After President Trump paused Foreign Corrupt Practices Act (FCPA) investigations and enforcement for 180 days by executive order this past February (Executive Order 14209), the United States Deputy Attorney General has now issued guidelines for FCPA investigations (the “Guidelines”) as directed by the executive order.
The head of the Department of Justice’s (“DOJ”) criminal division, Matthew Galeotti, commented on the Guidelines at the American Conference Institute Conference on June 10. He stated that “[t]hese Guidelines provide evaluation criteria and a non-exhaustive list of factors to balance when deciding whether to pursue an FCPA case.” He assured that “the Criminal Division will enforce the FCPA — firmly but fairly — by bringing enforcement actions against conduct that directly undermines U.S. national interests without losing sight of the burdens on American companies that operate globally.” And so a new era of FCPA enforcement begins.
America First Approach
The Guidelines are aimed at “(1) limiting undue burdens on American companies that operate abroad and (2) targeting enforcement actions against conduct that directly undermines U.S. national interests.”
Non-exhaustive Factors to be Considered
The Guidelines provide four non-exhaustive factors that will need to be considered when evaluating whether to pursue FCPA investigations and enforcement actions:
- Total Elimination of Cartels and Transnational Criminal Organizations.
- Safeguarding Fair Opportunities for U.S. Companies
- Advancing U.S. National Security
- Prioritizing Investigations of Serious Misconduct
Authorization Requirement
FCPA investigations and enforcement action cannot be initiated without the authorization of the Assistant Attorney General for the Criminal Division (or the official acting in that capacity) or a more senior DOJ official.
Impact of the Guidelines
These Guidelines appear to dramatically change the landscape for businesses over the next few years. Companies may have found new ammunition to terminate an FCPA investigation based on policy arguments or “collateral consequences” that extend well beyond the underlying facts of the investigation.
For example, the DOJ now appears to be receptive to arguments that an FCPA investigation should be terminated if it is detrimental to U.S. interests—perhaps the prosecution could hinder American corporate dominance in a particular industry or sector, or impede strategic access to a particular country or market. Companies may also argue that an investigation unnecessarily risks the company’s viability or could lead to the loss of American jobs.
The Guidelines also indicate that prosecutors must look to whether the conduct under investigation is of the nature and type that foreign law enforcement in that jurisdiction is willing and able to prosecute.
On the other hand, companies doing business in areas where narcotics, cartels, or terrorism issues are real risks, or where U.S. national security is implicated, will need to examine whether their policies and procedures are sufficient to avoid U.S. scrutiny of their business practices.
Evolving Situation
The Guidelines indicate that neither they, in and of themselves, nor the factors listed constitute an exhaustive list of considerations that the Attorney General’s office may consider. This means that creative lawyering may find additional ways to mitigate an FCPA investigation. Additionally, given that the Executive Order focused on the president's foreign policy authority, any possibility that the current administration might view an investigation as threatening the relationship with a foreign jurisdiction may be something the DOJ would factor into a decision to decline to investigate or prosecute.
But companies cannot ignore the law. An executive order does not constitute a repeal of the FCPA. Application and enforcement of the FCPA could be a short-term shift, dictated by political and economic objectives of the current administration. Therefore, experienced counsel who understand the FCPA landscape are even more critical in companies’ assessments of long-term risks and whether to self-report.
Moreover, given the volatile political environment, this policy could be rescinded as quickly as it was imposed, via executive action by the next administration or the present one. More importantly, because the FCPA law itself remains unchanged (and given the five-year statute of limitations for FCPA violations), no company can assure itself that something it does now might not become the subject of an inquiry by a successor administration (or the same administration due to a policy shift).
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The foregoing is for informational purposes only. It is not intended as legal advice and no attorney-client relationship is formed by the provision of this information.
LBKM’s experienced team of former law enforcement officials and senior in-house compliance professionals advises and represents businesses and individuals in the United States and around the word in connection with criminal, civil, and regulatory investigations and enforcement actions. Our White Collar Defense, Financial Crimes Compliance, and U.S. Sanctions practice is well-versed in the FCPA and dealing with the DOJ and other U.S. authorities.
If you have questions or concerns about the scope or reach of U.S. FCPA enforcement, please contact LBKM to have a privileged and confidential discussion.
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About LBKM
Lewis Baach Kaufmann Middlemiss PLLC is a boutique law firm focusing on international financial disputes, financial compliance, white collar defense and investigations, insurance and reinsurance, and cross-border commercial litigation and arbitration. The firm has offices in Washington, New York, and London.