Context of the FCPA and its Extraterritorial Reach The Foreign Corrupt Practices Act (FCPA) prohibits U.S. companies and citizens from bribing foreign officials to secure business advantages, but its impact extends beyond national borders. Through its extraterritorial jurisdiction, the FCPA also applies to foreign companies operating on U.S. soil, utilizing the U.S. financial system, or maintaining ties with American firms. This has empowered U.S. authorities to impose multibillion-dollar penalties on foreign companies that breach its provisions, yielding a dual benefit: safeguarding U.S. businesses from unfair competition and generating substantial revenue for the Treasury via fines.
For instance, between 2008 and 2020, foreign companies such as Siemens (Germany), Alstom (France), and Petrobras (Brazil) faced sanctions amounting to billions of dollars under the FCPA. Data from the Department of Justice and the SEC reveal that approximately 60% of the largest fines levied under the FCPA have targeted non-U.S. entities. This ability to penalize foreign competitors has leveled the playing field, punishing those who employ bribery as a business tactic while protecting ethically operated U.S. companies.
Why the Suspension Harms the United States The suspension of the FCPA does not benefit U.S. companies, as the Trump administration might argue by portraying it as a reduction in regulatory burdens. On the contrary, it triggers adverse effects that undermine the United States’ competitive and moral standing globally. Below, I outline the primary harms, emphasizing how the loss of oversight over foreign companies amplifies these consequences:
- Loss of a Tool Against Unfair Foreign Competition The FCPA has served as a potent instrument to sanction foreign firms that bribe officials in third countries to secure contracts or advantages that might otherwise have gone to U.S. companies. The case of Odebrecht, a Brazilian construction firm that paid over $3.5 billion in fines in 2016 for bribery across multiple nations, illustrates how the FCPA shields U.S. economic interests by penalizing corrupt practices that distort global markets. Suspending the law relinquishes this supervisory power, allowing foreign companies to act with impunity and edge out U.S. competitors in international contracts.
- Damage to International Reputation and Moral Leadership The United States has long established itself as a leader in combating corruption, largely due to the FCPA. Beyond punishing violators, the law has spurred other nations to enact similar measures, such as the UK Bribery Act. Suspending the FCPA sends a conflicting signal: that corruption is acceptable if it serves short-term economic goals. This erodes U.S. credibility in global forums like the G20 and OECD, where it has championed anti-corruption standards, and diminishes its authority to demand transparency from foreign governments and companies.
- Increased Risks for U.S. Companies Rather than creating parity, the FCPA’s suspension tilts the playing field toward foreign competitors willing to leverage bribery. Absent the deterrent of U.S. sanctions, these firms may escalate corrupt practices in critical markets, disadvantaging U.S. companies still bound by state laws and international agreements like the OECD Anti-Bribery Convention. Moreover, the suspension does not eliminate legal risks for U.S. firms: engaging in corruption during this period could expose them to retroactive penalties upon the FCPA’s reinstatement or prosecution by other jurisdictions.
- Loss of Revenue from Fines and Weakening of the Financial System FCPA penalties have funneled billions into the U.S. Treasury, predominantly from foreign entities. For example, Siemens paid $800 million in sanctions to the U.S. in 2008, directly bolstering public funds. Halting the law curtails this revenue stream and limits the U.S.’s capacity to deter corruption impacting its financial system, as many foreign firms route bribes through American banks.
- Creation of an Exploitable Legal Void The suspension generates a regulatory gap that foreign companies could exploit to operate with fewer constraints in the U.S. or markets where they vie with American firms. Without the FCPA, U.S. authorities lose the ability to investigate and penalize these entities, potentially increasing corruption in global supply chains linked to the U.S. This not only damages the economy but also threatens national security by enabling illicit activities tied to corruption, such as money laundering.
Arguments in Favor of the Suspension and Their Refutation Proponents of the suspension contend that the FCPA burdens U.S. companies with excessive compliance costs, hampering their competitiveness against firms from nations with laxer rules. Yet this overlooks how the law also sanctions those foreign companies when they operate within U.S. influence, thus balancing the scales. Furthermore, compliance costs represent an investment in integrity and governance, fostering trust among investors and global partners. The short-term relief from these costs pales against the long-term risks of losing markets and prestige.
Recommendations for Companies in This Context Given the suspension, companies should adopt proactive strategies to safeguard their interests:
- Strengthen Compliance Programs: Though the FCPA is paused, other anti-bribery laws (state and international) remain active. Robust internal policies are essential.
- Monitor Foreign Competitors: Firms should watch for corrupt practices by rivals and report them to alternative bodies, such as OECD or EU authorities.
- Advocate for Reversal: U.S. companies, particularly those harmed by corrupt foreign competitors, should press for the FCPA’s swift reinstatement.
Recommendations for Professionals In this transitional landscape, compliance, legal, and business professionals must exercise caution and foresight. Key steps include:
- Maintain Robust Compliance Programs: Despite suspended federal enforcement, adherence to local and international anti-bribery laws is mandatory. Updating internal policies is critical.
- Ongoing Training: Educating teams on corruption risks and ethical standards remains vital, irrespective of FCPA enforcement.
- Proactive Monitoring: Audits and internal controls should be implemented to detect and prevent violations, protecting both the company and its reputation.
Suspending the FCPA does not benefit the United States—it harms it by stripping away a vital mechanism to penalize corrupt foreign companies that unfairly compete with American businesses. Far from a burden, the FCPA has been a cornerstone of the U.S.’s competitive and moral edge, safeguarding its economy and reinforcing its global leadership. This decision undermines those gains, exposing the nation to unnecessary economic and reputational risks. Companies and the government must acknowledge that the United States’ true strength lies in its dedication to transparency and justice, not in capitulating to corruption.
