{"id":4161,"date":"2025-02-28T12:16:09","date_gmt":"2025-02-28T17:16:09","guid":{"rendered":"https:\/\/www2.law.temple.edu\/10q\/?p=4161"},"modified":"2025-02-28T12:16:09","modified_gmt":"2025-02-28T17:16:09","slug":"honesty-integrity-regarding-fcpa-pause-eo-part-1","status":"publish","type":"post","link":"https:\/\/law.temple.edu\/10q\/honesty-integrity-regarding-fcpa-pause-eo-part-1\/","title":{"rendered":"Honesty &amp; Integrity Regarding FCPA \u201cPause\u201d EO [PART 1]"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-2798\" src=\"https:\/\/www2.law.temple.edu\/10q\/wp-content\/uploads\/2021\/01\/Compliance-Center-Image-300x66.jpg\" alt=\"\" width=\"300\" height=\"66\" srcset=\"https:\/\/law.temple.edu\/10q\/wp-content\/uploads\/sites\/12\/2021\/01\/Compliance-Center-Image-300x66.jpg 300w, https:\/\/law.temple.edu\/10q\/wp-content\/uploads\/sites\/12\/2021\/01\/Compliance-Center-Image-1024x225.jpg 1024w, https:\/\/law.temple.edu\/10q\/wp-content\/uploads\/sites\/12\/2021\/01\/Compliance-Center-Image-768x169.jpg 768w, https:\/\/law.temple.edu\/10q\/wp-content\/uploads\/sites\/12\/2021\/01\/Compliance-Center-Image-1536x337.jpg 1536w, https:\/\/law.temple.edu\/10q\/wp-content\/uploads\/sites\/12\/2021\/01\/Compliance-Center-Image-2048x449.jpg 2048w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<p>February 28, 2025<\/p>\n<p>On February 10, 2025, U.S. President Donald Trump issued an executive order \u201c<a href=\"https:\/\/www.whitehouse.gov\/presidential-actions\/2025\/02\/pausing-foreign-corrupt-practices-act-enforcement-to-further-american-economic-and-national-security\/\">Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security<\/a>\u201d (the \u201cEO\u201d). The bold title and text of the EO, its accompanying fact sheet, presidential commentary, and other developments have caused some dismay among the Compliance &amp; Ethics community, though the EO cannot totally be seen as a surprise.<\/p>\n<p>Collectively, these documents and statements include stretches of the law and facts, as well as outright misstatements. In the short term, they have caused confusion and raised awkward legal questions. Even more concerning, they signal support of lower ethical standards in business in the U.S. and abroad, and undermine the largely positive leadership of the U.S. in combatting international bribery since the law\u2019s enactment in 1977.<\/p>\n<p><u>Brief FCPA Background<\/u><\/p>\n<p>The Foreign Corrupt Practices Act (FCPA) prohibits bribery of foreign government officials and mandates accurate record keeping for companies trading securities on U.S. stock exchanges. Although virtually every country in the world recognized the perils of bribery and prohibited such corruption within their own governments, the FCPA was unique as the first, and for 20 years, the only law in the world forbidding bribery of <em>foreign<\/em> government officials.<\/p>\n<p>The FCPA had been discussed in the U.S. before its enactment, but faced opposition from top U.S. government and business leaders who argued it would be difficult to enforce, could harm businesses, and would appear arrogant by seeking to impose U.S. standards abroad. Yet even FCPA critics agreed that illicit payments to foreign governments were unethical and intolerable. Opponents\u2014including Congress, President Ford\u2019s administration, and the New York Bar\u2014proposed alternatives, such as merely requiring disclosure, or urging that the OECD be the body to promote anti-bribery principles (even then, on merely a hortatorical basis).<\/p>\n<p>Following the Watergate Hearings, during the 94th Congress (1975-77), over 400 U.S. corporations, including major \u201cblue-chip\u201d companies, admitted to making over $300 million\u2014about $2.2 billion today\u2014in questionable or illegal payments to foreign officials, politicians, and parties through secret slush funds. This revelation tipped the scale of public sentiment, leading to the FCPA\u2019s enactment on December 19, 1977, including its criminal provisions.<\/p>\n<p><u>Operative Text of EO<\/u><\/p>\n<p>Among the primary operative text of the February 10 EO is the following:<\/p>\n<pre><em>Section 2. <\/em>. . . [T]he Attorney General shall:\n\n(i) cease initiation of any new FCPA investigations or enforcement actions, unless the Attorney General determines that an individual exception should be made;\n\n(ii) review in detail all existing FCPA investigations or enforcement actions and take appropriate action with respect to such matters to restore proper bounds on FCPA enforcement and preserve Presidential foreign policy prerogatives; and\n\n(iii) issue updated guidelines or policies, as appropriate, to adequately promote the President\u2019s 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.<\/pre>\n<p><u>Technically OK in Form. But Substantively, We\u2019ll See<\/u><\/p>\n<p>Scholars recognize that presidents often set or adjust enforcement priorities like those in section 2(iii) due to resource constraints, a common and (usually) proper practice. Some commenters argue that the EO is therefore unremarkable and consistent with past presidents\u2019 actions. However, without knowing what the new enforcement priorities will be\u2014and for the reasons set forth below\u2014the substance of such new priorities <em>could<\/em> prove quite remarkable. Whether or not updating enforcement priorities constitutes \u201cbusiness as usual,\u201d pausing this particular law is fraught with negative implications for integrity in international business transactions.<\/p>\n<p><u>Legal Questions and Dilemmas<\/u><\/p>\n<p>Regarding the text itself, section 2(i) ceases new investigations or enforcement actions. But what becomes of the statute of limitations for ongoing investigations that haven\u2019t yet led to enforcement actions? Does this mean that any person or entity under investigation now, but whose statute of limitation deadline is within 180 days of the EO, cannot be prosecuted for FCPA violations ever\u2014regardless of what the investigations have uncovered? If so, how does that serve justice?<\/p>\n<p>Section 2(ii) orders a review of existing FCPA investigations and enforcement actions\u2014but how does this affect the SOL? Could this lead to cases being dismissed despite compelling evidence of violations? Does this section provide defendants with a new defense, even though the EO states it gives no right of action? Reportedly, the day after the EO\u2019s release, defendants (Cognizant Technology executives) in a current FCPA trial directly approached acting Deputy Attorney General Emil Bove, seeking dismissal of the case\u2014on the basis of the new EO.<\/p>\n<p>How will the EO affect SEC FCPA investigations and enforcement? The EO doesn\u2019t apply to the SEC. In recent years, SEC settlements for books and records violations have increased due to the lower burden of proof and the relative ease of proving record-keeping violations versus bribery. SEC and DOJ officials have noted that due to resource constraints, some cases have been resolved based on books and records violations, even when bribery was strongly suspected.<\/p>\n<p>What does the pause mean for U.S. cooperation with other countries\u2019 ongoing enforcement efforts? The U.S. has increasingly relied on international cooperation in FCPA and other investigations. Does this pause halt our cooperation, and should we expect other countries to stop cooperating with us? Could the EO, therefore, create more national security concerns than it alleviates?<\/p>\n<p><em>Michael Donnella is a Practice Professor of Law and the Director of Temple\u2019s Center for Compliance and Ethics.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>February 28, 2025<br \/>\nProfessor Michael Donnella, Director of Temple Law\u2019s Center for Compliance &amp; Ethics, discusses the President\u2019s \u201cpause\u201d on FCPA enforcement and the legal &amp; ethical questions that arise. <\/p>\n","protected":false},"author":63,"featured_media":4163,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13,52,8,27],"tags":[2484,264,2914,106,402,166,2915,2916,1392,198,348,2913],"coauthors":[2314],"class_list":["post-4161","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-law-practice","category-compliance","category-faculty-authored","category-international-business","tag-bribery","tag-business","tag-capital-markets","tag-compliance","tag-enforcement","tag-ethics","tag-fcpa","tag-foreign-corrupt-practices-act","tag-fraud","tag-sec","tag-trump","tag-trump-administration","masonry-post","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Honesty &amp; 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