Suspending enforcement of the US Foreign Corrupt Practices Act: a backwards step in the fight against international corruption

Following the issuing of the updated guidelines, the US Attorney General is directed to determine whether any additional actions (including remedial measures) should be granted in respect of past FCPA investigations and enforcement actions.

What is the Foreign Corrupt Practices Act?  

The Foreign Corrupt Practices Act is a United States federal law which prohibits US citizens and companies from bribing foreign government officials to benefit their business interests. Compliance with the FCPA applies to US publicly traded companies, US citizens or residents, and, in the instance of the anti-bribery provisions, to privately held companies. It also applies to non-US individuals and companies that violate the Act while in the US. 

Under its published guidance, the FCPA was intended to address the problem of international corruption in two ways: 

• via the anti-bribery provisions, prohibiting individuals from bribing public officials abroad; and
• via the accountancy provisions which impose strict record keeping and internal control requirements. 

The accountancy provisions under the FCPA represent an additional safeguard; even where all of the elements of the anti-bribery offence are not met, companies may still be liable under the FCPA if they do not keep proper records of transactions.  

The UK Position  

Similarly to the position in the US under the FCPA, the UK also has in place anti-bribery legislation with extra-territorial reach under The Bribery Act 2010 (the Act). 

The Act applies to UK-incorporated entities, UK nationals, and organisations operating in the UK and also contains specific provisions designed to ensure that such individuals or entities do not use bribery as part of their overseas operations, or even benefit from a failure to prevent bribery committed by associated persons and entities overseas.

Section 6 of the Act provides a standalone offence of bribery of a foreign public official. In line with the position under the FCPA, there is no requirement for an improper function to take place, but instead it is sufficient for an offering to intend to influence the official’s functions and retain business advantage.

Further, Section 7 of the Act establishes a corporate offence of failing to prevent bribery.  This offence can be committed by a commercial organisation which fails to prevent persons associated with them from committing bribery. It is therefore important for a business to be able to prove that it has adequate procedures in place to prevent persons associated with it from committing bribery. Where an organisation commits an offence under section 7 of the Act, senior officers of that organisation can also be held liable.

Potential international implications of the Executive Order

Corruption in US organisations goes unchecked

Whilst the Trump Administration’s Executive Order relaxes the enforcement of the FCPA, the FCPA remains good law in the US. However, by stopping any new investigation or enforcement actions, the prosecution and imposition of penalties for bribery and corruption by US organisations overseas will undoubtably reduce. This may lead to an increase in corruption by US organisations, in the knowledge that their activities will be subject to reduced scrutiny. The Order is likely to destabilise international anti-corruption efforts, with the US approach now apparently out of kilter with other international legislation such as the UK Bribery Act. Indeed, the gaining of a competitive commercial advantage for US enterprises appears to be one of the objectives of the Executive Order, which expressly references the promotion of American interests and American economic competitiveness.

Weakening of global anti-corruption enforcement

The FCPA has historically established the U.S. as a major player in setting regulatory standards in the fight against corruption. For example, the United States has long been an active member in the Organisation for Economic Co-operation and Development (OECD) Working Group, which is responsible for monitoring the implementation and enforcement of the OECD Anti-Bribery Convention. However, should the updated guidelines prioritise US economic interests over anti-corruption enforcement, this could constitute a violation of Article 5 the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. In particular, Article 5 provides that “investigation and prosecution of the bribery of a foreign public official shall . . . not be influenced by considerations of national economic interest”.

There is also a concern that the implementation of the Executive Order will result in international efforts being gradually scaled back to align with the more lenient approach now being adopted by the U.S. This will be music to the ears of kleptocrats and organisations wishing to secure an unfair economic advantage in their overseas operations through corrupt means

A further deterrent to would-be whistleblowers

Whistleblowers often find their lives and careers ruined after their disclosures are made public. Even where the issues are not publicised, whistleblowers can face a backlash within their industry and be blacklisted from future employment.  

These brave individuals rely on international criminal authorities taking a robust and joined-up approach to the investigation of reported concerns.  

The apparent intention of the U.S. Administration to withdraw from international cooperation in the field of global anti-corruption enforcement is a concerning development for those who might put their livelihoods and careers on the line to help bring perpetrators of corruption to justice. In a world where enforcement of international anti-corruption legislation is trumped by individual national economic interests, whistleblowers are faced with a situation where not only are they putting their lives and livelihoods at risk by reporting potential corruption, but those responsible for investigating those concerns may decide to turn the other way.    

Leigh Day’s whistleblowing and anti-corruption team has first-hand experience of the impacts of overseas corruption on individuals. Over the years, our team has represented numerous whistleblowers and victims of corruption both in the UK and overseas.  

We are currently acting for retired Royal Signals Officer Ian Foxley in his claim against British defence company, GPT Special Project Management Limited and the Ministry of Defence. Mr Foxley escalated concerns to his superiors in GPT about suspicious payments whilst he was working as a Programme Director on an MoD project in Saudi Arabia. He has filed a legal claim against the MoD, the Department for Business and Trade and GPT over the impacts of the corruption on his livelihood.  An investigation by the Serious Fraud Office led to GPT pleading guilty in 2021 to an offence of corruption resulting in fines and sanctions totalling £28 million plus £2.2 million in costs. In his Sentencing Remarks, Mr Justice Bryan found that the UK government had been complicit in and sanctioned the payments. The Defendants are arguing that Mr Foxley should not be entitled to pursue his claim because they say it has been brought too late.