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In a controversial move, U.S. President Donald Trump signed an executive order on Monday directing the Department of Justice (DOJ) to pause prosecutions under the Foreign Corrupt Practices Act (FCPA), a nearly 50-year-old law that criminalizes bribing foreign officials to secure business deals. Trump argued that the law places American companies at a disadvantage compared to their international competitors.
“Nobody Wants to Do Business With Americans”: Trump
The order instructs the Attorney General to review FCPA guidelines and enforcement policies within 180 days. During this period, the DOJ is prohibited from initiating new FCPA investigations or enforcement actions unless the Attorney General grants an individual exception.
Speaking at the Oval Office on Monday, Trump defended his decision, stating, “It turns out that in practicality, it’s a disaster. Nobody wants to do business with the Americans.”
A White House factsheet echoed his sentiment, asserting that the law harms U.S. companies by preventing them from engaging in business practices that are common among their international competitors. “U.S. companies are harmed by FCPA over-enforcement because they are prohibited from engaging in practices common among international competitors, creating an uneven playing field,” the statement read.
Review of Existing Investigations Under Foreign Corrupt Practices Act and Future Guidelines
The executive order also mandates a detailed review of all ongoing FCPA cases, with the Attorney General instructed to take “appropriate action” to ensure enforcement remains within “proper bounds” and respects presidential foreign policy prerogatives.
Once new guidelines are issued, any future FCPA prosecutions must adhere to them and receive specific authorization from the Attorney General. The order also allows for reconsideration of past FCPA cases, with the Attorney General directed to determine whether remedial measures or presidential intervention are necessary.
Foreign Corrupt Practices Act Pause and Implications for Gautam Adani Case
Trump’s order could have significant consequences for high-profile FCPA cases, including the U.S. Department of Justice’s indictment of Indian billionaire Gautam Adani and his nephew Sagar Adani. Under the Biden administration, the DOJ had charged the Adani Group with fraud and allegedly orchestrating a bribery scheme.
The DOJ was reportedly investigating whether the Adani Group violated the FCPA by bribing Indian government officials to secure solar power contracts. With Trump’s decision to suspend prosecutions under the law, any ongoing or potential investigations into Adani in the U.S. could be delayed or weakened.
Hindenburg Research had previously accused the Adani Group of stock manipulation and corporate fraud, raising concerns about possible bribery. If these allegations were being examined under the FCPA, Trump’s directive might hinder any legal action in the U.S.
Allegations Against Gautam Adani
While the decision could provide temporary relief for Adani in the U.S., scrutiny from global regulators remains. Investors and oversight bodies in the U.K., European Union, and other international markets may continue monitoring the Adani Group’s business dealings.
The DOJ’s indictment accuses Gautam Adani, Sagar Adani, and senior Adani Green executives of bribing Indian state government officials with $265 million (approximately Rs 2,100 crore) to secure solar power contracts. The group allegedly raised funds in the U.S. by falsely claiming compliance with anti-bribery laws, which could constitute fraud under U.S. federal securities regulations.
The case alleges that Adani Green bribed officials in Odisha and Andhra Pradesh, and possibly Tamil Nadu, Chhattisgarh, and Jammu & Kashmir, to secure agreements from state-owned power distribution companies to purchase solar energy at above-market rates.
The Adani Group has denied all allegations, calling them baseless and asserting compliance with all applicable laws.
What Is the Foreign Corrupt Practices Act (FCPA)?
The FCPA, enacted in 1977, prohibits U.S. businesses, individuals, and foreign firms listed in the U.S. from bribing foreign officials to secure business advantages. It has two key components:
Anti-Bribery Provisions: These prevent businesses from offering bribes to foreign officials, including indirect payments through third parties.
Books, Records, and Internal Controls: This section ensures financial transparency and prevents fraudulent accounting practices used to disguise corrupt payments.
Both the Securities and Exchange Commission (SEC) and the DOJ are responsible for enforcing the FCPA. Violators can face significant fines, potential criminal prosecution, and even prison sentences of up to five years for individuals.
Impact of FCPA on Global Business
Before the FCPA’s passage, bribery was a common international business practice, with some corporations even writing off bribes as standard expenses on tax filings. The law sought to level the playing field for American businesses abroad, particularly with international agreements such as the Organisation for Economic Co-operation and Development’s (OECD) anti-corruption treaty.
However, Trump’s administration argues that the law, in its current form, hampers U.S. companies while competitors from other nations continue to engage in similar practices without repercussions. The suspension of FCPA enforcement could significantly reshape the global business environment and U.S. corporate compliance obligations.
Trump’s executive order introduces a period of uncertainty regarding the U.S.’s stance on corporate corruption and international business ethics. While the move may ease compliance burdens on American companies, it also raises concerns about weakening anti-corruption efforts globally.
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