Dive Brief:

• The Department of Justice will stop enforcing the Foreign Corrupt Practices Act, a law to prevent U.S. companies and citizens from paying bribes to foreign government officials, pending new “reasonable enforcement guidelines,” as part of a Trump administration executive order.
• Excessive enforcement of the FCPA has harmed U.S. companies “because they are prohibited from engaging in practices common among international competitors, creating an uneven playing field,” according to a White House statement Monday accompanying the order. Attorney General Pam Bondi will formulate the new guidelines and approve any future FCPA enforcement actions — a policy shift likely to curtail the law’s impact on multinational companies.
• Trump’s order “diminishes the crown jewel in the U.S.’s fight against global corruption,” Transparency International, which tracks and measures corruption globally, said in a statement.

Dive Insight:

The anti-corruption law, signed by President Jimmy Carter in December 1977, “has been systematically, and to a steadily increasing degree, stretched beyond proper bounds and abused in a manner that harms the interests of the United States,” according to the executive order.

The government has averaged three dozen FCPA enforcement actions annually since 2015, including 26 last year, “draining resources from both American businesses and law enforcement,” according to the White House.

The order gives Bondi 180 days to review the law and to formulate new enforcement guidelines that promote U.S. competitiveness abroad and “efficient use” of law enforcement resources. She can extend the 180-day pause for another 180 days, or potentially a full year, according to the order. 

Bondi will also review past FCPA enforcement cases and approve any new ones, “including remedial measures with respect to inappropriate past FCPA investigations and enforcement actions,” if such measures are warranted, the administration said.

The law represents an “excessive barrier” to U.S. commerce abroad, the order states. 

“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,” the administration said. 

The law has forced multinational companies to develop “very robust” and costly compliance programs but regulators haven’t been clear about what is expected of them from these programs and what behaviors constitute a violation, said Adam Goldman, a Pillsbury partner in San Francisco who specializes in the FCPA and cross-border regulation and litigation.

“That guidance will be very welcome by companies that are engaged in global businesses,” Goldman told Legal Dive Tuesday. “There has been dissatisfaction in how the FCPA has been enforced and the breadth of the jurisdiction that the SEC and DOJ have conferred upon themselves.”

The administration is likely to narrow the law’s application but continue enforcing it, Goldman said, possibly with a focus toward using the FCPA as a negotiating lever with foreign companies that are subject to U.S. jurisdiction. “My sense is the FCPA will continue to be used as a trade tool, especially against foreign-headquartered companies that are subject to the FCPA.”

Multinational companies are likely to continue operating as they have with respect to the law because it would be “incredibly risky” given various other anti-bribery laws around the world, such as in China and the United Kingdom, Goldman said. “Most companies are not looking to have to pay bribes because of the cost, the unpredictability, potential legal liability, the reputational harm if it comes to light. There’s a lot of reasons I’d expect similar conduct” despite the Trump order, he said.

The U.S. law — passed after the Watergate scandal during the Richard Nixon administration — made America “the world leader in addressing transnational corruption,” Gary Kalman, executive director of Transparency International U.S., said in the organization’s statement. 

“The world must not default to where bribery and corruption are the norm,” Kalman said. “A race to the bottom harms both the citizens in the country and the businesses involved in corrupt transactions.”

Last year, defense contractor Raytheon agreed to pay more than $950 million in penalties for several violations of federal law, including an FCPA-related scheme to bribe a high-level Qatari military official. 

In 2023, the U.S. charged cryptocurrency entrepreneur Samuel Bankman-Fried with violating the act by allegedly paying Chinese officials $40 million for access to more than $1 billion of cryptocurrency in trading accounts that China had frozen.

In December, a large aviation services company, Illinois-based AAR, agreed to pay $55.6 million in penalties and forfeiture for FCPA violations by a former AAR executive in two foreign bribery schemes from 2015 to 2018. The charges related to the proposed sale of two Airbus wide-body jets to an airline in Nepal and the sale of aviation services to a subsidiary of South African Airways.