Yesterday, the President signed an Executive Order rethinking the United States’ approach to foreign corruption.
The Foreign Corrupt Practice Act makes it illegal for US persons to bribe foreign officials. There is a corollary law that make it illegal for foreign officials to ask for a bribe (that law was just updated less than a year ago).
The new executive order directs the Attorney General to halt all new FCPA investigations and prosecutions, to study the issue for 180 days (with an option to extend) and to issue new guidelines about what will be considered acceptable. It does not halt existing enforcement actions, but it does direct that those FCPA enforcement actions be governed by the new guidelines to the extent the enforcement action is continued after the new guidelines are issued. To understand the likely direction of the new guidelines, it is useful to look at the descriptive language in the executive order:
“But overexpansive and unpredictable FCPA enforcement against American citizens and businesses — by our own Government — for routine business practices in other nations not only wastes limited prosecutorial resources that could be dedicated to preserving American freedoms, but actively harms American economic competitiveness and, therefore, national security.
It is therefore the policy of my Administration to preserve the Presidential authority to conduct foreign affairs and advance American economic and national security by eliminating excessive barriers to American commerce abroad.”
A real concern is that this sends a message to foreign officials who are inclined to take bribes, that it is now potentially acceptable to demand a bribe from an American business. It is unclear what the new guidelines will do for the separate law that makes it illegal to ask for bribes.
Some journalists have suggested that the new FCPA policy may be intended to benefit certain billionaires and large businesses subject to current FCPA enforcement.
The executive order does not eliminate the law. It merely orders a temporary halt to the enforcement of the law. U.S. businesses still need to be careful about FCPA compliance while we await the new guidelines. U.S. businesses also need to be cognizant of their contractual obligations: I have seen a lot of contracts that require FCPA compliance, and if you are party to such an agreement then you may have an enforceable contractual obligation even if the U.S. government pauses enforcement of the FCPA.
The Attorney General can exercise prosecutorial discretion with respect to the FCPA, but it doesn’t remove the law from the books; so be very careful in how you act until the new guidelines are issued.