Executive Order signals major shift in FCPA enforcement—for now

The Executive Order directs the Attorney General to take several actions over the next 180 days (and grants the Attorney General authority to extend the review period for an additional 180 days as necessary). Specifically, the Executive Order directs the Attorney General to:

• Cease initiating new FCPA investigations and enforcement actions.
• Review ongoing FCPA investigations and enforcement actions and take action with respect to such matters “to restore proper bounds on FCPA enforcement and preserve Presidential foreign policy prerogatives.” The “proper bounds” of FCPA enforcement remain unclear, but this may result in the end of corporate bribery investigations into US companies and dismissal of indictments.
• Issue updated FCPA enforcement policies and guidelines. The Executive Order itself offers little guidance on the criteria the DOJ will consider in updating those policies. However, the Executive Order suggests that future FCPA enforcement will be significantly limited compared to current practice. In the fact sheet accompanying the Executive Order, the Trump administration sharply criticizes previous FCPA enforcement, stating that the law creates an uneven playing field for US companies. The Executive Order also follows new DOJ guidance, instructing the FCPA Unit of the Criminal Division’s Fraud Section to prioritize investigations related to foreign bribery that facilitates the operations of cartels and Transnational Criminal Organizations. Taken together, FCPA investigations against US companies that are unrelated to transnational crime appear unlikely to continue under this administration.

The Executive Order further states that after the revised FCPA enforcement guidelines or policies are issued, the Attorney General shall determine whether “remedial measures” are warranted with respect to past FCPA cases and shall take such actions or, if presidential action is required, recommend such actions to the President. This could significantly impact companies with corporate monitorships resulting from FCPA violations and potentially even result in presidential pardons for individuals previously found guilty of violating the FCPA.

Further, while the Executive Order directs the Attorney General to take certain actions, its broader tone suggests a wider shift in the Trump administration’s approach to FCPA enforcement, potentially forecasting decreased FCPA enforcement by the Securities and Exchange Commission.

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The Executive Order is silent in a number of areas, one of which is the extent to which the “pause” will impact enforcement against non-US companies. While FCPA enforcement against US companies will likely slow during this administration, it would be inconsistent with the Trump Administration’s larger geopolitical agenda to apply the pause equally to non-US companies.

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For Now—As the current administration’s policy directives change, or if a post-Trump administration comes into power, enforcement policy may evolve. The statute of limitations for prosecuting a criminal violation of the FCPA’s anti-bribery provisions is five years, while violations related to the FCPA’s accounting provisions are subject to a six-year statute of limitations. Additionally, statutes of limitations are often extended for a number of reasons, such as through tolling requests in cases involving Mutual Legal Assistance Treaties. Thus, FCPA violations that are recent, are ongoing, or occur within the next four years could become targets for enforcement post-Trump presidency. In addition to the possibility of future enforcement at the federal level, there is anti-bribery legislation under most state law—with obviously more limited jurisdictional reach. 

Regardless of relaxing enforcement of the law, particularly against US stakeholders, the FCPA is still good law. Therefore, contractual commitments to “comply with the law” would be violated by FCPA breaches. In addition, anti-bribery language has become standard in most forms of agreements—with lenders, insurers, customers, suppliers, investors, etc. Conduct that violates the terms of the FCPA, notwithstanding shifting enforcement guidance, would still trigger defaults under such arrangements.

Anti-bribery also remains a cornerstone of most environmental, social, and governance (ESG) commitments by companies: Violations of such commitments could give rise to private rights of action, loss of confidence, enforcement actions under other countries’ anti bribery and corruption laws, and other negative consequences for companies engaging in such activities due to this stakeholder ESG expectation.

At its core, the Executive Order signals the Trump administration’s shift away from FCPA enforcement, which will likely provide US companies with temporary reprieve. However, it is crucial for businesses—particularly non-US companies—to remain proactive and vigilant in their compliance efforts, as the FCPA continues to be the law of the land and the behavior it prohibits remains a global expectation.