North America Overview

By late 2020, things were looking up for the North American relationship – the special bond between Canada, the United States and Mexico. The US-Mexico-Canada Agreement (USMCA, or T-MEC by its Spanish acronym) entered into force on 1 July 2020 and replaced its predecessor, the North American Free Trade Agreement (NAFTA). Months later, in January 2021, US President Joseph R Biden, Jr came into office promising to reshape US foreign policy, including forging closer bonds with its North American neighbours, Canada and Mexico.[2]

Yet, a year into his presidency, the Biden administration’s attention – and that of the world – turned instead towards eastern Europe. The global response to the illegal Russian invasion and annexation of Ukrainian[3] territory, which began in early 2022, has largely dominated the international law enforcement co-operation agenda. In the immediate aftermath of the invasion, countries around the world, led by the United States and Europe, came together to impose arguably the most robust and systematic inter­national sanctions ever imposed on a nation.[4] Although the Ukrainian crisis has demonstrated the true value of international law enforcement co-operation on issues such as sanctions enforcement and cross-border asset location and forfeiture actions, at least from a United States perspective, the crisis has consumed much of the proverbial oxygen in the room on foreign policy issues.

The developments highlighted in this overview reflect the need and importance of refocusing foreign policy and law enforcement co-operation efforts on that critical North American relationship. Continued close co-operation between the North American partners is essential to all three countries’ human rights, economic, environmental and security interests.

Co-operation between United States and Mexico

Bicentennial Framework for Security, Public Heath, and Safe Communities

In October 2021, the United States and Mexico held a high-level security dialogue, during which they agreed to enter into a US–Mexico Bicentennial Framework for Security, Public Heath, and Safe Communities (the Framework). This Framework, which resulted from high-level negotiations between a US delegation involving the Departments of State, Homeland Security, Justice and Treasury, and Mexican President Andrés Manuel López Obrador and his cabinet, focuses on three key goals:

  • Protect our people: The two governments agreed to take steps focused on (1) public health, including the prevention and reduction of substance abuse, (2) supporting safe communities, including ‘reduc[ing] exploitation of vulnerable people and criminal groups’, and (3) reducing homicide and high-impact crime.
  • Prevent transborder crime: The governments agreed to take steps in four areas, with the aim of diminishing the capacity of transnational criminal organisations (TCOs) and preventing the trafficking of drugs, arms, wildlife and people:
    • securing modes of travel and commerce at air, land, sea, and rail ports of entry;
    • reducing arms trafficking through information sharing and greater co-operation in law enforcement;
    • disrupting the capacity of TCOs and their illicit supply chains – that is, to reduce drug sales capacity and prosecute corruption cases and TCO-related crimes, with a focus on drug laboratories and precursor chemicals; and
    • identifying, targeting and dismantling human smuggling and human trafficking organisations.
  • Pursue criminal networks: The governments identified three main areas of focus: (1) disrupting illicit financiers – including by ‘enhance[ing] information-sharing to combat money laundering related to illicit activities; identify[ing], freez[ing], and seiz[ing] assets of criminal actors involved in corrupt activities; indict[ing], arrest[ing], and extradite[ing] key financial facilitators’; (2) strengthening the capacity of security and justice-sector actors to investigate and prosecute organised crime, including in respect of cyberspace threats; and (3) increasing co-operation on extradition.

The United States and Mexico announced that cabinet officials from each country will meet annually to advance implementation of the new Framework, while sub-cabinet officials work toward these goals year-round.

Legal and legislative developments

Mexico’s anti-corruption referendum fails due to lack of voter participation

In late July 2021, Mexican voters faced a referendum at the behest of President Andrés Manuel López Obrador, which asked whether ex-government officials should be subject to investigation and prosecution for allegations of impunity and corruption. However, the referendum, a key component of the President’s promises to crack down on graft and government impropriety, drew a paltry voter turnout of 7 per cent, well below the 40 per cent turnout threshold required for the referendum result to be legally binding. Notably, of the limited voters who did take part, more than 98 per cent voted in favour of the measure.

Mexico suffers anti-corruption setbacks

The failed referendum represents another setback for anti-corruption efforts in Mexico, which some critics have argued have been undermined by the President himself.[5] Indeed, by most accounts, Mexico is experiencing a backwards slide on corruption issues. The 2022 Capacity to Combat Corruption Index, published jointly by Americas Society and Council of the Americas and Control Risks, had Mexico falling to 12th of the 15 Latin American countries with respect to corruption issues. The authors described this as one of the highest declines in the index, noting that ‘the country experienced setbacks in all categories, but the steepest decline was within democracy and political institutions’.[6]

Recent cross-border interactions

Charges against former Mexican minister

On 15 October 2020, officials from the US Drug Enforcement Administration arrested former Mexican Defence Minister, General Salvador Cienfuegos Zepeda, who was accused by the US authorities of taking bribes in exchange for protecting drug cartel leaders.[7] According to the US Department of Justice, the evidence against General Cienfuegos – allegedly known as El Padrino or the Godfather to the cartels – was ‘overwhelming’.

In mid-November 2020, US authorities returned General Cienfuegos to Mexico, after Mexican authorities had promised to bring the full weight of the Mexican justice system to bear in the case. At the time, the Attorneys General of the United States and Mexico issued a joint statement heralding the close co-operation between law enforcement agencies in the two countries:

In recognition of the strong law enforcement partnership between Mexico and the United States, and in the interests of demonstrating our united front against all forms of criminality, the U.S. Department of Justice has made the decision to seek dismissal of the U.S. criminal charges against former Secretary Cienfuegos, so that he may be investigated and, if appropriate, charged, under Mexican law. At the request of the Fiscalía General de la República, the U.S. Department of Justice, under the Treaty that governs the sharing of evidence, has provided Mexico evidence in this case and commits to continued cooperation, within that framework, to support the investigation by Mexican authorities. Our two countries remain committed to cooperation on this matter, as well as all our bilateral law enforcement cooperation. As the decision today reflects, we are stronger when we work together and respect the sovereignty of our nations and their institutions. This close partnership increases the security of the citizens of both our countries.[8]

Immediately after the General’s return to Mexico, in January 2021, Mexican authorities announced that they would not bring charges against him.

Other high-profile investigations

Mexico launches historic anti-corruption probe against former president

In July 2022, Mexican prosecutors announced that they had launched a criminal investigation against former president Enrique Peña Nieto, who led Mexico from 2012 to 2018.[9] The Mexican Treasury Ministry reported that it had detected ‘a scheme through which a former president received economic benefits’ and referred the matter to the Mexican Attorney General’s Office. The Treasury reported that Mr Peña Nieto allegedly received approximately US$1.3 million in bank transfers from a relative within a company that the Treasury said had ‘fiscal and financial irregularities’. One of the firms at issue allegedly maintained a ‘symbiotic’ relationship with a company that received approximately US$500 in government contracts from Mexico during Mr Peña Nieto’s term in office.

Mr Peña Nieto has not been charged, but if he were, he would be the first Mexican president ever to face public corruption charges.

Co-operation between United States and Canada

Efforts to impose wide-ranging sanctions on Russia

In February 2020, leaders from Canada and the United States joined counterparts from Australia, Germany, France, Italy, Japan, the United Kingdom and the European Commission to launch the Russian Elites, Proxies and Oligarchs Task Force. The task force, which the US Department of Justice described as ‘consisting of Finance Ministry and Justice or Home Ministry in each member jurisdiction’, entailed all participants ‘committ[ing] to using their respective authorities in concert with other appropriate ministries to collect and share information to take concrete actions, including sanctions, asset freezing, civil and criminal asset seizure, and criminal prosecution’.[10]

Legal and legislative developments

Canada has taken a number of measures in response to Russia’s invasion of Ukraine, under the Special Economic Measures Act (SEMA), among others. Interestingly, SEMA was recently amended to enable the Canadian Minister of Foreign Affairs to apply to a court for an order forfeiting a sanctioned person’s property situated in Canada. Previously, SEMA only allowed for property to be seized or frozen, but not forfeited. The new asset forfeiture power is supported by amendments allowing government bodies to share, collect and compel the disclosure of information relevant to an order under section 4 of SEMA. In addition, the amendments now permit the government to direct the proceeds of a forfeiture to be remitted for reconstruction purposes, for restoration of international peace and security, or to victims.

Other high-profile investigations

Company and senior executives charged with fraud and forgery

Montreal-based engineering and construction firm SNC-Lavalin has faced several anti-corruption and fraud probes in Canada. Most recently, in September 2021, the Royal Canadian Mounted Police (RCMP) charged SNC-Lavalin with fraud and forgery, and arrested two of its former vice presidents, Normand Morin and Kamal Francis,[11] in connection with conduct occurring between 1997 and 2004 to obtain a contract to refurbish a significant bridge in Montreal, a project valued at more than US$100 million. At the time, SNC-Lavalin’s chief executive officer reported that it was the first company to receive an offer to negotiate for the settlement of charges under the new deferred prosecution agreement legislation passed in Canada.

On 6 May 2022, the firm announced that it had concluded a settlement and remediation agreement with the Quebec Crown Prosecutors’ Office, pursuant to which it would pay approximately US$22.5 million over a three-year period to settle its role in the bridge project scandal. A week later, Quebec’s Superior Court approved the settlement and imposed a three-year compliance monitorship for SNC-Lavalin, appointing two Blake Cassels & Graydon partners to this role.

Company and four individuals charged with international corruption

On 21 September 2022, the RCMP announced that Ultra Electronics Forensic Technology Inc (Ultra Electronics), a Montreal-based company and four of its former executives are facing charges of bribery and fraud under the Corruption of Foreign Public Officials Act and the Criminal Code.[12] The charges come as a result of a long-running investigation initiated in August 2018 by the National Division RCMP Sensitive and International Investigations section. The company and each of the four individuals were charged with two counts of bribery of a foreign public official and one of defrauding the public. Canadian authorities have alleged that the corporation and the accused individuals directed local agents in the Philippines to bribe foreign public officials to influence and expedite a multimillion-dollar contract.

On 29 September 2022, Ultra Electronics announced that it has agreed to a remediation agreement (akin to a deferred prosecution agreement in the United States or the United Kingdom) with the Public Prosecution Service of Canada to resolve the claims. The settlement, which does not involve or implicate the four former executives of Ultra Electronics, still requires the approval of the Quebec Superior Court.


Footnotes

[1] Michael S Diamant is a litigation partner at Gibson, Dunn & Crutcher LLP in Washington, DC.

[2] See, e.g., Duncan Wood and Alexandra Helfgott. ‘Seeking Process and Predictability: An Evaluation of U.S.-Mexico Relations Under President Biden’ (24 January 2022), The Wilson Center (discussing the ‘high expectations for the U.S.-Mexico relationship in January 2021 when President Joe Biden took office’).

[3] See, e.g., International Court of Justice, press release, ‘Allegations of Genocide under the Convention on the Prevention and Punishment of the Crime of Genocide (Ukraine v. Russian Federation): The Court indicates provisional measures’ (16 March 2022).

[4] ‘Are Sanctions on Russia Working?’, The Economist (25 August 2022), https://www.economist.com/leaders/2022/08/25/are-sanctions-working (last accessed 9 November 2022) (‘Since February America, Europe and their allies have unleashed an unprecedented barrage of prohibitions covering thousands of Russian firms and individuals. Half of Russia’s $580bn of currency reserves lies frozen and most of its big banks are cut off from the global payments system.’).

[5] See, e.g., Shannon K O’Neil, ‘Mexico’s Democracy Is Crumbling under AMLO’, Council on Foreign Relations (10 March 2022), https://www.cfr.org/article/mexicos-democracy-crumbling-under-amlo (last accessed 9 November 2022).

[6] Brendan O’Boyle, ‘Mexico, Brazil Fall behind in anti-corruption efforts, ranking shows’, Reuters (22 June 2022), https://www.reuters.com/world/americas/mexico-brazil-fall-behind-anti-corruption-efforts-ranking-shows-2022-06-22/ (last accessed 9 November 2022).

[7] Oscar Lopez, ‘Mexico Exonerates Ex-Defense Chief Who Was Freed by the U.S.’, The New York Times (14 January 2021), https://www.nytimes.com/2021/01/15/world/americas/mexico-defense-minister-cienfuegos.html (last accessed 9 November 2022).

[8] US Department of Justice (DOJ), press release 22-241, ‘U.S. Departments of Justice and Treasury Launch Multilateral Russian Oligarch Task Force’ (16 March 2022), https://www.justice.gov/opa/pr/us-departments-justice-and-treasury-launch-multilateral-russian-oligarch-task-force (last accessed 9 November 2022).

[9] Mary Beth Sheridan and Gabriela Martínez, ‘Mexico announces corruption probe into ex-president Peña Nieto’, The Washington Post (7 July 2022), https://www.washingtonpost.com/world/2022/07/07/mexico-pena-nieto-corruption (last accessed 9 November 2022).

[10] US DOJ, press release 22-241, op. cit. note 8.

[11] At the time of writing, the case against Morin and Francis remains ongoing, and they are presumed innocent until and unless proven guilty.

[12] Royal Canadian Mounted Police, news release, ‘RCMP foreign corruption investigation results in charges against Montreal-based company’ (21 September 2022), https://www.rcmp-grc.gc.ca/en/news/2022/rcmp-foreign-corruption-investigation-results-charges-montreal-based-company (last accessed 9 November 2022).

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