The difficult route of the Rule of Law
2021 not only brought unexpected things but also situations that we no longer expected to see again: two banks lost their license, and a third, of great depth, will change owners. And although these operations began last year, their repercussions will crystallize in 2022. Last year, we expected to see more financial restructuring and not so many M&A, a change that may well herald a more in-depth transformation. Meanwhile, we are witnessing more activity in courts, which persist overcrowded.
Our energy sector specialists report that, instead of supporting new businesses for a beneficial economic benefit for Mexicans, they are advising companies that already have investments in Mexico and seek to defend their acquired rights in contracts against possible drastic changes in the law. and, of course, immediate changes in policies and regulations.
It was a fact that the Federal Government executed a policy of suspension of oil rounds, cancellation of bids, contests, and energy auctions. Likewise, the freezing of permits to develop clean energy and the issuance of a decree to reform the Electric Industry Law to grant a predominant role to the Federal Electricity Commission (CFE), which immediately found itself subject to constitutional controversies.
The pandemic has indeed brought us much greater awareness at all levels. Globally, corporations have continued to embrace a much deeper understanding of social and environmental responsibility. The wounds that the pandemic continues to inflict on us every day are crystallizing into a new type of productive society, which is going to replace that of savage capitalism.
Legislators, companies, final consumers, employees, communities, suppliers, investors, clients, shareholders, regulators, the media, and governments in different parts of the world have a conscience of responsibility that more firmly confronts industrial abuses.
In Mexico, the controversial point consists of accepting or not the government as the only rector and watchdog. As if it was a father as if it was the State itself when there is already a mature society with autonomous institutions that guarantee limits to abuses, for example, the Federal Economic Competition Commission and COFECE. We believe in and faithfully support the social institution that has courageously opposed the attempts at legislation that seek to revive government monopolies in the country's key industries. The world as a whole has already matured toward environmental, social, and corporate governance (ESG) compliance. Mexico does not have to be the exception.
The laws of the countries with the largest economies respond to this call for responsibility. The Constitution and laws of Mexico have also already reached a point of progress in this regard. The autonomy of powers is the only guarantee for a Rule of Law to prevail. Not one of the people, no matter how well-intentioned.
Jorge León Orantes
Partner and Chairman of Santamarina + Steta