Is the U.S. Foreign Corrupt Practices Act Dead?
Should you stop trying to prevent bribery by your employees?
It’s been over two months since president Trump signed an executive order criticizing “overexpansive and unpredictable FCPA enforcement against American citizens and businesses … for routine business practices in other nations,” saying that FCPA enforcement “actively harms American economic competitiveness … .” Enforcement actions under the Foreign Corrupt Practices Act by the U.S. Department of Justice and Securities and Exchange Commission have been paused pending a review by attorney general Bondi. And the Justice Department has dismissed several “white collar crime” prosecutions.
Is the dust beginning to settle, and how should multinational companies respond? Can they open up the spigots of illicit money? Or pay a few targeted bribes where it “really important?” Can they at least relax internal compliance efforts?
The pretty clear answer is “stay the course.” Here’s why:
- Many other countries have strong anti-corruption laws that they will continue to enforce. If you have a subsidiary or affiliate in one of those countries, or employ their citizens, you are still at risk.o A growing number of countries where bribery has been routine have strengthened their anti-corruption laws.
- Although president Trump says, in effect, that corruption is good for business, much of the rest of the world disagrees. Other countries may increase their enforcement efforts in response to the U.S. Indeed prosecutors in Switzerland, France, and the U.K. are creating an international anticorruption task force to strengthen international cooperation on enforcement. Other countries will have opportunities to join.
- The U.S. government has five years or more to prosecute FCPA violations, and the current policy may well change. The law is still on the books.
- If you ease up your compliance efforts to enable bribery of foreign officials that you want, you are likely also to enable commercial bribery within your company, including bribery of your employees by suppliers, as well as bribery of American officials, which remains illegal under federal and state law.
- It is extremely difficult to weaken only one pillar of your compliance efforts without weakening the whole.o If you exempt illegal bribery from your expectations that employees follow the law, you increase the risk that they will commit other crimes in your name.
o The U.S. government is still prosecuting other crimes that your compliance program should target. Just last week the Justice Department announced with some fanfare a $1.6 billion fine against a Toyota subsidiary for importing engines that did not meet emissions standards and falsifying records.
- There are hints in the Executive Order that the U.S. may continue to prosecute foreign companies under the FCPA. Non-U.S. companies, and even U.S. companies that the current administration disfavors, remain at risk. For example, an American company that does most of its manufacturing overseas and declines invitations from this administration to move factories to the U.S. might not be helped by this new policy.
- The Justice Department has not stopped prosecuting corporate crime altogether. The DoJ press room updates in early April include prosecutions for money laundering, various business frauds, and environmental crimes.
Will Donald Trump make bribery great again? It would be dangerous to be first in line to find out.
[i] The attitude that the FCPA hurts American competitiveness was common when the law was first adopted in 1977. Executives pointed out that other countries encouraged their companies to get business by any means possible, and that foreign bribes were explicitly tax deductible, for example in France. The world’s attitudes toward bribery have changed dramatically in the past half century.
[ii] Many countries have prohibited foreign bribery, and some countries where bribery has been a “routine business proactive” continue to strengthen their laws and enforcement against local bribery. If the president thinks that there’s a uniform appetite in developing countries for more corruption, he’s mistaken. One company that recently put a stop to ongoing bribery in a country that the president might have been describing was told by senior officials, “It will be so nice to work with your company without the bribery.” Can president Trump reverse this global trend? I’m not so sure.
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