In recent years, some who comment on FCPA issues and then hit the “publish” button on their computers are overtly partisan.
I sometimes wonder whether these individuals are aware that the topic they are writing about has been an FCPA topic for several decades or – even if they are aware – whether they even care.
Case in point is this latest rant from a “commentator” seemingly upset that the U.S. is open to exploring relationships in the Democratic Republic of Congo given the abundance of critical minerals in that country.
The “commentator” writes:
“[An] article that caught my eye this weekend ran in the Financial Times. Apparently the Democratic Republic of Congo has approached the Trump Administration about awarding mineral extraction rights to U.S. companies, in exchange for U.S. support of Congolese president Félix Tshisekedi — who is battling armed rebels in the eastern part of the country, which also happens to be one of the most corruption nations on the planet.
The FT article stresses that talks about a minerals extraction deal are still just exploratory, but they do seem serious. As one U.S. State Department spokesman told the FT, “The DRC is endowed with a significant share of the world’s critical minerals required for advanced technologies. The United States is open to discussing partnerships in this sector that are aligned with the Trump administration’s America First agenda.
Who knows whether such an arrangement with the DRC will ever come to pass. It is, however, yet another example of the deals Trump might try to foist on global businesses — deals with corruption at the core, but coated in promises from Trump that his administration won’t enforce anti-corruption laws. Would your board and management team be willing to swallow that pill?
[…]
In his executive order pausing all FCPA enforcement, Trump expressly mentioned acquisition of ports as an example of deals serving the national interests of the United States, where he wouldn’t want concerns about FCPA prosecution to spook U.S. companies from bidding on the project. That same order also cited critical minerals as another example.
Now we have this story about the DRC, which just so happens to have critical minerals up the wazoo. Unfortunately, it also has corruption risks up the same location. So if you’re a global business that normally wouldn’t touch a DRC government project with a ten-foot pole, but now Trump is making all sorts of assurances that everything will be fine — what do you do?”
If one wants to be concerned about U.S. policy encouraging companies to explore business relationship even in “corrupt” countries – to advance U.S. interests – that is fine.
One needs to acknowledge and understand however that this dynamic has occurred for decades.
For instance, this 2023 post highlighted how the Biden administration did the same thing – encouraged U.S. companies to explore business relationships in the DRC in connection with mineral projects.
Where was the rant then?
As highlighted in a 2023 Wall Street Journal article titled U.S. Turns To Congo in Quest for Cobalt
“The U.S. is turning to a much-criticized source as it races to secure supplies of battery metals to meet the growing demand for electric vehicles.
To do so, it is homing in on cobalt from the Democratic Republic of Congo’s informal mining sector, where miners, sometimes including children, often work with no safety equipment in dangerous, hand-dug mines. Congo supplies around 70% of the world’s cobalt, a key metal in the lithium-ion batteries used in EVs, with about a third of that coming from these so-called artisanal miners.
The U.S. Agency for International Development said earlier this year that it would issue grants to companies that source critical minerals from Congo and were willing to support artisanal miners.
…
We are building a pipeline of Congolese investment opportunities to attract more U.S. investment into the DRC. said John Dunlop, mission director for Congo at the U.S. Agency for International Development, at an industry conference in June.
USAID has launched a $20 million program to give grants ranging from $100,000 to $4 million to U.S. companies and other mining entities interested in sourcing critical minerals from Congo if they agree to support the integration of local companies and artisanal miners into the global supply chain.”
Prior posts here, here and here have also highlighted instances of the U.S. government encouraging investment in a country – because it advances U.S. government foreign or domestic policy interests – while knowing full well that the country has corruption problems that could expose U.S. companies to FCPA issues.
This dynamic is as old as the FCPA itself (passed in 1977).
Actually, older than that.
As highlighted in this prior post, one of the more insightful things found in the FCPA’s extensive legislative history is an October 1975 article by Milton Gwirtzman published by the New York Times Magazine. At this point in time, Congress was in the midst of its investigations into the so-called foreign corporate payments problem and Gwirtzman noted:
“If corporate bribery abroad has offended the post-Watergate morality, the companies implicated have nevertheless taken a greater share of the blame than they deserve. […] The responsibility for present practices must also be shared by our Government, which not only encouraged investment in countries whose ethical standards differ from ours, but also in many respects set the pattern for the graft under censure today. […] The rapid acceleration of American private investment in foreign lands, which began in the mid-nineteen-sixties, was seen by our foreign policy makers as a welcome opportunity. If U.S. firms could build a nation’s infrastructure, supply its consumer goods and hire a portion of its workers, the greater the likelihood the nation would be bound to ours by the safest and strongest of ties, economic self-interest. As a result, our Government wrote the foreign investment laws of several developing countries and urged our multinationals to make use of them. New programs were established to insure foreign investment against the risks of war and expropriation. Embassy personnel were ordered to scout out export possibilities for American firms, which were published in Commerce Business Daily, the Government’s daily list of business opportunities.”
As highlighted in this prior post, there have been several FCPA enforcement actions which have occurred in the context of U.S. government aid or assistance programs.
If one wants to “rant” about current FCPA issues in a partisan way, that is their call.
I sometimes wonder though whether the partisan FCPA commentators are aware that the topic they are writing about has been an FCPA topic for several decades or – even if they are aware – whether they even care.
