U.S. Attorney General Pam Bondi has issued a directive prompted by a White House executive order announcing a “fundamental change” in the U.S. Department of Justice’s (DOJ) investigative and prosecutorial priorities and directing all law enforcement personnel to work toward the “total elimination” of criminal drug cartels and transnational criminal organizations (TCOs). A laudable goal, no doubt, but the devil is in the details. The main thrust of DOJ’s action is to direct the government’s focus away from prosecuting foreign bribery under the guise of focusing its anti-corruption efforts on prosecuting organized drug and human trafficking and other organized crime. The Justice Department has many draconian tools for prosecuting drug cartels and human traffickers and while bribery may be a part of the problem of transnational crime, it is not its main feature. Suggesting that anti-corruption resources need to be diverted to drug cartels and other groups appears to be a misdirection play to implement the actual policy change of turning a blind eye to foreign bribery by American companies.
This is not just speculation as to the motivation of the new administration.
“It’s going to mean a lot more business for America,” Trump told reporters while signing the executive order in the Oval Office on Monday. A White House factsheet said the Foreign Corrupt Practices Act (FCPA) makes American companies less competitive. It notes that U.S. companies are harmed by FCPA “overenforcement because they are prohibited from engaging in practices common among international competitors, creating an uneven playing field.” Trump wanted to strike down FCPA during his first term in office. He has called it a “horrible law” and said “the world is laughing at us” for enforcing it. In the transactional Trump world, bribery is just another part of doing business, and if we don’t bribe foreign corrupt officials, someone else will. The policy and the reasoning behind it are wrong on multiple levels.
The FCPA, enacted in 1977, in response to massive bribery scandals involving U.S. multinationals during the Nixon Administration, has been one of the largest drivers of major white-collar cases for federal prosecutors for the past two decades, as well as for civil cases brought by the Securities and Exchange Commission. It provides for criminal penalties for U.S. citizens who bribe foreign officials and has been used aggressively by federal prosecutors to pursue huge settlements with global companies. Since its enactment many billions of dollars have gone to the US Treasury from FCPA enforcement cases. During the first Trump Administration, the DOJ resolved approximately 30 corporate FCPA cases with monetary penalties totaling more than $14 billion, and during the Biden Administration DOJ resolved 23 corporate cases with penalties of more than $4 billion. Large companies implicated in bribery pay large amounts to resolve these cases. Those are funds that DOGE should take note will not be coming into government coffers.
The new directive tells prosecutors to prioritize foreign bribery investigations that focus on bribery relating to Cartels and TCOs, such as bribery of foreign officials to facilitate human smuggling and the trafficking of narcotics and firearms. All well and good, but at the same time, it directs prosecutors to “shift focus away from investigations and cases that do not involve such a connection.” But the FCPA only applies to U.S. persons and U.S. entities. While drug cartels do sometimes bribe foreign officials (and threaten and kill them), the bribes seldom involve U.S. citizens, so the nexus between bribery by U.S. citizens and drug cartels is dubious, as is the need for redirection of resources toward a problem that has numerous other solutions. What the new policy does is refocus the main thrust of the FCPA and signal to American business that bribery of foreign officials is back on the table.
The significance of this change cannot be overstated. For two decades the United States has sought to lead a global anti-bribery and anti-corruption movement. The theory has been that if we mandate higher standards the world will follow. And much of the world has followed. The UK Bribery Act, enacted in 2011, imposes more severe penalties and is broader in scope than the FCPA, covering bribes to private parties as well to foreign officials. The UK Bribery Act also prohibits being bribed, not just giving bribes. Many EU member states have also enacted anti-bribery legislation, which while not as aggressive as the FCPA are enforced regularly and strictly. In France, anti-corruption criminal statutes provide for criminal penalties of up to 15 years in prison and financial penalties of up to 5 million Euros or twice the amount of the bribe. A 2015 German law introduced the crime of active or passive corruption of public officials. Australia has adopted a strict enforcement regimen, up to 10 years in jail for individuals and fines of up to $31.3 million Australian dollars. And Switzerland, long perceived as having a laissez-faire outlook on foreign bribery, regularly enforces its anti-bribery statute which provides for up to five years in jail, forfeiture, and heavy fines.
These cases reflect the broad consensus, at least in the developed world, that bribery is bad business and that it must be stopped. Corrupt payments to obtain contracts cost everyone more. To the extent that projects are funded by foreign governments or United Nations agencies like the World Bank, bribery constitutes a transfer from innocent taxpayers to corrupt officials. To the extent that projects are funded by governments in poor countries, then the poor get poorer as their politicians get wealthier and act with increasing impunity. Bribery is the worst kind of tax as it undermines honest government. The bribe paid by the contractor is not “free money;” it becomes a cost deducted from actually performing projects competently. And it means that contracts are not awarded based on ability to perform the work adequately and accountably. A government on the take will not go after incompetent contractors or sub-standard infrastructure. When the bridge collapses or the road buckles, there is nowhere to turn. Is this really the kind of competition that the U.S. government wants to encourage, rather than promoting transparency, skill, and competence?
Beyond these policy changes, it is also clear that President Trump is overtly asserting control over DOJ policy. Certainly, attorneys general pursue the policies of the administrations they serve, but one is hard-pressed to think of any other president issuing an executive order pausing ongoing prosecutions and announcing a policy change in this fashion. Mr. Trump’s control over DOJ is complete. And promoting honesty and transparency in the way U.S. individuals and corporations do business is not part of his agenda.
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Eric Lewis is chair of the boutique litigation firm Lewis Baach Kaufmann Middlemiss.