Understanding the FCPA
The FCPA, enacted in 1977, prohibits US companies from bribing foreign officials to gain business advantages. It was introduced following a scandal in which over 400 American firms were found to have made illicit payments to foreign officials. The law does not require that a bribe is actually paid—only offering one is enough to trigger prosecution. Penalties are severe, with individuals facing up to 20 years in prison and corporations subject to fines that can reach billions.
Over the decades, the FCPA has led to high-profile prosecutions, including cases against Goldman Sachs, Siemens, Glencore, and Walmart. Its enforcement has been credited with deterring bribery and promoting fair competition worldwide. However, some argue that it places American businesses at a disadvantage against foreign competitors who are not bound by similar laws.
Trump’s Justification for the Suspension
Trump has long been critical of the FCPA, calling it an unnecessary hindrance to US companies. While signing the executive order, he stated, “It sounds good on paper but in practicality, it’s a disaster. It’s going to mean a lot more business for America.”
The White House argues that aggressive FCPA enforcement hampers national security and economic interests by making it difficult for American companies to secure crucial international deals. Trump contends that restrictions on US businesses limit their ability to gain access to essential resources, such as deep-water ports and critical minerals. The administration has also criticised the law for “excessive, unpredictable” enforcement, which they claim drains DOJ resources.
What Does the Order Do?
The executive order directs the Attorney General to:
- Suspend all new FCPA investigations unless an exception is granted.
- Review existing cases to determine if they should proceed.
- Develop new guidelines to limit enforcement to cases that pose a direct threat to US interests.
- Extend the review period by another 180 days if necessary.
- Require personal approval from the Attorney General for any future FCPA prosecution.
This shift in policy could drastically reduce the number of bribery cases pursued by US authorities.
Reactions from Experts and Watchdogs
Mark Pieth, a criminal law professor at the University of Basel and anti-bribery expert, warned of serious repercussions: “We are facing a Wild West situation. It will be everyone against everyone.”
Critics fear the pause will weaken global anti-corruption efforts and embolden unethical business practices. Since the FCPA’s enactment, many countries—including the UK, France, and Japan—have introduced similar anti-bribery laws. If the US pulls back enforcement, other nations may follow suit, creating a regulatory vacuum that could encourage corruption.
“If a US company bribes because Trump is giving them the green light, the French and the British will jump on that company,” Pieth added. “It will be a mess.”
The Broader Context: What’s at Stake?
Before the FCPA, bribery was commonplace in international business. Companies frequently made secret payments to foreign officials to win contracts. The law’s passage in 1977 marked a turning point in global business ethics. Since then, enforcement agencies have uncovered bribery schemes ranging from military contractors to multinational retailers.
For example, in 2023, RTX (formerly Raytheon) paid over $300 million to settle FCPA charges related to a bribery scheme in Qatar. In 2019, Walmart paid $282 million after a seven-year probe into allegations that it secured store approvals in Mexico, India, and Brazil through illicit payments.
With the US stepping back from enforcement, concerns are rising that such practices could become more widespread.
Trump’s order does not repeal the FCPA but significantly reduces its impact. If enforcement remains weak, critics warn it could embolden corruption worldwide and damage America’s credibility. The DOJ’s review will determine whether the law is restored, permanently weakened, or restricted to extreme cases.
Duncan Levin, a criminal defence attorney who has represented high-profile clients, expects the FCPA will be effectively dismantled. “He can’t get rid of the law, but he can refuse to enforce it,” Levin said. “I don’t think this is just a pause.”
As the DOJ reassesses its approach, businesses and policymakers alike will be watching closely. Whether the freeze boosts US competitiveness or erodes global anti-corruption efforts remains to be seen.
(With inputs from Reuters)
