Mexico Industry Set for Fight as Congress Passes Graft Bill

  • Ruling PRI voted to limit politicians’ asset declarations
  • Lawmakers want all government contractors to declare assets

Mexico’s fight against widespread corruption is putting the nation’s leading business groups on a collision course with President Enrique Pena Nieto’s party after key legislation was passed in the lower house on Thursday.

In a session that lasted 10 hours, lower house lawmakers approved a bill that will require people and companies that do business with the government to declare to public auditors their assets. The bill now needs to be signed into law by Pena Nieto. In the same vote, legislators pushed off the decision over whether public servants will need to disclose details of their own assets publicly and instead need only to declare them to an oversight panel.

The bill is part of a broader set of legislation under discussion that has fueled an acrimonious dispute between the ruling Institutional Revolutionary Party, opposition lawmakers and local industry, which claim Thursday’s vote was an ’act of revenge’ in response to their efforts to hold politicians more accountable.

It’s a risky strategy for the government ahead of presidential elections in 2018, said Alejandro Schtulmann, who heads Mexico City-based political risk group Empra. Pena Nieto’s approval rating, down to 30 percent in April from 48 percent a year earlier, has been hit already by corruption scandals, while his party was roundly defeated in gubernatorial elections earlier this month.

“This is about threatening the private sector,” said Gustavo de Hoyos, president of Coparmex, one of Mexico’s largest business trade groups, whose members include Cemex SAB and Grupo Bimbo SAB. Coparmex held a rally Thursday in downtown Mexico City to protest the legislation.

Potential Backlash

Thousands of companies are hired by the government and local administrations every year to carry out works ranging from water treatment to building bridges. The bill, if ratified by the president, would mean that everyone in these companies will have to file asset declarations as well as a list of any possible conflicts of interest, starting a year after the bill becomes law.

“Definitely from the business sector there’s going to be a backlash against the PRI in 2018,” Schtulmann said.

The peso strengthened 0.7 percent to 18.8112 per dollar at 12:11 p.m. in Mexico City.

The anti-corruption legislation was pushed into congress by citizens’ groups that gathered more than half a million signatures amid widespread anger at corrupt politicians.

Changes to the original text of the bill would limit what public servants will have to disclose in their asset declarations, according to some citizen groups. They say this renders the declarations -- a cornerstone of their anti-corruption campaign -- all but useless.

“They are trying to twist what civil society has achieved,” said Marco Fernandez, research associate for Mexico Evalua, one of the citizen groups that gathered signatures. “Clearly they are totally deaf in terms of listening to the citizens’ voice that was already expressed one week ago in the local elections where they received a very harsh punishment.”

Edgar Romo Garcia, a PRI lower house lawmaker, called passage of the laws a marked advance against corruption, according to a statement from the chamber’s press office.

(A previous version of this story was corrected to show that the bills were passed in the lower house.)

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