The dust is settling and for all the drama surrounding the Trump Administration’s refocus on FCPA enforcement, the picture is becoming a little bit clearer. When cooler heads prevail, it is much easier to pick through the relevant issues and prioritize the issues and analysis.
First, we need to put this in perspective.
From a much larger viewpoint, the FCPA pause has to be considered in the context of a long list of increasing risks that companies face given the topsy-survey world we live in.
DOJ has identified DEI as a key priority for enforcement. For entities that receive federal funding, this is now a risking risk under discrimination laws, but more importantly the False Claims Act tied to false certifications of compliance in this area.
Moreover, companies that maintain large workforces, we are about to witness an increase in workplace immigration raids, let alone other more vigorous enforcement actions. And then, to top all this off, trade compliance — tariffs, regulatory restrictions, sanctions and other issues of concern have to be prioritized.
Second, with respect to FCPA enforcement and risks, keep in mind that global companies are unlikely to make much of a change. It is important to remember that the purpose of an ethics and compliance program is not just to avoid DOJ enforcement; instead, we know that ethical companies that maintain a culture of compliance are better performers in the marketplace. No sane CEO is going to dismantle a compliance program, much less one that prohibits bribery and corruption. To that end, the global marketplace has spoken on this issue for years — the OECD Convention on Anti-Bribery, along with a myriad of country-specific laws have not been paused or repealed — indeed, companies still face serious risks from foreign bribery from the UK Bribery Act, the Clean Companies Act in Brazil, and Sapin II in France.
For sure, we can say that global companies may not face the risk of a DOJ investigation, and will not incur expenses flowing from a costly anti-bribery internal investigation, remedial actions and serious penalties. That does not mean that some other jurisdictions may not pick up the investigation and enforcement action and pursue it to the benefit of UK, France or Brazil prosecutors, depending on who wants to fill the void.
We also do not know yet what the SEC will do as a result of the Executive Order since there was no direction there — I expect, however, that the SEC will quickly follow suit and pause their own investigations.
But let me raise a picky question — when we say that FCPA enforcement has been paused, does this extend to the internal controls and books and records provisions in a non-bribery case? These provisions are important for overall SEC enforcement purposes and used in a variety of circumstances, not just bribery cases. DOJ and the SEC have to be careful here not to axe too much of the underbrush, some of which is important to protect.
For those companies wondering what to do in the face of this shifting landscape — my advice is to just keep everything working and prioritize the new risks, immigration, trade, DEI and False Claims. In the end, global businesses may long for the days of yesteryears since this new risk profile may be a very difficult time ahead.
