The White House issued an executive order on Monday pausing enforcement of the Foreign Corrupt Practices Act (FCPA) for at least 180 days.
The order, titled “Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security,” cites concerns that the FCPA has been “stretched beyond proper bounds” and is harming American economic competitiveness and national security interests.
The FCPA, enacted in 1977, prohibits U.S. companies and individuals from bribing foreign officials to obtain or retain business.
The executive order directs Attorney General, Pam Bondi, to review guidelines and policies governing FCPA investigations and enforcement actions. During this review period, the Attorney General is instructed to cease initiating any new FCPA investigations or enforcement actions, unless an exception is deemed necessary. Existing investigations and enforcement actions will also be reviewed to ensure they align with the administration’s policy of prioritizing American economic and national security interests. The Attorney General has the option to extend the review period for an additional 180 days.
Rationale Behind the Pause
The White House argues that overzealous enforcement of the FCPA places American companies at a disadvantage in the global market. The order states that the President’s foreign policy authority is linked to the global economic competitiveness of American companies. It suggests that focusing on FCPA enforcement diverts resources from preserving American freedoms and harms American economic competitiveness, thereby impacting national security. The administration believes that by eliminating excessive barriers to American commerce abroad, it can better advance American economic and national security interests.
Potential Implications and Concerns
Critics argue that pausing FCPA enforcement could lead to a rise in corruption and unethical business practices. They contend that the FCPA is a critical tool for promoting transparency and accountability in international business dealings. Suspending its enforcement, they warn, could damage the reputation of American companies and undermine efforts to combat global corruption. There are also concerns this could be perceived as a green light for bribery, potentially harming developing nations and undermining the rule of law.
Additionally, concerns that individuals with significant global business interests, such as Trump and Musk, could indirectly benefit from reduced scrutiny under the FCPA.
Trump has extensive international business dealings through the Trump Organization. Pausing FCPA enforcement could theoretically reduce legal risks for companies engaging in practices that might otherwise be scrutinized under the law. This could indirectly benefit Trump’s business operations if they involve markets where informal payments are common.
The decision might strengthen relationships with foreign leaders or corporations that could benefit from relaxed anti-corruption enforcement, potentially aiding Trump politically or economically in the future.
Elon Musk’s companies, such as Tesla and SpaceX, operate globally, including in countries like China where corruption risks are higher. Relaxed FCPA enforcement could make it easier for these companies to navigate complex international markets without fear of legal repercussions.
What’s Next?
The Attorney General is expected to issue updated guidelines or policies regarding FCPA enforcement following the review period. These revised guidelines will govern future FCPA investigations and enforcement actions, and all such actions will require specific authorization from the Attorney General. The Attorney General will also determine whether additional actions are warranted, including remedial measures for past FCPA investigations and enforcement actions deemed inappropriate.
