Last week President Trump signed an Executive Order pausing enforcement of the nation’s most robust anti-bribery statute, the Foreign Corrupt Practices Act (“FCPA”). The EO seeks a complete overhaul of the FCPA enforcement landscape by directing the following:
- For a (renewable) period of 180 days, the EO bars any new FCPA actions or investigations unless the Attorney General herself makes an exception.
- The Attorney General will conduct a detailed review of existing investigations and actions in light of the objectives of the EO.
- The Attorney General will issue new enforcement guidelines and policies that “prioritize American interests [and] American economic competitiveness with respect to other nations. . .”1
- Any investigations or actions initiated after the review period will have to be authorized by the Attorney General and consistent with the overall administration enforcement priority to eliminate cartels and transnational criminal organizations (TCOs).
- The Attorney General will determine whether remedial actions for past cases are appropriate.
What does this mean for the near future? As for existing investigations and cases, the Attorney General presumably will direct the dismissal or closure of those cases against U.S. companies that do not involve cartels or TCOs. The Attorney General’s review of past cases will likely lead to requesting early termination of existing monitorships or self-reporting obligations. And the new guidelines will direct prosecutions targeting cartels and TCOs, but little else. Very few FCPA cases involve either.
Left unaddressed by the EO is the civil enforcement of the FCPA, which is handled not by DOJ but by the SEC. Although the SEC has not yet issued new guidance on the FCPA or the EO, it is difficult to imagine that civil enforcement would proceed at full steam (or even half steam) given the rollback in criminal enforcement.
The civil aspect of the FCPA includes two accounting provisions—a “books and records” provision and an “internal controls” provision—that prohibit public companies from engaging in off-the-books accounting.2 These provisions have formed the basis of many accounting fraud and issuer disclosure cases where bribery was not present. Because the current administration has determined that enforcing prohibitions on bribery is hindering American competitiveness, we should expect a similar pause on policing related to accounting requirements.
The catch is that this rollback on enforcement might apply only to U.S. companies. The preamble to the EO states that the FCPA has been stretched in a way that “harms the [foreign policy] interests of the United States [in connection with] routine business practices in other nations, . . . actively harms American economic competitiveness and, therefore, national security.” It also explains that American national security depends on “gaining strategic business advantages whether in critical minerals, deep-water ports, or other key infrastructure or assets.” So if a U.S. company engages in bribery to secure “critical minerals,” it would seem that it simply will not face prosecution. At least for now, and at least in the U.S. That said, nearly all of the largest penalties imposed for FCPA violations have been imposed on foreign companies.3
The “at least for now, and at least in the U.S.” is a huge caveat. If the administration effectively excuses U.S. companies from enforcement, we should expect increased enforcement under the UK Bribery Act and numerous other global anti-bribery laws. In addition, the statute of limitations for the FCPA anti-bribery provisions is five years, which can be extended up to eight if foreign legal assistance is requested or in certain other circumstances. So if the next administration changes course, companies that tossed their FCPA compliance may find themselves targeted for enforcement.
