Trump's FCPA Order Won't Change Much for Large Companies, Lawyers Say
President Donald Trump's recent executive order halting prosecutions under the Foreign Corrupt Practices Act likely won't change the behavior of many companies, given the risk of prosecution globally or in the U.S. after Trump leaves office, lawyers said.
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Reid Whitten, partner at Sheppard Mullin, told us that smaller companies may feel emboldened to pursue more aggressive bribery tactics internationally, but that multinational corporations will stick to the status quo.
"Companies aren't going to be opening up bribery departments unless and until the law changes," Whitten said, noting that the FCPA law remains on the books even if Trump chooses not to enforce it.
Attorneys at Ropes & Gray said in an alert that Trump's executive order didn't touch existing guidance on FCPA compliance, which details an "expectation that companies will continue to conduct internal investigations and work to mitigate risk." The alert also noted that the order, which instructs the attorney general to reassess FCPA enforcement policies to increase U.S. companies' competitiveness internationally (see 2502110045), doesn't address the actions of foreign companies.
Ropes & Gray said this could "suggest the trend of significant FCPA cases involving non-U.S. companies and individuals will continue," particularly in industries of "key strategic competition."
Whitten also highlighted the divide between U.S. and non-U.S. companies when it comes to FCPA enforcement, noting that U.S. companies may take the move as a signal that they can bribe to boost their competitiveness because FCPA enforcement has traditionally roped in non-U.S. firms.
Whitten added that the order injects more confusion when it comes to the administration's enforcement priorities, particularly given the language calling out the president's power under Article II of the U.S. Constitution to regulate foreign affairs to make the change. Whitten suggested that the White House could further use its authority to selectively prosecute FCPA violations in special cases.
He also said the FCPA could be wielded in a way that appeases the personal business proclivities of Trump or those around him. Whitten provided a hypothetical scenario wherein a European rocket company wins a government contract abroad through bribery, then Elon Musk leans on Trump and the U.S. attorney general to prosecute the company for an FCPA violation.
"Personal preferences become presidential policy," he said. "This is why I would, if I were a non-U.S. company, I'd be like, 'I'm still going to do all the FCPA blocking and tackling that I need to do.'"
Rep. Raja Krishnamoorthi of Illinois, the top Democrat on the House Select Committee on China, sent a letter to the American Chamber of Commerce in China this week warning its members that Congress will investigate any FCPA violations, even if DOJ doesn't. "Should an American business decide to try to take advantage of this pause in FCPA enforcement, they should not be surprised to hear from Congress," he said.
Krishnamoorthi specifically noted that the FCPA includes up to a six-year statute of limitations, "which outlasts any pause triggered by" Trump's order. "Any company contemplating relying on the recent executive order to loosen internal policies or procedures regarding improper payments to government officials in the PRC should think twice."
Both Whitten and the Ropes & Gray attorneys also highlighted the ability of foreign authorities to prosecute foreign bribery and corruption, though Whitten noted that what made U.S. prosecutorial efforts more noteworthy were their extraterritorial reach. Whitten said that foreign anti-bribery laws, such as the U.K. Bribery Act or Sapin II in France, will allow for the continued prosecution of foreign corruption both as a moral and an economic violation.
The Ropes & Gray alert noted that Trump's executive order "does not explicitly impact the [Securities and Exchange Commission (SEC)], which civilly enforces the FCPA against publicly traded companies," though it said it's "unclear how the SEC will react to the EO."
Ropes & Gray also speculated that, due to the language in the order calling out specific sectors such as "critical minerals" and "deep-water ports," as well as Trump's general enforcement priorities, the FCPA could be used more frequently as a tool for "criminal enforcement in related areas, such as sanctions enforcement." Whitten agreed, pinging Azerbaijan as an example of a state where bribes are frequent and the government has ties to the Iran Revolutionary Guard Corps.