US Reconsiders Its Priorities in Combating Foreign Bribery

Memorandum of the Attorney-General

On 5 February, Pamela Bondi, newly appointed US Attorney-General,issued a number of memoranda containing updated policy priorities of the US Department of Justice (DOJ) headed by her.

One of these documents entitled Total Elimination of Cartels and Transnational Criminal Organizations contains provisions on combating bribery of foreign public officials.

In particular, the document states that law enforcement should now focus on investigating the violations of the FCPA that stimulate illegal activities of drug cartels and transnational organized crime; as a consequence, investigations of the offences lacking this link will be considered as secondary. Similar policies should be conducted by the Money Laundering and Asset Recovery Section (MLARS) of the Criminal Division of the US DOJ with regard to the investigation, prosecution and confiscation of assets.

The adopted document also facilitates the procedure for initiating criminal cases against foreign bribery. Under paragraph 9-47.110 of the Justice Manual, any proceedings concerning the FCPA or the Foreign Extortion Prevention Act (FEPA) should be sanctioned by the Criminal Division of the US DOJ, while the Foreign Corrupt Practices Act Unit of the Fraud Section of the Criminal Division is authorized to carry out relevant investigations and prosecution. The Bondi Memorandum decentralizes this exclusive jurisdiction of the Criminal Division, but only with regard to the proceedings related to the activities of drug cartels and transnational organized crime. This means that in these cases the prosecution services of any division of the DOJ will be able to autonomously initiate proceedings notifying the Fraud Section 24 hours before the launch of investigations about its intention to charge and providing all documents concerning alleged charges upon request.

Finally, the memorandum announces the dissolution of the KleptoCapture Task Force established in 2022 and of the Kleptocracy Asset Recovery Initiative launched in 2010. The activities of those structures were focused on:

Ensuring compliance with the sanctions, export restrictions and economic countermeasures with regard to the Russian oligarchs and their associates. Last year, in particular, it was announced that KleptoCapture secured the confiscation of $700 million of assets related to Russia and charged over 70 persons with violations of sanctions and export controls;
Detecting, investigating and prosecuting kleptocracy, tracing and recovering stoled and/or illegally acquired assets, prosecuting corrupt officials, including foreign ones. In early 2023, it was stressed that the Kleptocracy Asset Recovery Initiative secured the confiscation of around $1.7 billion.

The aforementioned provisions will be in force for 90 days and can be given the status of a permanent decision or abolished.

In spite of the fact that many American media consider this Memorandum as a step towards restricting the area of application of the FCPA and even concluding the fight against foreign bribery, experts in the FCPA enforcement believe it is unlikely that the document will have a considerable impact on the enforcement of the Act.

Executive order of the President

Only a few days later, on 10 February, newly elected US President Donald Trump signed the Executive Order on Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security.

The Order provides for the suspension of the FCPA for 180 days (with the possibility of extension) until the guiding principles and policies regulating investigations and enforcement of the FCPA have been revised.

Throughout this period:

It is prohibited to initiate any new investigations and enforcement action under the FCPA (exceptions can be made upon the decision of the Attorney-General);
All investigations and enforcement action under the FCPA must be thoroughly analyzed;
Based on the findings of the analysis, updated guidance and/or policies regarding FCPA enforcement should be issued; they should be rooted in the principles of priority of the interests of the United States and economic competitiveness of the country compared to others, as well as in an effective use of resources of the federal law enforcement.

The document stresses that this decision was taken by the head of State due to the fact that the current enforcement of the FCPA is «overexpansive and unpredictable», is «against US citizens and businesses» and provides for their liability for «routine business practices in other nations», while law enforcement «not only wastes limited prosecutorial resources that could be dedicated to preserving American freedoms, but actively harms American economic competitiveness and, therefore, national security».

As in the case of the Bondi Memorandum, a number of journalists and experts have already labelled the Order a step towards rejecting a powerful tool for countering foreign bribery. For instance, the head of Transparency International US said that Trump’s Order «diminishes - and could pave the way for completely eliminating - the crown jewel in the U.S.’s fight against global corruption».

At the same time, other experts stress that the need to revise and/or improve the FCPA had been announced before also by some open critics of incumbent President Trump. It was highlighted that the FCPA and the documents regulating its enforcement contain many unclear and equivocal provisions and definitions, while the mechanisms used by law enforcement such as the actual reversal of the obligation to conduct internal investigations onto companies and expansion of pre-trial resolutions less demanding for the depth of investigations as a means to solve cases under the FCPA reduce the quality of law enforcement and have a negative impact on competitiveness of US companies.