President Donald Trump is expected to direct the Justice Department to pause enforcing the Foreign Corrupt Practices Act, which prohibits U.S. companies from bribing officials of foreign governments to advance their business interests.
He is expected to sign an executive order outlining the change in U.S. policy on Monday afternoon, according to media reports.
The White House could not be immediately reached for confirmation.
Bloomberg News reported that the pause will be until new enforcement guidelines can be issued, citing a fact sheet on the executive order. The administration said it wants to ensure U.S. companies aren’t at a disadvantage to overseas competitors.
“U.S. companies are harmed by FCPA overenforcement because they are prohibited from engaging in practices common among international competitors, creating an uneven playing field,” the fact sheet says, Bloomberg reported.
Trump is directing Attorney General Pam Bondi to pause actions under the FCPA until she issues new enforcement guidelines. The administration is also planning to review current and previous actions, Bloomberg said.
Harry Sandick, a partner in Patterson Belknap Patterson Belknap Webb & Tyler LLP’s white collar defense and investigations team and a former Assistant U.S. Attorney for the Southern District of New York, told Barron’s in an email that the president ceasing all enforcement of the FCPA would be “unprecedented,” saying: “Historically, both parties have agreed that enforcement of the FCPA is an important priority.”
He said the concerns about global corruption that spurred Congress to pass the FCPA in 1977 “remain valid,” and that the decline in global corruption over time is likely partially because of “the threat of FCPA prosecutions, which have given compliance officers and in-house lawyers more authority to insist on change within global corporations.”
The Foreign Corrupt Practices Act, enacted in 1977, makes it illegal for certain people, entities, and certain foreign issuers of securities to make payments to foreign government officials to assist in obtaining or retaining business.
It prohibits using the mail or any other instrument of interstate commerce to offer, pay, promise to pay, or authorize the payment of “money or anything of value” knowing that all or some of it will go to a foreign official to influence the foreign official to do or not do something in violation of their duties, or to secure an improper advantage to help obtain or retain business.
Those who violate the FCPA or Foreign Extortion Prevention Technical Corrections Act, which prohibits foreign officials from corruptly demanding, seeking, receiving, accepting, or agreeing to receive payments in return for obtaining or retaining business, can face up to 15 years in prison and a maximum fine of $250,000 or three times the monetary value of the bribe demanded by the foreign official.
Richard Bistrong, CEO of Front-Line Anti-Bribery LLC in Connecticut, told Barron’s that the things to keep an eye on are the impact on the Federal Bureau of Investigation’s international corruption units, and the Justice Department’s trial and line prosecutors who have FCPA expertise.
Not only was the U.S. one of the first countries to create an anti-foreign corrupt practices law, but it has recovered billions of dollars from enforcing the law. “Anti-bribery enforcement is now global,” he said, and international corporations have become very mature about their global compliance. Bistrong said this is the first time since the FCPA was enacted that it has been formally paused.
As someone who pleaded guilty to FCPA offenses and served time in prison for those violations, Bistrong questioned the Trump administration’s assertion that complying with anti-bribery laws puts American companies at a competitive disadvantage. He expects most U.S. corporations will not adjust their compliance policies in response to the change.
One of the memos Bondi issued on Feb. 5 said Trump wanted the federal government to revise its existing national security and counter-narcotics strategies to pursue “total elimination of Cartels and Transnational Criminal Organizations,” including by shifting the focus of the Criminal Division’s Foreign Corrupt Practices Act Unit to prioritize investigations related to foreign bribery that facilitates the operations of Cartels and TCOs, and “away from investigations and cases that do not involve such a connection.”
Law firm Holland & Knight in a blog called that update “a game-changer for attorneys counseling companies responding to FCPA inquiries,” saying that alleged foreign corruption would be analyzed according to whether it had any connection to “narcotics trafficking, money laundering, human trafficking, or other forms of violence.” Foreign bribery connected to “for example, bribing a foreign official to procure a multimillion-dollar energy contract or bribing a foreign official to maintain a lucrative airport concession – will receive fewer resources and less attention.”
