In February US President Donald Trump signed an executive order to halt enforcement of the Foreign Corrupt Practices Act. The White House announced that the pause will last for 180 days while the Attorney General reviews ‘guidelines and policies governing investigations and enforcement actions under the FCPA’.

Nicola Bonucci is a Member of the IBA Anti-Corruption Committee Advisory Board and former Director of Legal Affairs at the OECD. He oversaw the drafting and implementation of the OECD Anti-Bribery Convention, an international agreement, of which the US is a party, that requires its 46 signatory states to criminalise the bribery of foreign officials. ‘At this stage it is a signal,’ he says, ‘which is certainly not a welcome signal for all those who believe that enforcement so far has not been overenforcement, as it is suggested, but a good and important level of enforcement.’

Introduced in 1977 the FCPA prohibits the bribery of foreign officials by individuals and companies to benefit their business interests. The legislation set a powerful precedent, influencing anti-corruption laws globally, which has led to a more coordinated cross-border approach to combatting bribery and corruption. 

In response to the pause in FCPA enforcement, Bonucci - with former chairs of the OECD Working Group on Bribery, Drago Kos and Mark Pieth, and others - co-wrote a letter sent to Bondi. They argue that the pause, if continued, will not restore American competitiveness and security but is likely to put US companies operating abroad at greater risk of investigation by foreign enforcement authorities. ‘It will probably lead to more solicitation and increase the cost of doing business abroad for companies,’ he says. ‘US companies will have to resist solicitation without being able to rely on the FCPA protection and be more likely to lose the market altogether as a consequence.’

Bonucci, Pieth and Kos point out that, over the past decade, most defendants in enforcement actions under the Act have not been US businesses but foreign companies and individuals. While acknowledging the issue of an uneven playing field in international efforts to combat foreign bribery, they argue that this would be best solved by encouraging more countries to be parties to the Anti-Bribery Convention and implement its requirements to the same standard. 

Benjamin Borsodi, an officer of the IBA Anti-Corruption Committee, says that the pause in FCPA enforcement could potentially lead to an increase in anti-corruption investigations and prosecutions by authorities in the EU. ‘I would be cautious about advising companies to take a step back,’ he says. ‘In general, companies should continue efforts to fight against corruption and make sure they have proper compliance programmes.’ 

In March, the Office of the Attorney General of Switzerland, the UK’s Serious Fraud Office and France’s Parquet National Financier, announced they had formed a new taskforce to strengthen collaboration. The SFO director, Nick Ephgrave, says the new task force is ‘in no way a reaction to’ the FCPA enforcement pause and that all three agencies will continue to work with their US colleagues.

Borsodi, head of the White-Collar Crime and Internal Corporate Investigations Group at Schellenberg Wittmer in Switzerland, says there is a risk that the pause, if continued, may stall efforts by prosecutors to resolve criminal charges against companies with multijurisdictional settlements if the US decides to decrease cooperation and information sharing with foreign authorities. ‘I think there will be other settlements, involving other jurisdictions, like France and the UK, but of course the US is quite often leading in these kinds of investigations so we might see a slowdown and less involvement on their part,’ he says.

Borsodi says that despite the freeze on prosecutors initiating new investigations the US Justice Department still appears keen to receive reports from companies that have entered corporate settlements with remedial requirements, about improvements to their due diligence programmes.

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