In a surprise to no one, President Trump said he was suspending Foreign Corrupt Practices Act (FCPA) enforcement. Why is it no surprise? Because the FCPA commits illegal bribery and corruption against foreign officials and employees of state-owned enterprises outside the US. Trump wants to make such business tactics legal for US companies, as he thinks US companies cannot compete with other international actors without engaging in such illegal conduct. But the reality is that Mark Twain was correct; ‘right is right and wrong is wrong,’ and Trump’s pronouncement of non-enforcement did not make bribery and corruption of foreign officials and employees of state-owned enterprises outside the US legal. This announcement also puts more US companies at risk for shakedowns by corrupt foreign officials.
For the compliance professional, this suspension of FCPA enforcement will make having an effective corporate compliance program even more important for the upcoming 3+ years of Trump’s final term. I want to break down the reasons for continued effective compliance into legal and business.
Criminal Reasons
A. 5-Year Statute
The FCPA is still the law of the US. Any company or person who now engages in bribery and corruption of foreign officials and employees of state-owned enterprises outside the US will violate the FCPA. There is a five-year statute of limitation on FCPA enforcement, so even if your organization decided to start bribing today, there would be a five-year window of potential liability. Moreover, it is five years from the discovery of the illegal conduct, so unless your organization affirmatively states via its books and records that it has engaged in illegal activities and violated the FCPA, there will be an even longer tail for investigation and prosecution.
B. SEC and Books and Records
Remember, the FCPA has two basic provisions. One, thou shalt not bribe foreign officials and employees of state-owned enterprises outside the US. Second, thou shalt have accurate books and records. The Securities and Exchange Commission (SEC) enforces this second component of the FCPA. It has two parts: (a) financial books and records that accurately reflect the financial condition of the organization and (b) effective internal controls that prevent bribery and corruption. Is the SEC now going to turn its back by allowing companies that engage in illegal actions to puff up their profits to defraud the American public?
C. Individual Prosecutions Outside the US
The stakes are even higher for the individual corporate employee doing business outside the US. NO country in the world says that bribing our government officials is legal. That makes any such bribe illegal. This is not about an extra-territorial law such as the FCPA, where China or Nigeria would come to the US and arrest a US citizen for actions in China or Nigeria. Instead, it is about China or Nigeria enforcing their domestic laws. Remember the GlaxoSmithKline PLC (GSK) bribery conviction in China in 2014. A Chinese court fined the company nearly $500 million dollars. Equally significant was the criminal conviction of the Country Manager and several of his direct reports. With the Trump Administration aiming more tariffs and other trade sanctions at China, does anyone not think the Chinese government may well open investigations, warranted or not, at US corporations doing business in China and US individuals working in China? (For a full discussion of the entire sordid affair of GSK in China, read my book on it, available on Amazon.com)
What about detaining US businesspersons on more trumped-up charges? Just look at what purported US ally Nigeria did to Binance compliance officer Tigran Gambaryan in 2024. According to the New York Times (NYT), the “Nigerian government charged Mr. Gambaryan and Binance itself with tax evasion and money laundering — effectively accusing the company and a midlevel employee of the same crimes.” He was held in custody for eight months in a Nigerian prison in Abuja. Both the GSK matter and Gambaryan’s case point to the real risks that US businesspersons may now well face if they engage in bribery and corruption outside the US. Wherever you want to be, a prison in China or Nigeria is not one of those places.
Business Reasons
A. The Bribery Tax
Paying bribes is a cost. Once you pay a bribe, corrupt officials have you in their collective back pockets. Multiple FCPA enforcement actions over the years have demonstrated that corruption officials are never shy about demanding more illegal payments during the life of a business relationship. Does an organization think a one-time bribe payment will secure your contract? Once corrupt government officials eat at the trough of a corrupt company, they always come back for more. Churchill said, ‘One, we have established your morals; now it’s just a question of the amount.’
Bribery can be a one-time payment or much more ongoing. Bribes are a percentage of the overall contract value and can go up or down. Who is going to keep those records, and how does an organization engage in such negotiations? It sounds like trying to negotiate with organized crime. The bottom line is that bribes are a tax that any organization subjects itself to when it engages in corruption.
B. Negative Impact on Revenue
Not only does paying bribes put an individual and organizations at criminal risk, but it can also be more costly and a less effective business strategy in the long run. A CFO.com article reported that George Serafeim and Paul Healy of Harvard Business School released a paper in the American Accounting Association journal The Accounting Review that the business impact of paying bribes “overall effect on a company’s finances is nil—a poor result, given that the practice could trigger damaging media. Yet bribes are costly. The low returns on equity on incremental sales in high-corruption markets for firms [that commit bribery] imply that the costs are not fully recovered through higher prices on corrupt contracts or through scale economies from increased sales.”
Statistically, the authors reviewed some “480 large multinational companies from 32 countries; those with strong anticorruption programs had average sales growth over three years of 2.6% in high-bribery countries or regions, far below the 14.1% achieved by anticorruption laggards. Yet, that didn’t translate to a greater gain in return on equity for the latter group compared with the former. “On average, the sales growth and ROE effects are offsetting.”
C. Department of Bribery and Corruption
Now, think about the business impact of how bribes might be paid. Will your organization go full Siemens or Odebrecht and create an entire department dedicated to bribery and corruption? Will your organization change its Code of Conduct to say that now that the Trump Administration has suspended FCPA enforcement, your company will engage in illegal acts? Are you going to try to hide your newfound business strategy? If so, what is the cost of announcing that your organization believes in unlawful acts to gain business? What business executive will lead this organization and put their head on the chopping block for directing illegal activity?
Your organization would be skewered in the court of public opinion. Just as consumers have no interest in purchasing clothing or other products created by slaves or forced labor, they would have zero interest in companies that pay bribes to garner business. Such actions could also lead to more civil actions for anti-competitive behavior brought by private parties.
But here, the greater risk is internal for companies. After 20 years of training on not paying bribes, how to spot a bribe, and who not to do business with, the Trump Administration expects US companies to change course. What will this do to a culture of doing business ethically and in compliance? If corporate execs set up a Department of Bribery and Corruption or try to hide it, what message does that send to employees? It sends the message that engaging in bribery, corruption, and fraud is acceptable in our organization.
This fraud component may be the most important business reason for robust compliance. Every ACFE Report to the Nations makes clear that corruption is a subset of fraud. Any company that supports bribery and corruption will be more susceptible to employees engaging in fraud. After all, if a company is willing to violate the law to make money, why shouldn’t employees do so as well?
III. Compliance is the Key
I have set out all of these scenarios to explain why compliance will become even more important during this second Trump administration. If doing ethics is doing the right thing when no one is looking, then compliance should be seen as the business process that follows up to ensure it is all happening. Going forward, the need for effective compliance will only increase, and the pressure on compliance professionals will intensify. An effective compliance program will make your business run more efficiently and more profitably. It will protect your organization from various woes brought on by the current administration.
