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The new Trump Administration has eliminated another significant form of corporate oversight through an executive order suspending enforcement of the Foreign Corrupt Practices Act. With a stroke of his Sharpie, Trump has in effect decriminalized bribery by multinational corporations.
A statement accompanying the order claimed the step was needed to “save our country” and that “every policy must be geared toward that which supports the American worker, the American family, and businesses, both large and small, and allows our country to compete with other nations on a very level playing field.”
This is classic MAGA double-speak, trying to make the case that a policy benefiting large dishonest corporations serves the interests of workers, families, and small firms.
That reference to a level playing field is also misleading. Trump tries to give the impression that the U.S. is the only country that prosecutes bribery. In fact, other countries are also active in policing the practice.
In Violation Tracker Global, we document dozens of cases brought by authorities outside the United States. For example, in 2020 Airbus agreed to pay over 2 billion euros to resolve allegations brought by French prosecutors relating to foreign bribery. In 2017 Rolls-Royce paid over 500 million pounds to resolve a bribery case brought by the UK’s Serious Fraud Office. The Brazilian government has collected the equivalent of several billion dollars through an anti-corruption campaign known as Operation Car Wash.
In numerous large FCPA cases, the U.S. Justice Department worked in concert with prosecutors in other countries. That’s true of the Airbus and Rolls-Royce cases mentioned above as well as investigations of other companies such as ABB Ltd, BAE Systems, and Goldman Sachs.
What Trump also seems to be ignoring is that the Justice Department and the SEC have brought many cases against foreign companies. In fact, of the 122 FCPA cases in the U.S. version of Violation Tracker linked to a large parent, more than half involve firms headquartered abroad. Fifteen of the 20 largest penalties were paid by foreign defendants. By suspending FCPA enforcement, Trump is helping foreign corporations much more than domestic ones.
The final fallacy is the idea that the FCPA has been a substantial burden on corporations. Although the DOJ handles foreign bribery cases as criminal matters, it routinely allows companies to sign deferred prosecution and non-prosecution agreements—leniency arrangements under which they pay a penalty but do not have to enter a guilty plea. More than 80 percent of all FCPA cases have included one of these agreements.
The theory is that leniency deals will incentivize companies to clean up their practices to avoid a future conviction, yet in some cases DOJ has allowed repeat offenders a second leniency agreement rather than lowering the boom.
In some cases, the DOJ takes the leniency process a step further and resolves FCPA cases through a process called declination. This typically occurs when prosecutors want to reward a company for cooperating with an investigation. The firm agrees to disgorge the profits it received from the illegal activity, and the DOJ essentially drops the case. The most recent example of this occurred in August, when the Boston Consulting Group agreed to disgorge about $14 million related to profits from contracts received as the result of improper payments to government officials in Angola.
All these forms of leniency have not satisfied large corporations, which have complained about the FCPA ever since it was enacted in the wake of widespread revelations of foreign bribery in the 1970s. Now they have finally gotten their wish from a president who serves the interests of big business while pretending to be an economic populist.