US President Donald Trump has paused enforcement of a federal anti-corruption law to make American businesses competitive. While anti-corruption advocates have expressed alarm, the new order need not necessarily mean a free rein for bribing foreign officials, explains Banasree Purkayastha
What has Trump done and why?
On Monday, US President Donald Trump ordered the Department of Justice (DoJ) to halt the enforcement of the Foreign Corrupt Practices Act (FCPA), 1977, that bars Americans from bribing foreign government officials to win business in those countries. The executive order instructs the US attorney general, Pam Bondi, to pause prosecutions and not launch any new investigations under this law for 180 days while she reviews the anti-bribery law. The order argues that “over-expansive and unpredictable FCPA enforcement against American citizens and businesses — by our own government — for routine business practices in other nations not only wastes limited prosecutorial resources that could be dedicated to preserving American freedoms, but actively harms American economic competitiveness and, therefore, national security.” Per the Trump administration, the strict prohibitions against bribing foreign officials under the FCPA strangle American competitiveness in a tough global market. It is aimed at restoring US economic competitiveness by ordering “revised, reasonable enforcement guidelines for the Foreign Corrupt Practices Act (FCPA) of 1977.”
What is the Foreign Corrupt Practices Act?
The Foreign Corrupt Practices Act, 1977, makes it illegal for companies that operate in the United States to pay foreign government officials to secure business deals. Till 1998, this law only applied to US persons, a legal definition that included companies, citizens and residents, before it was expanded to also cover foreign companies operating in America. The law, which is enforced by the Department of Justice (DoJ) and the Securities and Exchange Commission (SEC), has provided the framework for cracking down on bribery over the last few decades, including in developing countries where it is a common business practice for company officials to bribe government officials to secure deals or bend laws. In 2010, the SEC set up a specialised unit to strengthen its FCPA enforcement, which it had described as a “high-priority area”.
The 1998 OECD Anti-Bribery Convention is also modelled on this US anti-bribery legislation.
Will this further US business interests?
“It’s going to mean a lot more business for America,” Trump said as he signed the order. The White House fact sheet said that US firms were harmed by “over-enforcement” because they were “prohibited from engaging in practices common among international competitors, creating an uneven playing field.” Financial Times quoted an unnamed White House official saying the country’s “national security depends on America and its companies gaining strategic commercial advantages around the world” and “Trump is stopping excessive, unpredictable FCPA enforcement that makes American companies less competitive.”
Both Republicans and Democrats have time and again criticised the FCPA enforcement, and Trump in his earlier term had expressed his desire to stamp out this law. Critics have said that the aggressive stance against foreign bribery cases under FCPA has led to increased compliance costs for US businesses. A New York Bar Association report in 2011 had pointed out that firms that are subject to the FCPA—including all US companies and non-US companies that have equity securities listed on a US exchange—have become increasingly wary of purchasing businesses that have not operated under the Act for fear of acquiring very costly liabilities.
Will bribery be okay now?
Per transparency international, clipping the wings of the DoJ delivers a major blow to the fight against foreign bribery worldwide. Pausing enforcement could lead to a rise in corrupt activity, Karen Woody, a law professor at Washington and Lee University who focuses on securities law and financial regulation, told the New York Times. “For multinational companies, it is a big deal that this is not going to be enforced.”
However, Washington-based law firm Arnold & Porter in an analysis said not only does bribery remain illegal under the law, which has not been repealed by Congress, but also under various state, federal and foreign laws. Other countries, including Britain and Germany, have anti-corruption provisions. The OECD Anti-Bribery Convention now has 46 member countries.
Impact of the law over the years
The anti-corruption law has been responsible for some of the biggest corporate cases taken up by the DoJ over the last decade, including that of Goldman Sachs for allegedly paying bribes to officials of Malaysia’s sovereign wealth fund, 1MDB. In 2020, it settled the case by agreeing to pay $2.9 billion. In 2024, the DoJ had charged the Adani Group for allegedly paying over $250 million to Indian officials for favourable terms for solar power deals. Last year, SAP agree to pay $220 million to resolve investigations into alleged wrongdoings in South Africa and Indonesia. The DoJ and the SEC filed 26 FCPA-related enforcement actions in 2024, and as many as 31 companies were under investigation by year end. However, an annual review of the law’s enforcement by Stanford Law School says the number of enforcement actions in 2024 were “well below the ten-year average of 36”.