The executive order halts enforcement of the FCPA, arguing that it affects the competitiveness of U.S. companies.
On February 10, U.S. President Donald Trump signed an executive order suspending the enforcement of the Foreign Corrupt Practices Act (“FCPA”), which has been in force since 1977 and prohibits U.S. companies and individuals from offering bribes to foreign officials to obtain or retain business.
The measure seeks to review both current and past cases in order to establish new guidelines for enforcement. The measure has generated a strong debate in the business and legal sphere, given the relevance of the rule in the fight against international corruption.
It is important to remember that the initiative was enacted in response to an investigation by the Securities and Exchange Commission (SEC) following the Watergate scandal.
That investigation revealed that multiple U.S. companies spent hundreds of millions of dollars bribing foreign officials to secure contracts and business.
Penalties for FCPA violators vary depending on the circumstances, and include penalties of up to 20 years in prison and fines of up to $5 million for individuals, as well as penalties of up to $25 million for corporations.
Among the most relevant elements of the executive order are several aspects that will redefine the U.S. anti-corruption regulatory framework and its impact on international business:
- Immediate stay of ongoing actions: the attorney general will be required to halt open investigations and prosecutions under the FCPA while their effects on business competitiveness are reviewed.
- Review of historical enforcement: Past cases will be analyzed to determine whether the sanctions imposed disproportionately affected U.S. companies compared to their international competitors.
- New FCPA enforcement policy: Guidelines will be established to align the regulations with U.S. economic and security interests, ensuring their effectiveness and enforcement.
Regarding the rationale for the measure, the Government has argued that the Foreign Corrupt Practices Act imposes an undue regulatory burden on U.S. companies, limiting their ability to operate in markets where bribery is a common practice.
The FCPA has been considered a pillar in the global fight against corruption, influencing similar regulations in the United Kingdom, the European Union and the Organization for Economic Cooperation and Development (OECD).
Since its implementation, it has resulted in significant sanctions against multinational companies and has served as a reference for compliance schemes in different sectors.
Thus, the coming months will be key to determine the impact of the executive order and the evolution of the anti-corruption regulatory framework in the United States and internationally.
Enforcement agencies, the business world and regulators will need to be attentive to the changes in the application of the FCPA and its implications for global corporate governance.
For more information on the suspension of FCPA enforcement, please contact our Compliance Group:
Rodrigo Albagli | Partner | ralbagli@az.cl
Yoab Bitran | Director Compliance Group | ybitran@az.cl
Caterina Ravera | Senior Associate | cravera@az.cl
Loreto Osorio | Associate | losorio@az.cl
Sebastián Achondo | Associate | sachondo@az.cl
Macarena Navea | Associate | mnavea@az.cl
Felipe Barrera | Associate | fbarrera@az.cl
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