Paulina Meixueiro, Amadeo Betancourt, Ignacio Funes, Jorge Silva, Jorge Rangel, Gerardo Escobar, Bernardo Antunez, Alejandro Corral

A business crime in Mexico is any unlawful conduct in which an enterprise is involved. It is penalized by commerce law, securities law and criminal law with monetary or physical punishment to the individual that commits the referred action.

What is a business crime?

Business crimes legislation timeline

1870 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

1st criminal code: liability is limited to people and

their estates (33rd article)

Possibility of suspension or disollution of a

society/group when a partner uses company resources (33rd article

reform)

Only people are subject to consequences.

Special judicial consequences:

suspension, dissollution, prohibition of certain

commercial activities & Intervention

Commercial code structural reforms

Mexico

The Mexican business crime concept:

1. In Mexico, everything is linked to people• People• Corporations & businesses

2. Only people are subject to rights and obligations3. A business can only be accountable as an

accessory to crime4. Penal obligations can only be enforced to people

• Shareholders• Partners• Legal representatives

Corporations Lose Credibility

Customers and investors don’t want to be doing business with the next Enron

• Economic turmoil turned Bull to Bear market• Internet bubble burst, followed by the collapse of the telecommunications industry • Scandals, fraud and record bankruptcies occur• Keepers of corporate integrity fail:• Arthur Andersen

Types of business crimes (White Collar crimes)

Crimes occurring in the business context using non-violent means to obtain personal or business advantage

– Cover up– Bribery– Embezzlement (Malversación)– Fraud– Insider trading– Secrets and unlawful access to systems and

information equipment

Types of business crimes (cont’d)

– Unlawful disposal of hazardous waste & materials

– Unlawful enrichment– Crimes against environment– Copyright breaches– Money laundering– Tax evasion

THERE IS NO REAL TYPIFICATION OF THESE CRIMES, EACH CASE IS

UNIQUE

Why do companies/managers turn to business crimes?COMPLIANCE CONCERNS!!!

• Meeting compliance requirements on time while minimizing financial impact• Improving the ability to access and manage information• Increasing data accuracy • Staying compliant• Avoiding investigation and prosecution

Mexico’s Future

• A new proposal from the government is under discussion:

• We must find a way to avoid the “not-so-bright” cases like:

• FOBAPROA (1995)

• TV Azteca Fraud (Codisco)

• Canal 40

• Commercial law is old and outdated, therefore, a structural reform is urgent.

Mexico’s Future:Sarbanes-Oxley Act

• Set of complex regulations designed to restore confidence in corporations by:

• Granting the SEC increased regulatory power and control over corporations and their advisors

•Increasing the requirements of being a public company

•Increasing criminal and monetary penalties for executives at companies that fail to comply with SEC regulations

Business crimes in Mexico vs USA• Mexico

– Corporations are not criminally liable– Individuals are accountable– No electronic commerce regulation

• USA– Sarbanes-Oxley (Corporate governance)– Corporations are accountable and

subject to legal responsibility– Electronic commerce crime typification

Cyber Crimes

Computer crime: any act directed against computers or that uses computers as instruments of crime.

• Cyber Theft• Financial Crimes• Identity Theft• Cyber Stalking• Hacking and Cyber Terrorism.

New Challenge:

• Defamation Online

• Liability of ISP’s

• Trespass to Personal Property

• Statutory Regulation of Spam

New Business Crimes

What executives should ask when evaluating a technology based solution

• Will the technology:• Improve access to relevant data in a timely manner?• Help to control data integrity?• Enforce informational security?• Be easy to use?• Be scaled-up? • Be implemented within existing business processes?

Construction, services, trade & manufacturing companies in Mexico

assign 10% of their annual income to pay bribes to reduce red tape (31%),

inspections (28%), licenses or permits (25%)

According to the CEI Research President, Arturo del Castillo,

37% of the corruption cases are discovered by accident and only 39% involve legal actions. This

shows how corruption is not perceived as a serious crime.

A research made on Fraud and Corruption Impact on Small and Medium Companies (PYMES) reveals that 35% of the foreign investment is lost due to corruption.

More than 63% of the small and medium companies (PYMES) have been victims of frauds done by their employees and 43% of them have bribed public officers in various levels of the governmental hierarchy.

Facts