U.S. President Donald Trump signed an executive order directing the U.S. Department of Justice to pause enforcement of the Foreign Corrupt Practices Act (FCPA). This 1977 law criminalizes the bribery of foreign officials by American companies to secure business advantages.
“More Business for America”
During a brief statement from the Oval Office, Trump described the FCPA as a “disaster” in practice, asserting that it discourages international business with American entities due to the risk of investigations and indictments. “It’s going to mean a lot more business for America,” he claimed, emphasizing the economic benefits he believes will follow from this policy shift.
National Security and Competitiveness
A White House official elucidated the rationale behind this decision, linking it to national security. The official argued that “America’s national security depends on its companies gaining strategic commercial advantages worldwide.” By ceasing enforcement of the FCPA, the administration aims to level the playing field, allowing U.S. firms to compete more effectively against international counterparts who, according to the official, are not similarly constrained.
Criticism from Anti-Corruption Advocates
The move has not gone without criticism. Anti-corruption experts, including Richard Nephew, a former State Department anti-corruption coordinator, have voiced concerns. Nephew criticized the decision on social media, stating that the FCPA allows U.S. companies to firmly reject bribery, seeing it as an unproductive cost.
Legal and Economic Implications
The FCPA has been central to numerous high-profile cases, including the plea deal with Trafigura over bribery in Brazil, and the case against McKinsey’s former partner involved in South Africa’s corruption scandal under President Jacob Zuma. Additionally, RTX, a U.S. defense contractor, recently settled for over $950 million for violations related to arms sales in Qatar.
The executive order’s immediate effect is to halt new enforcement actions, with a review of ongoing and previous FCPA cases. Attorney General Pam Bondi is expected to issue new guidance aimed at promoting American competitiveness and efficient use of law enforcement resources.
Economic and Enforcement Costs
The White House official highlighted the economic burden of FCPA enforcement, noting that the act has led to 26 enforcement actions in the previous year alone, draining resources from both companies and law enforcement agencies. At the end of 2024, 31 companies were under active investigation for FCPA violations.
Future of FCPA Enforcement
With the cessation of new enforcement actions, the focus will now shift to how the Department of Justice and the Securities and Exchange Commission will adapt their strategies. The SEC, which established a specialized FCPA unit in 2010, had previously labeled FCPA enforcement as a high-priority area. The impact on ongoing cases, like that against Azure Power Global and its connection to Indian billionaire Gautam Adani, remains to be seen, especially under the new administration’s policy.
This historic change in U.S. policy towards international business practices could significantly alter how American companies operate abroad, potentially affecting global perceptions of U.S. corporate ethics and law enforcement.
What Does This Mean for American Businesses?
With enforcement of the Foreign Corrupt Practices Act (FCPA) on pause, U.S. companies might face fewer investigations and legal challenges when engaging in international deals. This could lower compliance costs and reduce the risk of delays or penalties when competing in markets where bribery or informal payments are more common.
Proponents argue that many foreign competitors operate in environments where similar practices are either overlooked or tolerated. By easing FCPA enforcement, American firms may feel they have a fairer chance to win contracts and secure business in such markets.
The administration’s rationale suggests that American companies could capture new market opportunities by avoiding the potential legal entanglements associated with strict FCPA enforcement. In theory, this could lead to a boost in revenue and international growth.
While the pause may provide short-term competitive advantages, there is a risk that engaging in practices once deterred by the FCPA could harm a company’s reputation. In today’s global market, stakeholders—including investors, partners, and customers—are increasingly sensitive to ethical considerations.
If companies begin to operate with looser ethical constraints, they might face difficulties if the policy changes again or if other countries maintain strict anti-corruption standards. This could lead to complex legal challenges and damage trust over the long run.
for American businesses, this change means a more flexible operating environment abroad that could drive growth and competitiveness in the short term. However, it also introduces potential risks—including ethical dilemmas, reputational harm, and future legal uncertainty—that companies will need to manage carefully as global standards and enforcement policies continue to evolve.
American Firms, FCPA and Nigeria
American firms operating in Nigeria and West Africa have repeatedly come under the scrutiny of the Foreign Corrupt Practices Act (FCPA) for engaging in bribery to secure contracts. In addition to the well-documented Halliburton scandal, which involved over $180 million in bribes in Nigeria’s oil sector between 1994 and 2004, another prominent case is that of Siemens AG. In the mid-2000s, Siemens faced a global bribery investigation that also scrutinized its operations in Nigeria, ultimately leading to a substantial fine and a commitment to overhaul its compliance practices. These cases underscore the persistent challenge of corruption in the region, where multinational companies have often resorted to unethical practices in environments with weak regulatory oversight. The FCPA has played a crucial role in holding these companies accountable, demonstrating that while Western firms may be prosecuted in their home countries, the local beneficiaries of corruption in Nigeria and beyond frequently escape punishment.
