Combating corruption in Mexico

Co-author: Allena Martin

On July 1, Mexico elected a new president, Andrés Manuel López Obrador, who campaigned on a vow to end corruption, bring down the “mafia of power,” recover billions of dollars lost to corruption and waste, and battle Mexico’s entrenched inequality. Although it remains to be seen whether Mr. López Obrador will act on his campaign promises, in his election-night victory speech he reiterated his pledge to root out corruption and take concrete actions, such as reviewing energy contracts for signs of corruption.

A month before the election, leaders from Mexico’s business sector and civil society candidly discussed the country’s progress and the current status of anti-corruption reforms at an event in Washington, DC hosted by the Inter-American Dialogue.

Much of the discussion revolved around the National Anti-Corruption System (SNA), an entity created in 2016 and charged with coordinating anti-corruption efforts across Mexico. Two years later, major gaps persist in implementing the SNA on the national level, and state-level implementation varies widely. The national system lacks several key components, including a national prosecutor and 18 magistrate judges who will specialize in corruption cases.

The SNA has the potential to be a powerful weapon against corruption in Mexico, but the serious gaps in implementation mean the success of the system is largely in the hands of the next generation of newly-elected leaders. The speakers at the Washington event emphasized that the election results and the political will of the next president will largely determine whether progress is made against widespread corruption.

Mexico is currently ranked 135 out of 180 countries (falling 62 places in 9 years), and last among OECD countries, in Transparency International’s 2017 Corruption Perceptions Index. There are now 14 current or former governors under investigation for corruption, and a recent public opinion poll ranked corruption the second-most significant challenge facing the country. It is thus no surprise that corruption was an important topic in the 2018 elections.

Looking to the Future: Challenges & Uncertainty

• The election is crucial. The effectiveness of the anti-corruption reforms will largely depend on the political will of the new president and Congress.
• The SNA reforms are a solid foundation, but if the next administration ignores or dismantles them, nothing is likely to change.
• There is also some concern that the new administration may not investigate recent corruption.
• Although it was a frequent campaign topic, no electoral candidate made a direct commitment on how to fight corruption.
• Five Greatest Challenges. The speakers at the Washington event proposed the following solutions to the five greatest obstacles to fighting corruption in Mexico:

1. Unfilled positions within the SNA require nominees that are “clean” and dedicated to the people and the rule of law.
2. The new National Prosecutor’s Office needs to be properly staffed and funded, and have sufficient independence so it can operate as intended.
3. Within the state system, power must be decentralized from local politicians with too much power who are able to prevent effective anti-corruption efforts.
4. The new administration needs to pass more (and better) laws to fight corruption.
5. The new government needs to be publically dedicated to anti-corruption in both the presidential administration & the Congress.

Time will tell whether Mr. López Obrador acts on his campaign promises and how. In the meantime, it is a good time for companies operating in Mexico to review their own anti-bribery compliance policies and have a clear understanding of all potential risks (and opportunities) that a stricter policy in this sense may have.