringement; the economic capacity of the offender; his degree of participation, and; the amount of the benefit obtained.

The powers of the authority to impose sanctions prescribe in a period of ten years.

The LFACP provides benefits to those who declare their offenses and cooperate with the investigation conducted by the authority.

III. CONCLUSION

The LFACP is a law aimed towards the prevention and punishment of corruption in public procurement both in national and international transaction. It is an effort to prevent the waste of economic resources make public governance more efficient, seeking public procurement procedures to be more objective.

The aforementioned shows that this law in a measure that seeks to promote and gives legal certainty to investors and taxpayers, and, if it is correctly applied by the authorities and citizens, it can result in a great economic and social benefit to our country.

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For additional information, you may contact any of the members of our Corporate & Business Practice Team.