The Trump Administration jumped at the opportunity to lash out at anti-deportation protesters, but for corporate criminals it continues to take a much more lenient position. In the latest in a series of steps that soften enforcement against business targets, the Justice Department just announced its new approach to prosecutions under the Foreign Corrupt Practices Act.
The policy was announced by Deputy Attorney General Todd Blanche, who previously represented Donald Trump in the New York State hush money case in which Trump was found guilty of 34 counts of falsifying business records.
Not long after taking office, Trump signed an executive order that paused all FCPA prosecutions, claiming that the law, enacted in 1977 in response to a series of foreign bribery scandals linked to Watergate, is detrimental to the competitiveness of U.S. corporations.
Blanche’s memo embraces that dubious argument by stating that FCPA cases should not put “undue burdens on American companies that operate abroad.” It also gives priority to investigations that could enhance overseas business opportunities for U.S. corporations or advance U.S. national security. This is effectively turning the FCPA, which was intended to promote honesty in business transactions, into an economic weapon against foreign competitors.
At the same time, Blanche’s policy is intended to weaken the FCPA in three ways. First, the memo directs prosecutors to give priority to cases involving transnational criminal organizations such as drug cartels. The typical FCPA case involves illegal payments by a corporate executive or agent to secure a procurement contract from a foreign government. Drug cartels do not compete for procurement contracts. Blanche’s policy seems like a way to divert resources from cases against corporations.
Second, the policy memo calls on prosecutors to “focus on cases in which individuals have engaged in criminal misconduct and not attribute nonspecific malfeasance to corporate structures.” This ignores the fact that individuals paying bribes are doing so in the interest of their employer and often with their knowledge. Blanche’s policy could enable companies to put the blame on a mid-level officials and escape consequences for both C-Suite executives and the corporation itself.
Violation Tracker documents more than 300 records dating back to 2000 in which corporations paid fines or reached settlements in FCPA cases. If Blanche’s policy had been in effect, most of those companies would have escaped punishment.
A third way in which the Blanche doctrine weakens enforcement is by directing prosecutors to take into account “collateral consequences, such as the potential disruption to lawful business and the impact on a company’s employees, throughout an investigation, not only at the resolution phase.”
This is another red herring. FCPA cases are typically brought against large companies that are easily able to deal with an investigation and the payment of penalties. The median penalty paid by companies in those cases documented in Violation Tracker is only $14 million. There were a handful of very large penalties against corporations such as Goldman Sachs, but there is no indication that the survival of those firms was put into question.
The enactment of the FCPA was a watershed moment in the campaign to promote corporate integrity. Trump’s Justice Department is both weakening its use against domestic corporations and weaponizing it against foreign companies to promote America First policies.