President Trump Issues Executive Order Pausing Enforcement of the Foreign Corrupt Practices Act

On February 10, President Donald Trump signed an executive order temporarily pausing DOJ’s enforcement of the Foreign Corrupt Practices Act (FCPA) for a period of 180 days. The executive order directs Attorney General Pam Bondi to review guidelines and policies governing FCPA investigations and enforcement actions and, specifically, to halt initiation of any new FCPA investigations or enforcement actions so that DOJ may conduct a comprehensive review of all existing actions to ensure they do not stretch beyond “proper bounds” of FCPA enforcement and are consistent with “Presidential foreign policy prerogatives.” Per the executive order, the 180-day pause may be extended one time for an additional 180 days, after which the Attorney General must issue new FCPA enforcement guidelines promoting “American interests, American economic competitiveness with respect to other nations, and the efficient use of Federal law enforcement resources.”

Citing the president’s “foreign policy authority,” the executive order states that “overexpansive and unpredictable FCPA enforcement against American citizens and businesses . . . for routine business practices in other nations . . . wastes limited prosecutorial resources” and “actively harms American economic competitiveness, and, therefore, national security.”

The executive order provides that FCPA actions initiated or continued after the revised guidelines are issued will require specific authorization by the Attorney General. The Attorney General may also determine whether “remedial measures with respect to inappropriate past FCPA investigations and enforcement actions” are warranted under the new guidelines and “shall take any such appropriate actions.”

While the executive order pauses the initiation of new FCPA investigations and enforcement actions, it is not entirely clear how the executive order will impact current DOJ investigations and enforcement actions or completed enforcement actions. In a pending FCPA prosecution of two former executives of a global technology company, a federal judge in the District of New Jersey addressed this uncertainty by issuing an order on February 11 requiring DOJ to “state its position as to [an] upcoming trial” in light of the executive order by February 18. DOJ has yet to respond. It is also not clear how the executive order will impact deferred prosecution or non-prosecution agreements, or their standard requirements for ongoing compliance enhancements and self-reporting obligations. Nor is it clear how the executive order will impact enhanced reporting and monitorship requirements for companies who previously entered guilty pleas to FCPA charges.

The executive order should be viewed as part of a broader shift in DOJ enforcement priorities. This executive order follows several memoranda issued by Attorney General Bondi on February 5 that dramatically shifted DOJ’s enforcement priorities and resources, including by dialing back white collar enforcement in areas of international corruption and inappropriate foreign lobbying and disbanding the National Security Division’s Corporate Enforcement Unit.

Immediate Impact. While it is too early to tell what the Trump Administration’s enforcement priorities will be after the pause on new FCPA investigations and enforcement actions is lifted and new guidance is issued, it is reasonable to expect a reduction in FCPA enforcement in the near term while DOJ is conducting its self-assessment.

Longer Term Impact.The executive order will likely also have a broader impact on FCPA enforcement beyond the review period. For instance, the immediate pause on new FCPA investigations and enforcement actions could lead to a decrease in DOJ resources to resume those investigations once the review period is over. It is likely that during the course of the review, DOJ attorneys and federal agents who were focused solely on FCPA enforcement will either leave the Department or be reassigned to other duties, as has happened with prosecutors and agents in other DOJ components whose work President Trump has deprioritized. The pause may also result in the expiration of the statute of limitations period for certain matters. The significant upswing in FCPA enforcement over the past 15 years is a historical outlier when viewed against its history since it became law in 1977. It is possible that the new FCPA enforcement guidelines could usher in a longer period of moderation in FCPA enforcement.

DOJ will also have to synthesize its new enforcement guidelines with Attorney General Bondi’s previously released memorandum redirecting the FCPA Unit to “prioritize” investigations of foreign bribery that “facilitate[s] the criminal operations of Cartels and TCOs [transnational criminal organizations].” Consistent with Attorney General Bondi’s memorandum, it is possible that once FCPA investigations and enforcement actions resume, they will be focused on matters involving cartels and TCOs, matters which have historically not been the focus of the FCPA unit, rather than FCPA cases that lack such features.

For the past 15 years, aggressive DOJ enforcement of the FCPA has been a primary driver of international corruption risk for global companies. But many other drivers continue to exist, including anti-corruption enforcement by foreign enforcers, particularly from members of the Organisation for Economic Co-operation and Development (OCED), SEC enforcement, and the demands of external auditors for proper accounting and internal controls. Indeed, it is possible that foreign enforcement of anti-corruption laws may be stepped up in light of these DOJ developments. Moreover, the recent executive order does not create any legal defense to a future DOJ prosecution, and, because the FCPA has a five-year statute of limitations, companies cannot rely on the current enforcement environment to exist that far into the future.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Jim Bowman, an O’Melveny Partner licensed to practice law in California; Mark A. Racanelli, an O’Melveny Partner licensed to practice law in Maryland and New York; Sharon M. Bunzel, an O’Melveny Partner licensed to practice law in California; Jorge deNeve, an O’Melveny Partner licensed to practice law in California; David N. Kelley, an O’Melveny Partner licensed to practice law in Connectitut and New York; Rebecca Mermelstein, an O’Melveny Partner licensed to practice law in New Jersey and New York; Greta L. Nightingale, an O’Melveny Partner licensed to practice law in the District of Columbia; Steven J. Olson, an O’Melveny Partner licensed to practice law in California; Benjamin D. Singer, an O’Melveny Partner licensed to practice law in the District of Columbia and New York; Pamela A. Miller, an O’Melveny Partner licensed to practice law in New York; Jennifer B. Sokoler, an O’Melveny Partner licensed to practice law in New York; Meaghan VerGow, an O’Melveny Partner licensed to practice law in the District of Columbia and New York; Andrew Churchill, an O’Melveny Counsel licensed to practice law in New York; Elizabeth Marley, an O’Melveny Associate licensed to practice law in New York; and Stephanie Alina Perez, an O’Melveny Associate licensed to practice law in the District of Columbia, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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