Photo courtesy of NYU School of Law.
On Monday February 10, 2025, President Trump issued an Executive Order (the “Order”) “pausing” enforcement of the Foreign Corrupt Practices Act (FCPA), citing its overly expansive and unpredictable enforcement as well as its adverse effects on the competitiveness of American companies. On the same day, the acting Deputy Attorney General of the Department of Justice ordered prosecutors in New York to dismiss pending campaign finance and bribery charges against New York City Mayor Eric Adams in part because of the Mayor’s support for the President’s policies on immigration.
Taken together, the optics of these announcements were terrible. They more or less implied that bribery—of both foreign and domestic officials—is acceptable so long as it is committed by people favored by the President.
Although the Order came as a surprise to many people, it is important to recognize that it is limited in both effect and scope. To begin, the President has not repealed the FCPA, and he couldn’t if he tried. Formally speaking, initiation of new enforcement actions has been paused for 180 days (renewable for a further 180 days) while the Attorney General reviews existing cases and issues new enforcement guidelines or policies. The Order expressly states that the Attorney General can make exceptions to the pause. Reviews of FCPA enforcement policy are a regular occurrence and the President has broad constitutional authority to guide the enforcement of laws that touch upon foreign affairs. Consequently, the Order does not seem to have major constitutional implications.
Given its provisional and contingent legal effects, the Order has limited implications for firms and individuals subject to the FCPA. A pause in enforcement is not a license for firms and individuals to begin violating the FCPA. There is nothing to stop the DOJ from eventually bringing charges based on misconduct during the pause. In principle, proceedings could even be initiated under the next Presidential administration because the limitation period for violations of the FCPA’s anti-bribery provisions is five years, and six years for the accounting provisions.
The Order is also limited in scope. It does not apply to either the Securities and Exchange Commission’s enforcement of the FCPA or the DOJ’s use of anti-fraud statutes to target people who lie about committing bribery. Nor does the Order say anything about investigations or enforcement actions aimed at corrupt foreign officials under the Foreign Extortion Prevention Act or the money laundering statutes. However, to the extent that enforcement of the FCPA and other statutes aimed at economic crime continues it will be subject to Attorney General Bondi’s day one memorandum directing prioritization of matters related to cartels and transnational criminal organizations.
The most immediate effects of the order will be felt by defense attorneys and other professionals, many of whom have profited from a steady stream of DOJ-initiated FCPA investigations and enforcement actions. It will be interesting to see if those professionals react by shifting to matters involving cartels and transnational criminal organizations.
The longer term effects of the Order will depend on the results of the Attorney General’s review and revision of FCPA enforcement policy. It is far from clear that a fair-minded review would reveal current enforcement policy to be overly expansive and unpredictable. Intense political scrutiny has pressed the DOJ and the SEC to revise and clarify their enforcement policy many times in recent years, through speeches, written policies and guidance documents. The penalties imposed for misconduct and the criteria for obtaining leniency remain somewhat uncertain, but it is hard to see how the DOJ could make its enforcement policy much more predictable without losing valuable flexibility. In addition, an increased number of prosecutions targeting individual defendants has led to an increase in the number of cases that have gone to trial and thereby given courts opportunities to define the bounds of the statute. There are certainly areas in which the statute could be enforced less expansively, but DOJ criminal cases—as opposed to those brought by the SEC—tend to focus on misconduct that lies near the core of the statute’s prohibitions on bribery.
It is less clear where a fair-minded review should come out on the question of whether FCPA enforcement undermines the competitiveness of U.S. firms. On the one hand, the FCPA applies to many firms with limited connection to the US, and many other countries, including all the members of the OECD, have followed the lead of the United States and adopted legislation comparable to the FCPA. There is also the argument that the FCPA gives firms a credible way to ‘just say no’ to requests for bribes without compromising their access to public services. In these respects, FCPA enforcement helps to level the competitive playing field for U.S. firms. On the other hand, virtually no other country enforces laws against foreign bribery as vigorously as the US, especially not major economic powers such as China and India. Consequently, it is not implausible that a more lenient or selective enforcement policy would enhance the competitiveness of U.S. firms.[1]
Having said that, it is disappointing that the Order assesses the role of anti-bribery law in U.S. foreign policy exclusively in terms of economic competitiveness. In the past, both Congress and U.S. presidents have justified the existence of the FCPA at least in part in terms of what it does for the moral standing of the United States as well as its positive effects on the integrity and effectiveness of foreign states. Also relevant is that any failure to comply with obligations the U.S. has assumed under treaties such as the OECD Anti-Bribery Convention and the United Nations Convention Against Corruption risks diminishing the administration’s credibility on the international stage.
Another disappointing feature of the Order is that it begins with a statement that the FCPA has been “abused” and ends with a cryptic direction to the Attorney General to “determine whether additional actions, including remedial measures with respect to inappropriate past FCPA investigations and enforcement actions are warranted.” It is unfortunate that the President chose to denigrate the work of so many hard-working public servants in this fashion, officials who, as far as I can tell, have enforced anti-bribery laws in good faith and with a view to serving the interests of the American people.
Footnotes
[1] I discussed these issues many years ago in Kevin E. Davis, Self‐Interest and Altruism in the Deterrence of Transnational Bribery, 4 American Law and Economics Review 314 (2002).
Kevin E. Davis is the Beller Family Professor of Business Law and the Faculty Director of Hauser Global Law School at NYU Law School.
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