Days after Trump was elected President in November 2016, this post  was titled “Let’s All Take a Deep Breath When It Comes To FCPA Enforcement In The Trump Administration.” When there was not a corporate FCPA enforcement action during the (better sit down for this one – first four months of the Trump Administration) this post  was titled “Let’s All Take A Deep Breath, Gaps In FCPA Enforcement Are Common.”
As highlighted below, it is time again for everyone to take a deep breath when it comes to the FCPA and Trump.
The origins of the latest “take a deep breath moment” are a recently published book which recounts an alleged 2017 exchange between President Trump and then Secretary of State Rex Tillerson in which Trump allegedly expresses displeasure for the FCPA.
If you are trying to sell a book or push the person or idea of the book, I suppose you make this out to be “new” news. However, this alleged exchange was “news” in 2017 (see here  for 2017 FCPA Professor post). In any event, many salivated at “news” of this alleged exchange and it once again dominated certain news cycles.
Next, at a press conference to talk about general economic issues, White House Economic Adviser Larry Kudlow was asked by a reporter about the above FCPA “news” and Kudlow stated that the White House was looking at changes to the FCPA. As widely reported, Kudlow stated:
“We are looking at it and we have heard some complaints from our companies.”
“I don’t want to say anything definitive policy-wise, but we are looking at it.”
Pressed about the specific changes, Kudlow declined to offer details but suggested that the administration was working on a “package” of reforms.
Thereafter, some appeared to lose it and seemingly began to hyperventilate.
For instance, this article states: “It’s amazing on its face that Trump and his team are eager to make foreign bribes easier …” (See here ). Another article asserted that Trump is “trying to make it easier to pay bribes” (See here ). Another article stated that the Trump administration is “actively looking into making bribery legal.” This headline  stated: “Not a Joke: Trump Is Looking Into Making Bribery Legal.” (See here ). This headline  read “White House Eyes Backward Steps on Anti-Bribery Laws.”
No reasonable interpretation of Kudlow’s brief comments stand for any of those propositions and it is amazing to think that journalists and editors get paid to churn out such misleading headlines. However, we appear to now live in a world dominated by narratives, not facts.
Moreover, how can any responsible journalist or editor – not knowing what, if any, reforms may be proposed – call them a step “backwards.”
Might there be some FCPA reform that represent a step forward?
Here some historical context is important.
In 2010 and 2011, the Senate and House held FCPA hearings and there appeared to be bipartisan support for certain FCPA reforms. These hearings and reforms were extensively covered on FCPA Professor (see here  and here  among other posts) – and indeed I had the pleasure of testifying at the Senate hearing and thus have first hand information about what occurred. As highlighted here , current Democratic presidential candidate Amy Klobuchar was a key participant in the Senate hearing as was Senator Christopher Coons (D-DE, a former compliance officer at a large company).
During the hearing, Senator Klobuchar stated:
“And I will tell you that I have heard from many very good standing companies in my State that they do not always know what behavior will trigger an [FCPA] enforcement action.”
That’s rather similar to what Kudlow said.
On the House side, a key participant in the 2011 FCPA hearing was John Conyers (D-MI) and, as highlighted here , he was in favor of certain FCPA reforms.
In short, reforming the FCPA has been talked about by Republicans and Democrats nearly as long as the FCPA has existed. However, the mere discussion of such reforms has always been contentious and a political hot potato.
For instance, in 1981 Senator Alfonse D’Amato opened Senate hearings on a bill to amend the FCPA. He stated that the bill “provides us with a good opportunity to assess the effect of recently enacted legislation and its implementation.” Senator D’Amato noted as follows. “The discussion which takes place during these hearings is not a debate between those who oppose bribery and those who support it. I see the major issue before us to be whether the law, including both its antibribery and accounting provisions, is the best approach, or whether it has created unnecessary costs and burdens out of proportion to the purposes for which it was enacted, and whether it serves our national interests.”
In an opening statement during Senate hearings, Senator John Chafee, a leader in the FCPA reform movement stated: “We’ve learned a great deal about the Foreign Corrupt Practices Act in the last three years. We’ve learned that the best of intentions can go awry and create confusion and great cost to our economy.” During the hearing, Senator Chafee further stated as follows: “Critics have attempted to characterize my bill as a signal to U.S. companies that they can return to the ‘bad old days’ of foreign bribery. That is not my intent, nor should it be the signal. I abhor bribery, whether domestic or foreign, but I also dislike confusion. Thus, my bill will eliminate uncertainty while maintaining strong prohibitions against bribery. The ambiguities and murkiness of the bill’s language have caused U.S. companies to withdraw from legitimate markets and contributed to the decline in the U.S. share of world exports. We need to end this confusion.”
During Senate hearings, Senator D’Amato also noted as follows: “The thing that bothers me about this kind of a debate is that we tend to posture this thing as if somebody were for or against bribery. I think it is important to state for the record that bribery of any foreign official by any U.S. concern is bad for our national health, and it is something that we have got to stop, we have got to deal with, and we have, I think, gone a long way with the FCPA. What we proposed to do is to simplify that law and to make it workable so that we can set that standard in concrete from now on and not have the abuses that occurred prior to 1977, but not by stopping exports, but by stopping bribery. That is the objective.” Senator D’Amato further stated as follows. “I think it is very important that in the committee’s work that we not create the attitude that this committee is making it easier for businesses to engage in illegal activity. That has, in fact, been suggested, not only by our distinguished colleague from Wisconsin [Senator Proxmire, a Senate leader in enactment of the FCPA who generally opposed the reform efforts], but also by certain journalists, who are questioning the need for proposed changes. I think that rather than hampering prosecution of illegal acts, [the reform bill at issue] would clarify and make possible just prosecution of those who engage in bribery. It would eliminate any ‘gray area’ by clearly spelling out the limits of the law.”
During Senate hearings, Senator John Heinz stated as follows. “… There are many people that are extremist, and there are others who get carried away by their enthusiasm who are going to argue that even if we change the provisions in the present act, that are unnecessary or ambiguous or uncertain, that even though we are not doing so, we are legalizing bribery. That strikes me as the worst kind of demagoguery, because it implies that everything that Congress has done in the past is perfect. And does anybody believe that?”
During the Senate hearing, William Satterwhite (Senior VP, General Counsel and Chief Legal Officer of Enserch Corp.) testified. He began his testimony as follows: “Before I begin my comments, I would like to state for the record, Enserch Corp. is not in favor of bribery. It is a sad commentary on the political atmosphere surrounding this legislation that those who support the bill feel compelled to make clear that they do not condone corruption.”
Back to the present day, even if the White House is actually contemplating FCPA reform, the above statements are still spot-on and ring true.
As William Brock (U.S. Trade Representative) stated during a 1982 FCPA reform hearing.
“Just because the Foreign Corrupt Practices Act spotlights a sensitive subject, some people wish to turn a ‘blind eye’ to its shortcomings rather than risk being accused of being ‘soft on bribery.’ That is too easy a way out. Retreating from controversy will not cure the law’s deficiencies. [… ] Is there any U.S. law that ought to be above such review and clarification – especially one as complex as the FCPA.”
Same is true today.
Some final facts to conclude this post.
FCPA enforcement in the Trump administration is above historical averages and 2019 (as measured by overall settlement amounts) was a record-breaking year. (See here ). Moreover, individual FCPA enforcement is up and above historical averages. (See here ).
Even as to these facts, some seem to be grasping for straws.
For instance, in the last several days I’ve had exchanges with individuals that go something like this: but …. many of those FCPA enforcement actions originated before Trump became President.
Of course that is true as the average length of FCPA scrutiny tends to be approximately 4 years. (See here ). However, this was also true in the Bush administration and Obama administration, but I don’t seem to recall anyone “discounting” FCPA enforcement during those administrations based on this FCPA dynamic.
In short, some people once again need to take a deep breath when it comes to the FCPA and Trump.
The FCPA is not going anywhere.
FCPA enforcement is vibrant.
Even if certain FCPA reforms may be proposed by the White House, for consideration by Congress, wait for the actual reforms, and then have a substantive based discussion.
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