On February 10, 2025, President Trump signed an Executive Order (EO)1 directing the U.S. Attorney General to review the guidelines and policies governing investigations and enforcement actions under the Foreign Corrupt Practices Act (FCPA) on the basis that current enforcement of the FCPA impedes U.S. foreign policy objectives.
During the mandated 180-day review period, the EO ordered that:
- The initiation of any new FCPA investigation or enforcement action is ceased, unless the Attorney General determines that an exception should be made;
- All existing FCPA investigations or enforcement actions are to be reviewed by the Attorney General in light of the objectives stated in the EO; and
- The Attorney General is required to issue updated guidelines to promote the President's authority to conduct foreign affairs and prioritize American interests and American competitiveness with respect to other nations.
The EO also authorized the Attorney General to extend the review period by an additional 180 days if necessary.
Background on FCPA
The FCPA was adopted in 1977, and, in general terms, prohibits public companies, private companies and individuals from making corrupt payments to foreign officials to obtain or retain business. It also contains accounting provisions that require public companies to keep accurate books and records and to maintain an adequate system of internal accounting controls. In short, it would be a violation of the FCPA for a public company to record an expense as a consulting fee, when the expense was actually a bribe or gratuity.
At the time of its adoption, the U.S. House of Representatives stated:
The payment of bribes to influence the acts or decisions of foreign officials, foreign political parties or candidates for foreign political office is unethical. It is counter to the moral expectations and values of the American Public. But not only is it unethical, it is bad business as well. It erodes public confidence in the integrity of the free market system. It short-circuits the marketplace by directing business to those companies too inefficient to compete in terms of price, quality or service, or too lazy to engage in honest salesmanship, or too intent upon unloading marginal products. In short, it rewards corruption instead of efficiency and puts pressure on ethical enterprises to lower their standards or risk losing business. Bribery of foreign officials by some American companies casts a shadow on all U.S. companies.2
In response to the FCPA and the DOJ's published Principles of Federal Prosecution of Business Organizations,3 many companies developed robust compliance programs4 and codes of conduct that promote ethical behavior, often with the guidance of legal counsel, and have devoted significant resources to administering such programs.
The Fate of Anti-Bribery Compliance Programs
It is not unusual for the enforcement priorities of the Justice Department to change under a new presidential administration; and over the years, enforcement of U.S. anti-trust laws has evolved. While this new EO is expected to change how the FCPA is enforced, it is difficult to anticipate the extent of this shift until the Attorney General's review is completed and updated guidelines are issued.
Until then, companies may want to consider continuing with their existing compliance programs and anti-bribery policies. If FCPA enforcement is relaxed in the future, additional factors to consider before updating any compliance policies and programs include:
- Other Anti-Bribery Laws. Companies with international operations may be subject to other anti-bribery laws such as the UK Bribery Act.
- Impact on Corporate Brand. Organizations spend millions of dollars developing brands and protecting them against infringement, counterfeiting and reputational harm. A single piece of news (regarding bribery or corruption) about an organization can easily go viral in minutes, resulting in significant damage to a company's brand that may take years, even decades, to repair.
- Competitive Advantage. Being recognized as an organization that promotes integrity as central to its core values and mission has other benefits. Integrity is attractive to both employees and customers. In a competitive situation when product quality and price are equal, many customers and vendors will choose the company with the solid reputation.
Footnotes
1. Executive Order: "Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security"/p>
2. Excerpt from "A Resource Guide to the U.S. Foreign Corrupt Practices Act, Second Edition," published by the Criminal Division of the U.S. Department of Justice and the Enforcement Division of the U.S. Securities and Exchange Commission
3. DOJ Manual 9-28.000
4. Including (a) adopting ethics policies and codes of conduct that prohibit bribery; (b) appointing a compliance officer; (c) conducting training for employees and sales agents; (d) maintaining confidential hotlines for reporting violations of law or a company's policies; (e) vetting third party agents and others who represent the company with government officials; and (f) establishing supplier codes of conduct.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
