Last night, in a move with wide-ranging implications for American companies doing business abroad, President Trump issued an executive order (Order) temporarily halting enforcement of the Foreign Corrupt Practices Act (FCPA). The Order directs Attorney General (AG) Pam Bondi to review guidelines and policies governing FCPA investigations and enforcement actions in the next 180 days, with an option to extend the review another 180 days if appropriate. During that time, no new FCPA investigations or enforcement actions will be opened, unless AG Bondi determines an exemption is appropriate, and all currently pending FCPA investigations and enforcement actions will be reviewed to “restore proper bounds on FCPA enforcement and preserve Presidential foreign policy prerogatives.” After new guidance is issued, new FCPA investigations initiated or current actions that are continued must follow the new guidelines, with new matters requiring the approval of AG Bondi. At the end of the review period, AG Bondi will also consider if additional action is appropriate, including possible remedial measures with respect to past FCPA investigations and enforcement actions.
The Order comes on the heels of a memorandum issued by AG Bondi last week, titled Total Elimination of Cartels and Transnational Criminal Organizations (Memo), which instructed the Department of Justice’s (DOJ) FCPA Unit to prioritize foreign bribery investigations with a connection to cartel activity or transnational criminal organizations (TCOs) and “shift focus away from investigations and cases” that lack such a connection. Less of a headline, but nonetheless notable, the Memo also suspended the section of the Justice Manual (§ 9-47.110) relating to FCPA investigations that require they be conducted by DOJ’s Fraud Section, rather than United States Attorney’s Offices, for matters relating to foreign bribery involving cartels and TCOs.
Enacted in 1977, the FCPA seeks to reduce global corruption by barring American companies and individuals from engaging in bribery abroad. In recent years, DOJ has brought significant FCPA enforcement actions against American companies and reached some of its largest white-collar settlements in the FCPA space. FCPA investigations can be a significant drain on a company’s resources, and often result in companies paying large fines and agreeing to lengthy compliance monitorships and other conditions to avoid prosecution. Companies under investigation or the threat of it have also typically been expected to commit significant resources to strengthening FCPA compliance programs at home and abroad.
A White House fact sheet highlights that the Order calls for a revised approach to enforcing the FCPA so that such enforcement does not stifle American businesses competing in the global market. To that end, the Order states that the FCPA 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.” This abuse both wastes limited prosecutorial resources and harms American economic competitiveness, the Order says.
While less regulatory enforcement in this area is potentially a positive development for American companies doing business abroad, the Order and Memorandum present several open questions that will likely be resolved as AG Bondi undertakes the directed review. McGuireWoods’ FCPA Team will continue to assess these questions to assist affected clients. Some of the open issues the FCPA Team are focusing on include:
- Whether investigations or enforcement actions involving cartels or TCOs will be permitted to proceed during AG Bondi’s review period, how DOJ will assess if an investigation or action sufficiently involves a cartel or TCO to merit proceeding, and if individual US Attorneys’ offices will be involved in those efforts.
- Whether AG Bondi, either during the pause period or after additional guidelines are developed, will greenlight non-cartel affiliated FCPA investigations that involve foreign companies using the U.S. financial system to facilitate foreign bribery.
- Whether the Securities and Exchange Commission (SEC), which has also been a significant player in FCPA enforcement and has an internal unit devoted to civil FCPA matters, will continue its work in this area. The Order does not expressly pause the SEC’s activities, but the policy shift it announces would likely apply with equal force to the SEC’s enforcement, which has typically been done in concert with DOJ enforcement.
In addition, companies should be cognizant that the FCPA’s statute of limitations is five or six years depending on the underlying conduct and can be tolled or extended through several different mechanisms. Future administrations may choose to seek enforcement of the statute and prioritize investigations differently.
McGuireWoods will continue to monitor the situation for all clients. Please contact any author of this article with questions.
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McGuireWoods’ Government Investigations & White Collar Litigation Department is a nationally recognized team of more than 80 attorneys representing Fortune 100 and other companies and individuals in civil and criminal investigations and enforcement matters at the federal and state level. The senior team consists of former federal officials, including a former deputy attorney general of the United States, former U.S. attorneys, more than a dozen federal prosecutors and an associate counsel to the president of the United States. Strategically centered in Washington, our Government Investigations & White Collar Litigation Department is recognized as an elite practice, most recently honored by Chambers USA with a highly regarded nationwide ranking for Corporate Crime & Investigations, honored twice as a White Collar Practice Group of the Year by Law360 and consistently ranked among the world’s leading investigations firms in the Global Investigations Review 100 guide to top cross-border investigations practices. The Legal 500 United States, a premier list of the country’s best law firms, also commended McGuireWoods for the “exceptional quality” of its powerhouse white collar litigation practice. More information on our Anti-Bribery and Anti-Corruption (FCPA) practice can be found here.