Executive Order Dated February 10, 2025 and the “Pause” of Enforcement of The United States Foreign Corrupt Practices Act Doesn’t Create Immunity For Criminal Acts Overseas.
The single most powerful tool in the hands of American businessmen working overseas is the universal knowledge that “we can’t pay bribes!” and anyone who does any where in the world facing prosecution, fines and jail time. The Foreign Corrupt Practices Act (FCPA) provided this shield against extortion since 1977. On February 10, 2025 Presidential Executive Order “paused” enforcement of this law by the U.S. Department of Justice.1 The message may well be received overseas that “finally! the Americans will pay too!”
Why Corruption Never Benefits the Common Person –
Corruption ruins both businesses and national economies. There are best practices to consider adopting in order to avoid legal and ethical entanglements.2 Honest and ethical business practices are not measured by a universal standard. Rather, the custom and practice of the business location often dictates the boundaries of what is “dishonest” when compared to what is “culturally sensitive.” However, local custom means absolutely nothing when confronted with criminal prosecution by the United States Department of Justice (USDOJ). You and your company need to observe the lessons of those prosecuted under US anti- corruption laws in order to identify what the USDOJ considers “ethical” regardless of where the acts are performed. Follow the discussion in brief of the USA law known as the Foreign Corrupt Practices Act (FCPA).3
The Executive Order Doesn’t Waive the Statute of Limitations –
Criminal charges will follow a corrupt action and the American who performs it well after the Executive Order or the new enforcement policies are replaced by a new President, Attorney General, or court ruling. There is no immunity from prosecution afforded by either. The statute of limitations for Foreign Corrupt Practices Act (FCPA) violations is five (5) years, but can be extended to eight (8) years. This extension is possible through tolling based on Mutual Legal Assistance Treaty (MLAT) requests.4 The conduct that might be criminal may well not be investigated or enforced under the current Administration through this revised “policy” developed by the current Administration. However, Americans need to worry about enforcement actions against this same conduct by the next or another Administration which determines it is conduct worthy of investigation and enforcement actions. The exercise of “prosecutorial discretion” remains an executive prerogative in the US.5
Under the federal criminal justice system, the prosecutor has wide latitude in determining when, whom, how, and even whether to prosecute for apparent violations of federal criminal law. The prosecutor’s broad discretion in such areas as initiating or foregoing prosecutions, selecting or recommending specific charges, and terminating prosecutions by accepting guilty pleas has been recognized on numerous occasions by the courts.6
Note that the Executive Order only instructs the Attorney General, as the chief law enforcement officer of the United States, to review the existing enforcement “policy” and consider a revision of that policy.7 This process is substantially different from an Administrative Rule change. When a defendant seeks to assert the “policy” as an affirmative defense such a claim will quickly fail because a policy has no protective weight of any kind, unlike an Administrative Rule, which has considerable weight.8
Common Sense Must Govern – Not “The Purge” Hollywood Capitalist Fever Dream-
An Executive Order doesn’t create the setting for a white collar version of the hit movie “The Purge” or its sequels “Anarchy” or “Election Year.”9 Please be “practical” as a business leader working with overseas interests. Recognize, for example, that the ruling party (in South Africa and elsewhere in post- colonial Africa) frequently deploys “party cadres” (loyalists) to government positions or government influenced positions in publicly owned businesses. These deployments pose a risk to you (personally) and to your company that you may inadvertently engage in one or more corrupt practices. South Africa, due to its political choices, has made the risk of corruption higher, and thus the business climate less attractive to USA based investment. No American wants to risk reputation and fortune in order to bring progress and prosperity to South Africa (or any country).
The Business Facilitators or Fixers Can Get You Into Trouble –
Doing business across borders involves more than the financial returns so business leaders should engage local “guides” to identify corruption risks and mitigate them. USA citizens, non-citizens, and USA companies are all subject to the long arm of American anti-corruption legal jurisdiction which includes Africa and companies (and officers) who wish to work in Africa. As a business leader you must be alert to the myriad types of conduct which is “dishonest” and which violates the FCPA without regard for local customs. Be alert to connections to Politically Exposed Persons also known as Prominent Influential Persons (PIP) are individuals who hold or have held prominent public positions or have close associations with such individuals.
There is no legal exception for culturally accepted behaviors. In particular, ruling party cadre deployments (i.e., the children of government members or employees) may fall within the definition of the “officials” the FCPA is intended to isolate away from the USA business leaders.
An American business leader who engages with a PEP will have an obligation to comply with the reporting laws. FICA PEP reporting is the process of reporting suspicious transactions to the Financial Intelligence Centre (FIC) in South Africa. The FIC is responsible for overseeing compliance with the Financial Intelligence Act (FICA).10 You are responsible for reporting to them. Seek local assistance to identify whether the intended investment will involve “officials” directly or indirectly.
FCPA Isn’t The Only Law That Can Reach An American Working Overseas –
South Africa and most other developed and developing countries have a law which mirrors the FCPA. For example, in South Africa, South Africa’s Prevention and Combating of Corrupt Activities Act (PRECCA) is the primary anti-corruption law in the country. It is similar to the UK’s Bribery Act. PRECCA has extraterritorial reach, which means that South African citizens and companies can be prosecuted for corruption in other countries.
The ruling African National Congress (ANC) is well known to make state owned enterprise (SOE) positions available exclusively to party members (without regard for competence).11 There are court cases brought by the opposition parties challenging the constitutional basis of such hiring preferences.12 The allegations of the court cases should raise the level of concern and the level of conduct scrutiny for all business leaders wishing to remain in compliance with the FCPA, and the South African equivalent.
As a practical matter all American business people are on “notice” that the employee or board member, or officer to whom they are speaking or with whom they are working may well be considered an “official” under the anti-corruption laws of several major economies. Frequent news stories identify suspect business transactions involving “officials” in the form of family members near and not so near, recognized confidants, and intimate or business partners.13
FCPA Is A Shield Against Extortion By Corrupt Leaders –
The Foreign Corrupt Practices Act (FCPA)14 was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. Specifically, the anti-bribery provisions of the FCPA prohibit the payment of money (or giving anything of value) to a foreign official to influence the foreign official in his or her official capacity. “Since 1977, the anti-bribery provisions of the FCPA have applied to all U.S. persons and certain foreign issuers of securities. With the enactment of certain amendments in 1998, the anti-bribery provisions of the FCPA now also apply to foreign firms and persons who cause, directly or through agents, an act in furtherance of such a corrupt payment to take place within the territory of the United States.”15
Violations of the FCPA start with any sort of “payment” or “value delivered” to an “official” for the purpose of advancing the business interests of the giver. The U.S. Department of Justice (DOJ) has historically adopted aggressive interpretations of the statute that apply with particular force.
There are three significant issues: (1) the meaning of “foreign official”; (2) the meaning of “anything of value”; and (3) the use of third parties that make pass through payments to officials.16 The law is so all inclusive that the hiring of the children of officials or the relatives of officials has been viewed by the US DOJ as a violation.17 The USA based bank, JPMorgan Chase, in November 2016, was fined $264M for a program it named “Sons & Daughters” which gave internships to the children of Chinese officials. The implications are clear that “dishonest” conduct can also be conduct which seems on its face to be innocuous. The risk of unintended corrupt conduct is sufficiently greater in less than transparent countries that a local guide should be engaged to identify risk and mitigate the risk.
Foreign Corrupt Practices Act and other anti-bribery laws must be carefully evaluated in the context of the alleged FCPA violation. The FCPA’s anti-bribery provisions contain two affirmative defenses: (1) that the payment was lawful under the written laws of the foreign country, or “the local law defense,” and
(2) that the money was spent as part of demonstrating a product or performing a contractual obligation, the “reasonable and bona fide business expenditure” defense. Because these are affirmative offenses, the defendant bears the burden of proving them.18
Penalties for violations can be civil or criminal. They can include fines, imprisonment, disgorgement of any ill-gotten profits, debarment from receiving federal awards, and loss of export control licenses.
Prohibition against corrupt payments appears simplistic and straightforward on its face. Corporations and other entities convicted of violating the FCPA’s accounting provisions face a maximum fine of $25 million per violation. Individuals convicted of violating the accounting provisions face maximum penalties of 20 years in prison and a $5 million fine. Enforcement is real.19
Change is Coming Now That The President Has Spoken to MAGA –
The fact that the President has laid down his personal marker (Executive Order) for his MAGA minions in which the FCPA is tarred as an “obstacle” preventing the realization of his vision of Make America Great Again, then we all can expect change in some manner to the law. The most reasonable change which would not kick off a race to the bottom of the ethical barrel would be to legislate to allow the JPMorgan Chase “Sons & Daughters” program. Another change would be to empower the Department of Education (or what is left of it) to issue financial grants to universities that admit foreign students who are PEP. The cultural change that could be stimulated by these small changes would be profound overseas and miniscule in the context of “corruption” of the business environment.
Consider The History & Make Better Choices & Lead The Way –
Corruption is a global problem. In the four decades since Congress enacted the FCPA, the extent of corporate bribery has become clearer and its ramifications in a transnational economy starker. The Anti- Bribery Convention came into force on February 15, 1999, with the United States as a founding party. Together these laws have “globalized” the fight against corruption tilting the business opportunities away from the consumer and into the pockets of the powerful.
Corruption impedes economic growth by diverting public resources from important priorities. Foreign bribery is a scourge that must be eradicated. It undermines the rule of law, empowers authoritarian rulers, distorts free and fair markets, disadvantages honest and ethical companies, and threatens national security and sustainable development.
As Americans abroad we all are ambassadors for the “brand” that is America. We are internationally known for our optimism, innovations, and our indefatigable “can do it!” spirit. In our business dealings we all should consider our roles and the history we are writing with each deal concluded, each promise kept, and each handshake respected. Our national leaders who passed into law the FCPA thought the same
– “The payment of bribes to influence the acts or decisions of foreign officials, foreign political parties or candidates for foreign political office is unethical. It is counter to the moral expectations and values of the American Public…” U.S. House of Representatives 1977. “Corporate bribery is bad for business. In our free market system it is basic that the sale of products should take place on the basis of price, quality, and service. Corporate bribery us fundamentally destructive of this basic tenet….” U.S. Senate 1977. International corruption also undercuts good governance and impedes U.S. efforts to promote freedom and democracy, end poverty, and combat crime and terrorism across the globe. We should not participate in or encourage others to do so. We are Americans.
References
1 Sec. 2. Policy of Enforcement Discretion. (a) For a period of 180 days following the date of this order, the Attorney General shall review guidelines and policies governing investigations and enforcement actions under the FCPA. During the review period, the Attorney General shall:
(i) cease initiation of any new FCPA investigations or enforcement actions, unless the Attorney General determines that an individual exception should be made;***
2 https://doi.org/10.1787/18151957 OECD(2003), “Business Approaches to Combating Corrupt Practices”, OECD Working Papers on International Investment, 2003/02, OCD Publishing.
4 18 U.S.C. § 3292 is the MLAT tolling statute. The Mutual Legal Assistance (MLA) process involves states requesting and providing legal assistance to investigate, prosecute, or punish criminal offenses. The process is governed by treaties, domestic legislation, or a combination of both.
5 This discretion exists by virtue of the prosecutor’s status as a member of the Executive Branch, and the President’s responsibility under the Constitution to ensure that the laws of the United States be “faithfully executed.” U.S. Const. Art. II § 3. See Nader v. Saxbe, 497 F.2d 676, 679 n. 18 (D.C. Cir. 1974).
6 See, e.g., United States v. LaBonte, 520 U.S. 751, 762 (1997); Oyler v. Boles, 368 U.S. 448
(1962); United States v. Fokker Services B.V., 818 F.3d 733, 741 (D.C. Cir. 2016); Newman v.
United States, 382 F.2d 479 (D.C. Cir. 1967); Powell v. Ratzenbach, 359 F.2d 234 (D.C. Cir.
7 Sec. 2. (a) *** (iii) issue updated guidelines or policies, as appropriate, to adequately promote the President’s Article II authority to conduct foreign affairs and prioritize American interests, American economic competitiveness with respect to other nations, and the efficient use of Federal law enforcement resources.***
(d) After the revised guidelines or policies are issued under subsection (a) of this section, the Attorney General shall determine whether additional actions, including remedial measures with respect to inappropriate past FCPA investigations and enforcement actions, are warranted and shall take any such appropriate actions or, if Presidential action is required, recommend such actions to the President.
8 But see contra., The previous doctrine of “Chevron deference” held that courts should defer to an agency’s interpretation of a statute if the statute was ambiguous. Chevron U.S.A. v.
Natural Resources Defense Council, 467 US 837 (1984). This was based on the idea that agency experts are better able to understand how new laws should be implemented. In a 2024 case, Loper Bright Enterprises v. Raimondo is Loper Bright Enterprises v. Raimondo, 603 U.S.
(2024) https://www.supremecourt.gov/opinions/23pdf/22-451_7m58.pdf the Supreme Court ruled that courts should only defer to an agency’s interpretation if the agency’s decision was reasonable and within the bounds of its statutory authority.
9 The story line is as follows – In 2014, a political party called the “New Founding Fathers of America” are voted into office following an economic collapse and pass a law sanctioning the “Purge”, an annual event wherein all crime (including murder) is legal, and emergency services are unavailable for 12 hours. The result is that the United States is said to have become virtually crime-free, with legal unemployment rates having dropped to 1%. The tale just gets worse from the premise described here.
10 https://www.fic.gov.za/wp-content/uploads/2023/09/2021.12-PCC-PCC-51-FPPO-DPIP.pdf
11 https://theconversation.com/south-africas-ruling-party-has-favoured-loyalty-over- competence-now-cadre-deployment-has-come-back-to-bite-it-199208
12 https://ewn.co.za/2023/01/30/first-of-two-da-cases-against-anc-cadre-deployment-policy- resumes-at-high-court
13 https://www.news24.com/news24/southafrica/news/r125m-ppe-scandal-govt-acts-against- top-officials-in-limpopo-20220317 ; https://www.news24.com/news24/southafrica/news/four- sandf-members-in-court-for-ppe-corruption-worth-r273m-20220926 ; https://www.iol.co.za/news/south-africa/mpumalanga/top-official-arrested-in-connection-with- r21m-in-ppe-corruption-443cd016-e6f3-4a40-be26-a268d37c1652
14 Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §§ 78dd-1, et seq.
15 https://www.justice.gov/criminal-fraud/foreign-corrupt-practices-act
16 https://www.lehmanlaw.com/resource-centre/faqs/administrative-law/faq-relating-to- fcpa.html#:~:text=The%20FCPA%20prohibits%20the%20giving,common%20way%20of%20 doing%20business.
17 https://www.hg.org/legal-articles/hiring-children-of-foreign-officials-may-expose-bank-to- bribery-charges-31177 ; https://www.hg.org/legal-articles/hiring-children-of-foreign-officials- may-expose-bank-to-bribery-charges-31177 ; https://money.cnn.com/2016/11/17/investing/jpmorgan-china-hiring-bribery- settlement/index.html
18 FCPA’s bribery prohibition also contains a narrow exception for “facilitating or expediting payments made in furtherance of routine government action.” This exception applies only when a payment is made to further “routine governmental action” that involves non- discretionary acts. https://www.justice.gov/criminal/criminal-fraud/file/1292051/dl
Regina Mundi Global Advisors 