Let me first nail my colors to the mast. I’m not a huge fan of Donald Trump “the man”, but I do have a begrudging respect for some of the policies he is implementing.
That does not extend to his recent suspension of the Foreign Corrupt Practices Act (FCPA), however. This is a backward step that will make regulatory compliance and anti-corruption tasks more difficult. As far as I am aware, this has not been undertaken with a view to replacing or updating the Act, merely that President Trump believes the FCPA to be a “horrible law” that should be changed.
I would be extremely surprised if President Trump was familiar with the FCPA and its intentions when it was enacted. Brought into law during the Carter era in 1977, the FCPA was introduced to target corruption and bribery around the world. It was passed at a time when bribing foreign officials in order to win contracts or to resolve legal matters quickly and favorably was a common activity.
They’re doing it, why can’t I?
I am inclined to believe that members of President Trump’s entourage, and those who funded his campaign, have fingerprints over his FCPA decision. Those who have pressed for the Act’s suspension will likely be businessmen who found its long-reaching principles inhibiting, and their dislike of the FCPA is almost inevitably borne out of frustration.
Indeed, President Trump has alluded to this, saying: “Every other country goes into these places and they do what they have to do,” insisting that American companies refusing to pay bribes are incapable of doing business.
As part of a team of professionals who take pride in the investigation and prosecution of corruption wherever it may occur, suspending a piece of legislation specifically intended to frustrate the corrupt does not sit well with me.
Those who have pressed for the Act’s suspension will likely be businessmen who found its long-reaching principles inhibiting, and their dislike of the FCPA is almost inevitably borne out of frustration.
The internet is full of opinion as to why the Republicans have taken this step. But the rationale is simple: it is (more) difficult to do business in countries where backhanders and corruption are rife, and when you are hamstrung by an Act that curtails “negotiation” and potentially leaves you vulnerable to prosecution.
The official position appears to be that the FCPA hinders US businesses and economic growth. But really, isn’t this the age-old adage that we often hear children exclaim: “They’re doing it, why can’t I?”
UK perspective
From a UK perspective, I believe that this move will complicate our investigations. British businesses, and indeed those from across Europe, will now be wondering how they can operate on the same level playing field as the Americans.
From both a UK and European viewpoint, the decision to suspend the FCPA will undoubtedly cause even deeper frustration among the European business community. It may increase temptation for these businesses to fight fire with fire: perhaps more palms will be greased? This would be a disastrous outcome. No one should want to see a free-for-all or a proliferation of corrupt officials all demanding (ever-higher) bribes.
Undoubtedly, the FCPA will have influenced UK and European bribery legislation. In a world that operates and does business in US dollars, the UK and European states will have had an eye on the FCPA when drafting their own legislation. It is likely that European investigators who have always enjoyed a positive working relationship with their American counterparts will now see that relationship suffer.
In practical terms, it will be back to the drawing board for the Brits and Europeans. How can they investigate corruption in places where sleaze is rife, if they are then forced to walk away if there are American citizens involved?
No one should want to see a free-for-all or a proliferation of corrupt officials all demanding (ever-higher) bribes.
From a UK perspective, the lessening supervisory burden on American firms will inevitably lead to regulatory gaps and inconsistencies in international anti-corruption efforts. Although there will probably be increased UK vigilance, and in all likelihood additional cooperation among global stakeholders in the fight against financial misconduct, the damaging effect of the FCPA’s suspension will be far reaching – and music to the ears of the corrupt.
In practical terms, UK regulatory professionals may find themselves needing to engage more directly with European counterparts and other international bodies to fill the void left by the FCPA’s suspension. This could lead to enhanced collaboration frameworks and shared investigative practices, potentially strengthening global anti-corruption initiatives in the long run. So some positives might emerge from all the negative angles here.
Adapting to regulatory change
As counter-fraud and anti-corruption professionals, adapting to regulatory changes is part of our daily reality. The suspension of the FCPA enforcement is a challenge for us to remain vigilant and innovative in our approach to tackling corruption and asset recovery cases. It is also clear that continued professionalism and dedication will be called for by those with the thankless task of safeguarding global financial integrity.
As a Brit, I don’t want to stick my nose into US politics, other than to say that the FCPA was a respected piece of legislation this side of the pond. If the decision is ultimately made to do away with it, then it will likely make our job over here much more difficult.
Tony McClements is head of Investigations at MKS Law, an international asset recovery and commercial litigation practice headquartered in the British Virgin Islands.
