As DOJ pivots away from white-collar enforcement, is FCPA still relevant?

Companies should continue to invest in anti-corruption compliance because enforcement may come from other regulators, Department of Justice (DOJ) enforcement may continue against foreign-headquartered companies and individuals, and anti-corruption compliance has broader business benefits.  

President Donald Trump’s Feb.10 executive order directs: 

• No new FCPA investigations by the DOJ for 180 days, subject only to exceptions by Attorney General Pam Bondi. Bondi will also issue new enforcement guidance, with FCPA matters going forward requiring her authorization, according to the order.

• The takeaway: The implication is that cases should be brought in fewer scenarios and align with the administration’s foreign policy and economic priorities. This at least suggests that enforcement might be skewed towards foreign-headquartered companies. 

• Existing FCPA investigations and enforcements actions to be reviewed. 

• The takeaway: This opens up the possibility of seeking reconsideration of “live” matters before the DOJ.  

• Bondi can take “remedial measures” with respect to past FCPA enforcement actions and even, “if presidential action is required,” recommend actions to Trump.

• The takeaway: This opens up the possibility of revisiting previously resolved matters. An obvious example would be a company that has settled a matter but is still subject to ongoing obligations, e.g., reporting requirements and compliance program improvements required under a deferred prosecution agreement. As for situations where presidential action would be relevant, the order does not explain what that means, but this could be read as including the presidential pardon power. Any reconsideration of a resolved matter could create complications for public companies that may have shareholder suits or investigations from other regulators where the company is relying on the scope and remediation in a matter resolved with the DOJ. 

The order followed on the heels of a Feb. 5 memorandum by Bondi titled, “Total Elimination of Cartels and Transnational Criminal Organizations,” that directed: 

• The DOJ FCPA Unit prioritize only foreign bribery investigations that are somehow related to cartels or transnational criminal organizations (“TCOs”).  

• The takeaway: While the memo’s definition of cartels and TCOs is not limited by geography, it appears most clearly focused on Latin America.  The administration’s law enforcement preoccupation with Latin America is also evidenced by a Jan. 20 executive order directing Secretary of State Marco Rubio to designate certain international cartels as terrorist organizations. That order identified two cartels, both based in Latin America, as candidates for designation. 

• Certain teams and initiatives within the DOJ’s Money Laundering division focused on anti-kleptocracy efforts were disbanded.   

• The takeaway: Those efforts had complemented the FCPA Unit’s work and were used to pursue asset seizures and forfeitures of corrupt officials and others around the world.  While not directly relevant to the enforcement risk for companies caught in the unfortunate position of paying bribes to corrupt actors, the anti-kleptocracy efforts had reflected a broader philosophical approach and policy goal of going after corruption in the international marketplace. Those investigations may also have yielded evidence from foreign corruption conduct by companies subject to the FCPA. 

Also on Feb. 5, Bondi issued a memorandum entitled, “Reinstating the Prohibition on Improper Guidance Documents,” limiting the use of DOJ guidance documents in the agency’s enforcement matters. This memo sounds procedural on its face but has potentially substantial implications for managing corporate enforcement risk. Corporate enforcement in FCPA matters has been informed by detailed DOJ guidance and pilot programs on how it evaluates voluntary disclosure, cooperation, and remediation by corporate actors. These policies influenced how companies respond to such issues, investigate them, and evaluate whether to approach the government by making a disclosure and how to deal with the government if subject to an investigation. Will the DOJ’s Corporate Enforcement Policy and related programs be ended or substantially revised? Only time will tell–but it would be wise not to count on previously settled understandings.   

In this time of uncertainty, we share three big picture observations: 

Near-term strategy, vis-à-vis the government

The already-announced shifts in enforcement priorities, more to come, and significant changes within the DOJ itself, are all reasonable to take into account in defining near-term strategy. These circumstances are relevant, for example, in evaluating whether to make a voluntary disclosure or how to approach cooperation in an ongoing matter. Moreover, companies will need to carefully evaluate whether they might face increased scrutiny based on policy priorities outside of the FCPA’s express focus, without regard for other considerations beyond jurisdictional ones, on improper payments to foreign officials to obtain business. 

Long-term management of corporate risk 

The FCPA remains the law, with a long statute of limitations (five or, if the government needs additional time to gather foreign evidence, up to eight years).  Ethics & compliance (E&C) programs take time to design, implement, test, and refine. Near-term dismantling or under-resourcing of compliance programs risks compromising such programs’ ability to mitigate future enforcement risk. Moreover, in addition to addressing bribery risk, these programs promote transparency, accountability, and business decisions by employees and business partners that look to long-term success and not merely short-term gains.  Enforcement risk from other regulators and authorities remains, including foreign law enforcement agencies, the Securities and Enforcement Commission for public companies, and even state attorneys general making use of state investor and consumer protection laws.   

Finally, investigative journalists and whistleblowers can bring with them significant reputational and financial consequences; we could well see an uptick in activities by such actors if U.S. enforcement is perceived to be lax. 

Breaking the cycle of corruption 

Over the past 20+ years, anti-corruption compliance programs and the broader E&C programs in which they sit have become an established norm. While corruption remains a serious challenge in too many situations and parts of the world, one of the things that this movement has done is send a message to would-be corrupt officials in the international marketplace. Foreign officials may now feel emboldened to seek bribes, making it even more important to have a culture of compliance and enable business leaders to refuse such requests.