Anti-corruption legislation promoted by President López Obrador threatens to trigger a brain drain from Mexico’s banking and securities regulator.
The so-called “revolving door” bill, which seeks to ban high-ranking public officials from taking jobs with companies they regulated for a period of 10 years, will be considered by the lower house of Congress this month. The proposed law has already been revised by the Senate.
Leaders from the ruling Morena party, which leads a coalition with a majority in both houses of Congress, have said that passing the bill is a priority for the fall session.
López Obrador has called the revolving door between government and the private sector a “cancer of corruption.”
Introducing the proposal in February, he described the employment of former high-ranking officials in private companies shortly after they leave public office as “immoral and a shame.”
But many senior officials of the National Banking and Securities Commission (CNBV), which has been criticized for maintaining cozy relationships with the private sector, believe that a 10-year ban is too harsh.
According to a dozen current and former CNBV employees who spoke to the news agency Bloomberg, many high-level workers have indicated that they will quit should the law take effect.
Some have already penned resignation letters that they keep in their pockets to submit as soon as the law is approved, Bloomberg said.
About one-fifth of CNBV employees have already resigned since López Obrador took office and slashed the salaries and benefits of high-ranking officials. A further exodus of workers would further weaken the regulator that oversees Mexico’s entire banking and financial sector.
“It would be devastating to the regulator,” said former CNBV official Mauricio Basila, referring to the likely approval of the 10-year ban. “The best people would leave rather than stay.”
Sources told Bloomberg that the pace of banking audits, the drafting of new regulations and the approval of licenses have all slowed since the departure of officials who were unhappy about the pay cuts they were forced to take.
A second wave of resignations stemming from approval of the “revolving door” legislation could diminish CNBV’s capacity to ensure the stability of the banking system and prevent fraud, cyberattacks and money laundering, the sources said.
Iván Alemán, a financial consultant and former CNBV official who was responsible for money laundering prevention, said that weaker regulation will lead to greater risk taking across Mexico’s financial sector.
“Once financial entities see that auditing by inspection has relaxed, they will loosen their own controls,” he said.
Craig Holman, a government affairs lobbyist for Washington-based consumer advocacy organization Public Citizen, told Bloomberg that a 10-year ban on officials taking jobs in companies they regulated is tough but “certainly not too harsh.
“The revolving door is one of the most pernicious influence-peddling schemes that plagues governments everywhere,” he said.
However, others took a different view.
“Ten years is just way too harsh,” said Nalleli Arias, a former CNBV deputy director of money laundering prevention who left the regulator last year after hearing rumors about the private sector restrictions.
Jacobo García, a public integrity expert at the OECD, said that eradicating corruption is essential but suggested that establishing effective controls would be a better strategy than imposing lengthy private sector employment bans.
“The sources of potential conflicts of interest need to be well regulated but it is important that there is a balance between reasonable restrictions and the job possibilities of public servants,” he said.
Source: Bloomberg (en)