Since the President signed the February 10, 2025 Executive Order (Order) pausing enforcement of the Foreign Corrupt Practices Act (FCPA) (Client Alert: President Trump issues Executive Order “Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security”), companies with cross-border business operations have likely faced questions from both internal and external stakeholders regarding what the Order means from a practical, day-to-day perspective. In some cases, this may include questions as to whether companies need to continue maintaining anti-bribery and anti-corruption compliance programs and related controls. The short answer is “yes.” Read on to learn why and for practical advice for internal legal teams addressing the current landscape.
Does the Order mean the FCPA is no longer law?
No, the FCPA is still the law of the land. The Order did not repeal the FCPA—only Congress can do that. The Order imposes a 180-day “pause” on FCPA enforcement (that can be extended) to allow the Attorney General to review existing and prior FCPA investigations and enforcement actions, and to establish new guidelines or policies governing enforcement practices. Until that review period ends, no new FCPA investigations or enforcement actions can be initiated unless an exception is granted by the Attorney General, and all current investigations and enforcement actions will be reviewed.
Why should companies maintain anti-bribery and anti-corruption measures?
Criminal enforcement of the FCPA by the Department of Justice (DOJ) is only one potential risk of engaging in corruption or bribery abroad. During the DOJ’s enforcement pause, companies should continue to maintain anti-bribery compliance protocols and anti-corruption monitoring for the following reasons:
- To limit commercial contract risk. Businesses often build anti-corruption and anti-bribery mechanisms into commercial contracts to minimize both enforcement risk and reputational harm, particularly if there are international operations involved. Even many domestic contracts—including financing agreements, credit agreements, commercial papers, and others—include anti-corruption provisions that may have immediate consequences (such as triggering a default and acceleration of outstanding debt) or may impact a company’s ability to obtain credit in the future when it makes representations related to corrupt conduct. Violations of these terms can often constitute breaches of representation, warranties, covenants, or other commercial terms that can have significant adverse consequences for the breaching party.
- To maintain business and bargaining power. Avoiding corruption and bribery generally makes good commercial sense. Continuing to maintain anti-corruption practices limits businesses’ reputational risk and allows companies to maintain bargaining power and control. Once a company gives in to a request for an improper payment, the paid party has leverage against the company—elevating the risk of future improper payment requests and threats of making the improper payments public.
- To avoid books and records and tax issues. Bribery or other improper payments create books and records issues, exposing a company to potential tax issues, external audit risks, and internal control weaknesses that are broadly problematic from a governance perspective. Further, public domestic companies will still be required to respond to auditors who will expect matters involving foreign bribery to be investigated and remediated prior to issuing an audit attestation letter. Failing to maintain proper controls may also expose a company to civil liability with the Securities and Exchange Commission (SEC) or through investor lawsuits.
- To prevent due diligence issues. Continuing to maintain best practices to comply with anti-bribery policies also benefits a business from the M&A perspective. If a company decides to enter a sale or merger in the future, the counterparty will almost certainly consider anti-bribery compliance, maintenance of third-party conduct oversight, and governance controls during the due diligence process.
- To manage civil litigation risk. Maintaining anti-corruption and anti-bribery compliance practices is a civil litigation risk management tool. Bribery can serve as the basis for civil lawsuits for claims related to anti-competition, antitrust, or securities fraud. For example, a competitor who believes another company’s corrupt conduct adversely affected it may bring suit alleging the company paid a bribe to keep the competitor out of the market. Civil litigants are often successful in suing competitors who shut other companies out of specific markets or limit their competitiveness, and those civil cases can result in damages that rival amounts paid in penalties to the DOJ or SEC for an FCPA violation. Also, as discussed in our prior client alert (link), it is not year clear how the SEC’s civil enforcement authority will be affected by the pause. Companies should not, at this juncture, assume that the SEC will no longer seek to enforce the FCPA now, or in the future.
- To prevent international prosecutions. Companies should be aware that anti-corruption and anti-bribery laws exist in numerous jurisdictions around the globe. Foreign regulatory agencies, many of whom have worked extensively with the DOJ in recent years, will continue to pursue foreign bribery investigations and may even increase enforcement of foreign anti-corruption laws to fill a perceived gap in U.S. enforcement. The UK Bribery Act, the Brazilian Clean Company Act, the Canadian Corruption of Foreign Public Officials Act, the French Sapin II Anti-Bribery Law, and other applicable international anti-corruption laws all broadly contain similar anti-bribery provisions like the FCPA. Companies conducting business internationally could face enforcement action in other jurisdictions.
- To prepare for later FCPA enforcement. The Order pausing FCPA enforcement is a policy decision that can be rescinded by this or a subsequent administration, and, as noted, the FCPA is still a valid law. Further, the pause does not fully foreclose the possibility that an FCPA investigation can be initiated and carried through to an enforcement action, so long as it is approved by the Attorney General. In addition, the statute of limitations for FCPA violations is five years and can be extended up to eight years with tolling based on Mutual Legal Assistance Treaty requests. A temporary pause in FCPA corporate enforcement does not preclude this or future administrations from bringing dormant cases that remain within the statute of limitations or investigating conduct that occurs over the next four years.
What will happen next?
The situation continues to unfold, and we cannot predict how the next several months, and years, of FCPA enforcement will play out. As this stage, it appears likely that the DOJ will prioritize enforcement in cases involving drug cartels or human trafficking. See Attorney General Bondi’s Memorandum (Feb. 5, 2025); President Trump’s Remarks on the Order (Feb. 10, 2025). The DOJ’s position in charged FCPA cases – including one currently pending in the District of New Jersey – may be revealing; the presiding federal judge in the New Jersey case ordered the Government to explain its position in light of the Executive Order by February 18. We will be monitoring this and other developments closely.
In this uncertain landscape, companies should not abandon their anti-corruption and anti-bribery compliance programs. While it is safe to say that the Order is a signal that most companies are unlikely to face an expensive and disruptive FCPA criminal investigation in the near future, it is not a guarantee that enforcement of the FCPA is a thing of the past. And for the many reasons outlined above, maintaining strong anti-bribery and anti-corruption policies and procedures will serve companies in the long term in a variety of ways.
