Compliance Programs: New Requirements to Obtain Contracts with PEMEX
The companies that seek to contract with Petróleos Mexicanos (PEMEX) will need to have an effective compliance program on account of the new regulation approved by the company’s board.
On May 18, 2018, the General Hiring Dispositions for Petróleos Mexicanos and its state owned productive companies were published in the Federal Gazette, which apply to all contracting that PEMEX and its state owned productive companies carry out.
The General Dispositions establish that generic model contracts will exist, as well as obligatory clauses for the different hirings. In this way, such contracts shall contain as a minimum, among others, fight against corruption and compliance clauses.
Also, they foresee that the participants, suppliers, contractors and sub-contractors who pretend to maintain or already maintain a commercial relationship with any of the state owned productive companies, shall not only need to know and adopt PEMEX’s compliance program, but will also need to have prevention and compliance programs or systems of their own.
Please note that the compliance program will need to remain in force during the contract period and PEMEX has the power to verify this directly or by means of an authorized third-party. If the companies do not have an established compliance program of their own, they shall need to adhere to PEMEX’s compliance program with the commitment to implement their own program.
A compliance program is one that specifies the policies, procedures and actions of a company within a process to help prevent and detect violations to law and regulations.
In light of the established in the General Dispositions, the companies that do not have a compliance program of their own and pretend to establish or maintain commercial relationships with PEMEX, shall need to create and adopt a compliance program.
We consider that consistent with the Model Program for Company Integrity emitted by the Mexican Ministry of Public Administration based on Article 25 of the General Law of Administrative Responsibilities, the necessary elements to comply with this new obligation and in order to have a comprehensive policy within a company, specific and clear policies need to be included in respect to: (i) hospitality, entertainment, expenses and travel expenses; (ii) donations and social contributions; (iii) prevention of internal fraud, soliciting and extortion; (iv) money-laundering prevention; (v) declaration or commitment of zero tolerance towards corruption; (vi) political donations or contributions; (vii) bribes; (vii) gifts or acknowledgments; (ix) an ethics or conduct code for the employees and conflicts of interest; and (x) compliance of antitrust and competition policies.
The new practices shall need to be converted in to tangible and measurable policies, compliance officers need to be appointed, these policies need to be disseminated throughout the company and will need to be monitored through an effective monitoring system.
At Creel, García-Cuéllar, Aiza y Enríquez we are more than happy to discuss whatever related issue in regards to this new requirement and assess in the elaboration and implementation of robust compliance programs.
Mexico City, June 5th, 2018