Shortly after taking office President Trump signed an executive order titled, "Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security." Among other things, President Trump instructed that the FCPA should not be "stretched beyond proper bounds and abused in a manner that harms the interests of the United States" or enforced in a way that compromises "American economic competitiveness and . . . national security." He further directed the Department of Justice (DOJ) to issue updated FCPA guidance. Earlier this week, the DOJ released that guidance in a memo, titled "Guidelines for Investigations and Enforcement of the Foreign Corrupt Practices Act" (Guidelines).
In the Guidelines, the DOJ announced that the guidance was structured to limit "undue burdens on American" companies operating worldwide and to target "enforcement actions against conduct that directly" compromises the interests of the United States. The Guidelines also instructed prosecutors to (1) "focus on cases in which individuals have engaged in criminal misconduct and not attribute nonspecific malfeasance to corporate structures," (2) ensure their investigations are conducted expeditiously, and (3) "consider collateral consequences, such as the potential disruption to lawful business and the impact on a company's employees, throughout an investigation, not only at the resolution phase."
Additionally, the Guidelines set forth the below non-exhaustive factors prosecutors should consider when assessing whether to proceed with FCPA investigations or enforcement actions.
- Cartels/Transnational Criminal Organizations
(TCOs): Prosecutors should consider "whether the
alleged misconduct (1) is associated with the criminal operations
of a Cartel or TCO; (2) utilizes money launderers or shell
companies that engage in money laundering for Cartels or TCOs; or
(3) is linked to employees of state-owned entities or other foreign
officials who have received bribes from Cartels or TCOs." This
factor stems from President Trump's executive order titled,
"Designating Cartels And Other Organizations As Foreign
Terrorist Organizations And Specially Designated Global
Terrorists." In that order, President Trump noted that cartels
and TCOs are a danger to the Western Hemisphere.
- Safeguarding Fair Opportunities for Companies in the
United States: Prosecutors should assess "whether
specific and identifiable U.S. entities or individuals have been
harmed by foreign officials' demands for bribes." The
Guidelines highlight that bribing foreign officials can place
"law-abiding" companies "at a serious economic
disadvantage," which can compromise "U.S. national
security and economic prosperity."
- Promoting National Security: FCPA enforcement
will "focus on the most urgent threats to U.S. national
security resulting from" bribery "involving key
infrastructure or assets." The Guidelines emphasize that
national security can be compromised when corruption happens
"in sectors like defense, intelligence, or critical
infrastructure."
- Serious Misconduct: Rather than investigating "alleged misconduct involving routine business practices" or corporate misconduct involving "de minimis or low-dollar" business practices that are generally accepted, prosecutors will focus "on alleged misconduct that bears strong indicia of corrupt intent tied to particular individuals." As an example, prosecutors will focus on "substantial bribe payments, proven and sophisticated efforts to conceal bribe payments, fraudulent conduct" furthering bribery, and conduct that obstructs justice. Prosecutors are also instructed to assess whether foreign enforcement authorities can (and will) investigate the alleged misconduct.
The Guidelines emphasized that the factors set forth above are not the only factors prosecutors should consider. For example, prosecutors will "follow other applicable policies and relevant factors." In addition, prosecutors must consider "the nature and seriousness of the offenses and the deterrent effect of prosecution."
The Guidelines confirm what many commentators have stated since President Trump's executive order pausing FCPA enforcement—companies should continue to ensure they maintain robust compliance programs. Although the Guidelines reflect that the DOJ has tweaked its approach to FCPA enforcement, it is clear that prosecutors will continue to investigate FCPA-related misconduct and bring enforcement actions when appropriate.
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.
