The FCPA Awakens: DOJ Announces New Enforcement Guidelines

In the third week of the Trump Administration, the President announced a 180 day “pause” on the enforcement of the Foreign Corrupt Practices Act (FCPA), which was promptly followed by a memorandum from the Attorney General introducing a shift in focus of FCPA enforcement to cartels and transnational criminal organizations (TCOs).  Earlier this week, Deputy Attorney General Todd Blanche announced the Department of Justice’s (DOJ) new guidelines for investigating and enforcing the FCPA (FCPA Guidelines), signaling the end of the pause and undermining the notion that robust FCPA enforcement was a thing of the past.  The new FCPA Guidelines, in combination with contemporaneous remarks by Matthew Galeotti, head of DOJ’s Criminal Division, make clear that DOJ will prioritize FCPA cases “firmly but fairly — by bringing enforcement actions against conduct that directly undermines U.S. national interests.”  This approach aligns with the Administration’s broader agenda of protecting American interests against foreign competition perceived to be unfair.  The FCPA Guidelines include procedural requirements and a description of non-exhaustive factors prosecutors must evaluate in considering whether to pursue FCPA investigations and enforcement actions, including mandating a focus on cases that promote: (1) “total elimination” of cartels and TCOs; (2) safeguarding opportunities for U.S. companies; (3) advancing U.S. national security interests; and (4) prioritizing serious misconduct. 

Key takeaways from the new guidelines include the following:

1. FCPA enforcement will be focused on direct harm to U.S. businesses, increasing risk for non-U.S. companies paying bribes that potentially implicate their U.S competitors.  As we have discussed, DOJ previously announced that white-collar enforcement should seek to address conduct that harms the competitiveness of U.S. businesses.  The new FCPA Guidelines reaffirm this focus on bringing enforcement actions against alleged misconduct that deprives U.S. entities of the opportunity to compete fairly in the global marketplace.  Under these guidelines, we expect to see enforcement focus on instances in which there is a compelling narrative of direct negative impact on U.S. companies, such as instances where foreign officials demand bribes from U.S. companies or U.S. companies lose business opportunities because competitors secure business through corrupt payments.  Non-U.S. companies with U.S. touch points should therefore be on notice of increased enforcement risk, given the policy’s explicit goal of protecting U.S. business interests and note that “the most blatant bribery schemes have historically been committed by foreign companies.”  The FCPA’s jurisdictional hooks are many: involvement of a U.S. person; the listing of the company on a U.S. exchange; or any other activity touching the United States, notably including U.S. dollar wire transactions which are necessarily processed through U.S. correspondent banks. 
2. FCPA enforcement will also focus on corruption related to crucial infrastructure sectors.  The FCPA Guidelines also seek to encourage enforcement to deter threats to U.S. national security.  National security is a broad umbrella—the FCPA Guidelines explicitly refer to threats by strategic competitors to “exploit rather than discourage corruption” to extract resources, noting that impacts to critical infrastructure place national security interests at stake.  This aspect of the FCPA Guidelines is thematically consistent with other stated priorities of the Trump Administration; to take just one example, the June 3 announcement of increased steel and aluminum tariffs cites threats to national security as the impetus.  Accordingly, DOJ may devote resources to investigate potential FCPA violations even where direct harm to U.S. businesses is less pronounced, but where there are impacts to companies operating in critical sectors such as defense, telecommunications, transportation, and advanced computing technology. 
3. FCPA enforcement will also be leveraged as a tool against companies using the infrastructure of cartels and TCOs.  Beyond directly targeting cartels and TCOs for making potentially corrupt payments, the FCPA Guidelines explicitly prioritize prosecuting instances in which the conduct touches upon other elements of the criminal ecosystem that are used by cartels and TCOs to facilitate other illegal activity.  Specifically, the FCPA Guidelines direct prosecutors to consider whether the alleged corruption involves money launderers or shell companies that are used by cartels and TCOs, or is otherwise linked to foreign officials as bribe recipients that have received bribes from cartels and TCOs.  As we have previously discussed in the context of DOJ’s white-collar enforcement priorities, this guidance is aligned with the Administration’s priority of dismantling cartels and TCOs by raising the stakes for companies with any link, however minor, to such activities.  This is consistent with the recent designation of drug cartels as foreign terrorist organizations, and the corresponding risk that seemingly mundane corporate activity can be charged criminally as providing material support to terrorism under the U.S. Anti-Terrorism Act.  Our analysis of the criminal material support charges alleged against two defendants in connection with narcotrafficking for the Sinaloa Cartel can be found here.
4. The FCPA Guidelines empower U.S. Attorney’s Offices to pursue FCPA cases expeditiously.  Although the FCPA Guidelines require that opening any new FCPA investigation must be approved by the head of DOJ’s Criminal Division, as an overall matter, the FCPA Guidelines provide for fewer procedural hurdles required to commence FCPA enforcement actions.  Historically, the DOJ Fraud Section (in Main Justice) was often directly involved, which resulted in dual supervision and additional layers of approval for charges and resolutions.  Although Main Justice is still responsible for evaluating whether investigations are consistent with the Administration’s priorities, these new guidelines empower U.S. Attorney’s Offices to move aggressively or—as the Guidelines command—“as expeditiously as possible,” once authorized to open an investigation.
5. The FCPA Guidelines provide avenues for advocacy at the resolution stage for companies facing FCPA charges.  The FCPA Guidelines explicitly note that when conducting enforcement investigations and proceedings, prosecutors should consider collateral consequences, including “the potential disruption to lawful business and an impact on a company’s employees” both during an investigation, and at the resolution stage.  Further, the new guidelines signal a potential reaction to the recent flood of applications to revisit indicted cases the Deputy Attorney General may have received following the initial pause in FCPA enforcement.  The FCPA Guidelines note that DOJ retains prosecutorial discretion to continue to terminate these FCPA enforcement actions based on the totality of circumstances, noting that DOJ’s “interests in pursuing cases that have already entered the judicial process . . . versus those that have not, may differ.”  Reading between the lines, this suggests that charged cases may proceed even if they might fall outside the newly updated policy.