Foreign Companies Must Keep Robust Compliance Despite FCPA Pause

The White House’s executive order last month pausing enforcement of the Foreign Corrupt Practices Act has significant implications for US companies doing business abroad. But foreign companies doing business—or maintaining assets or personnel—in the US are a potentially overlooked but critical audience for this order. This is because the pause highlights shifting enforcement priorities, which create an increased risk of the Department of Justice potentially seeking to subject such foreign companies to its jurisdiction.

If President Donald Trump’s prior administration indicates how FCPA enforcement may materialize under the current one, the executive order isn’t necessarily synonymous with less enforcement, especially regarding foreign-owned companies.

Contrary to many predictions, the first Trump administration saw an increase in FCPA monetary sanctions compared with prior administrations. The amount of monetary sanctions imposed on corporate entities on a yearly basis—including amounts imposed by the Securities and Exchange Commission or DOJ—were higher than any year preceding the first Trump administration except for 2016, the last year of the second Obama administration.

That four-year period resulted in many of the largest monetary penalties ever to resolve FCPA cases, with several involving companies based outside of the US.

Trump’s first administration likewise implemented criminal enforcement strategies that aimed to bolster the competitiveness of American companies in the global marketplace. For example, in 2018, the DOJ launched a “China Initiative” targeting US intellectual property theft by Chinese foreign nationals.

US and foreign companies should consider the long term and continue with current compliance initiatives even though the executive order signals a potentially laxer compliance environment. The FCPA is still in effect, and any compliance failures could result in charges and significant penalties if enforcement policies change after, or even during, the current Trump administration.

Foreign companies in particular, especially those that transact in critical minerals, deep-water ports, or other key infrastructure or assets, should decline any pause of FCPA compliance programs but should find ways to improve them, including:

• increasing employee awareness and training on the FCPA and US anti-corruption laws
• vetting of third party vendors and payments
• increasing compliance personnel and resources to uncover and root out any bribes or potential bribes to foreign officials

Latin America, China

Given Latin America’s vast mineral resources and deep-water ports and other infrastructure projects, Latin American companies that have business ties to the US are especially at risk for any enforcement strategy designed to favor US companies over foreign companies.

Some Latin American companies have recently increased manufacturing facilities to do business with US companies. Many Latin American countries also have increased ties to China on infrastructure projects and critical natural resources. A recent European Parliament briefing highlights that some predict China will surpass the US as Latin America’s most important trading partner by 2035.

China’s $1.3 billion investment in a deep-water port in Peru, announced in December, highlights this change. China has made similar large infrastructure investments in Caribbean deep-water ports as well. The February executive order explicitly references deep-water ports as an area in which the US seeks a strategic advantage.

Even in business dealings where there are seemingly no US ties, the DOJ may be motivated to find ways to assert jurisdiction over foreign actors claiming they have minimum contacts, through the US financial system or otherwise, with the US to support jurisdiction in criminal or civil proceedings. Courts have found a basis to exercise jurisdiction over foreign actors if they aim to cause harm in the US or to US citizens or interests, providing ample room for the DOJ to assert jurisdiction over foreign entities or actors.

Domestic and foreign companies should maintain robust anti-corruption compliance programs and potentially use this pause to conduct internal audits. These programs should:

• respond to risks in the company’s specific industry and geographic areas where it does business
• provide for robust detection and anonymous reporting of misconduct
• provide for periodic employee training
• be independent and free from any conflict of interests
• leverage data collection and analytical tools
• be adequately staffed and funded
• constantly be reviewed and evaluated for effectiveness

Companies also may want to conduct any necessary investigations under the protection of attorney-client privilege to deal with FCPA compliance issues, bearing in mind that the FCPA’s criminal anti-bribery provisions have a five-year statute of limitations, which means that violations now can potentially be investigated or prosecuted after the Trump administration.

Bribery and related corruption remain a violation of the criminal laws of the US as well as many other countries. Foreign companies subject to US jurisdiction should improve and maintain robust compliance programs in case any revised FCPA policy following the DOJ’s 180-day review period prioritizes enforcement against foreign businesses that are perceived to benefit from lax enforcement of corruption laws abroad.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Sergio E. Acosta is co-chair of Akerman’s white collar crime and government investigations practice.

Pedro Freyre is the chair of Akerman’s international practice.

Ildefonso P. Mas is a partner in Akerman’s litigation practice group.

Lauren Goddard contributed to this article.

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