Who benefits from the White House pause on fighting corruption
Add Axios as your preferred source to
see more of our stories on Google.

Illustration: Aïda Amer/Axios
The Foreign Corrupt Practices Act stands at the center of the global fight against bribery and corruption, and for the time being, it has been largely neutralized by Donald Trump.
Why it matters: The president's executive order pausing FCPA enforcement may act as a green light for corporate executives, both foreign and domestic, who have a high risk appetite and few ethical scruples about bribes and other forms of corruption.
- In turn, that risks putting law-abiding corporations at a competitive disadvantage when it comes to procuring government contracts.
Context: Congress passed the act in 1977 to root out the "foreign corporate payments problem," as law professor and FCPA expert Mike Koehler wrote in 2012.
- At its heart, the law prohibits giving "anything of value" to foreign officials to influence their behavior or secure business advantages.
The intrigue: While Trump's executive order claims that "American citizens and businesses" have suffered from FCPA enforcement, nine of the 10 biggest FCPA prosecutions have been against foreign companies, including Airbus, Siemens and Ericsson.
- Public U.S. corporations are subject to a vast range of anti-corruption laws, all of which continue to be enforced, which means weakening the FCPA might embolden foreign corporations more than domestic ones.
- "I don't think that non-American firms feel that they are as constrained as American firms by a lot of the American corporate governance statutes," Duke University law professor Rachel Brewster tells Axios.
Yes, but: The FCPA remains the law of the land, and the order is explicitly couched in terms of "eliminating excessive barriers to American commerce abroad."
- That suggests the Justice Department might pause enforcement for U.S. companies while keeping foreign corporations in its crosshairs, which Brewster describes as "a kind of legal industrial policy" where the DOJ concentrates its prosecutions on foreign firms in general, and Chinese firms in particular.
- The FCPA "could be a pretty powerful tool," Brewster says, in terms of the U.S. arsenal of retaliation against foreign countries engaged in a trade war.
- Michael DeBernardis, an FCPA attorney at Hughes Hubbard & Reed in Washington, agrees: "It wouldn't shock me to see the FCPA focused on non-U.S. companies."
Between the lines: DeBernardis expects that the most likely companies to try to take advantage of the pause will be U.S. companies involved in industries often faced with solicitation of bribes.
- While large public companies are unlikely to change their ways, private companies might be willing to take bigger risks. "I could certainly see certain companies or higher risk industries changing their calculation as to what the risk of an FCPA violation is based on this," DeBernardis says.
Flashback: Trump himself faced FCPA constraints when he attempted to build a hotel in Azerbaijan over a decade ago, per reporting from the New Yorker's Adam Davidson.
- As he was finalizing the deal in 2012, Trump went on CNBC to complain that the FCPA was "a horrible law and it should be changed."
The bottom line: While Trump didn't get his wish during his first term in office, things seem to be going very differently this time around.
