On Feb. 10, President Trump signed an executive order on Pausing Foreign Corrupt Practices Act Enforcement To Further American Economic and National Security. The Foreign Corrupt Practices Act of 1977 (FCPA) was passed following revelations from a subcommittee chaired by Idaho Sen. Frank Church of large-scale bribery of foreign officials being conducted by American businesses and officials, particularly aerospace and arms dealers. The countries included, among others, Japan, Germany, Italy, the Netherlands, Saudi Arabia, Nigeria, Indonesia, Mexico and Colombia, according to a report published on Responsible Statecraft.
But Trump thinks the threat of prosecution under the law is now hindering American businesses.
Through this order, Trump calls on Attorney General Pam Bondi to review current actions under FCPA, refrain from initiating new FCPA investigations (except in exceptional cases), and “issue updated guidelines or policies, as appropriate, to adequately promote the President’s Article II authority to conduct foreign affairs and prioritize American interests, American economic competitiveness with respect to other nations, and the efficient use of Federal law enforcement resources.”
The suspension of FCPA enforcement means that American companies are essentially free to offer bribes—and their counterparts now know they are free to demand them!
In the field of resource extraction, for example, it is common for less developed countries to receive financial incentives to offer sweetheart deals to international investors, with the result that the officials get rich while the country does not fairly benefit from its mineral wealth.
While the responsibility lies with the relevant nation’s political structure, the tacit approval of these arrangements signalled by the executive order could make it more difficult to overcome corruption.
While an intention to improve American business opportunities abroad is commendable, more productive avenues might include increasing support for the Export-Import Bank of the United States.
