02-14-2025

Pausing Foreign Corrupt Practices Act Enforcement To Further American Economic and National Security

Executive OrderView the Original .pdf
View the Original .pdf

The 1-Minute Brief

What: Executive Order 14209, issued on February 10, 2025, pauses the initiation of new investigations and enforcement actions under the Foreign Corrupt Practices Act (FCPA) for at least 180 days. It directs the Attorney General to review FCPA enforcement policies and issue new guidelines.

Money: There is no direct Congressional Budget Office (CBO) score for this executive order. However, it could impact billions of dollars in potential fines and penalties that are typically collected through FCPA enforcement actions. Enforcement of the FCPA has generated billions in revenue for the U.S. government.

Your Impact: For the average American, the direct impact is minimal. The order primarily affects U.S. companies doing business in foreign countries by potentially reducing the risk of prosecution for payments made to foreign officials.

Status: This Executive Order was issued by the White House on February 10, 2025, and is in effect. The Attorney General is currently undertaking the mandated review.

What's Actually in the Bill

Executive Order 14209 temporarily halts the federal government's enforcement of the Foreign Corrupt Practices Act (FCPA), a law designed to prevent bribery of foreign officials. The order states that current FCPA enforcement has been "stretched beyond proper bounds" and harms American economic competitiveness and national security.

Core Provisions:

  • The Attorney General must cease initiating any new FCPA investigations or enforcement actions for 180 days from the date of the order, with a possible extension for another 180 days.
  • All existing FCPA investigations are to be reviewed to ensure they align with the administration's stated policy.
  • The Attorney General is required to issue updated guidelines for FCPA enforcement that prioritize the President's foreign policy authority and American economic interests.
  • Any future FCPA investigations after this review period must be specifically authorized by the Attorney General.
  • The Attorney General will also consider "remedial measures" for past FCPA enforcement actions deemed inappropriate.

Stated Purpose (from the Sponsors):

The White House states this order is designed to achieve the following:

  1. Preserve the President's authority to conduct foreign affairs.
  2. Advance American economic and national security by eliminating "excessive barriers to American commerce abroad."
  3. Re-evaluate whether current enforcement practices impede U.S. foreign policy objectives and harm the global competitiveness of American companies.

Key Facts:

Affected Sectors: All sectors with international operations, particularly in energy, technology, pharmaceuticals, and infrastructure.
Timeline: The initial pause on new enforcement is for 180 days starting from February 10, 2025, with a potential 180-day extension.
Scope: The order affects U.S. citizens, residents, and companies, as well as foreign companies that issue securities on U.S. exchanges, in their business dealings anywhere in the world.

The Backstory: How We Got Here

Timeline of Events:

The Post-Watergate Era (1970s):

Following the Watergate scandal, investigations by the Securities and Exchange Commission (SEC) uncovered that over 400 U.S. companies had paid hundreds of millions of dollars in bribes to foreign government officials to secure business. This led to a crisis of confidence in American business integrity. In response, Congress passed the Foreign Corrupt Practices Act in 1977, and President Jimmy Carter signed it into law, making the U.S. the first country to outlaw foreign bribery.

Bipartisan Enforcement & International Adoption (1980s-2010s):

The FCPA was initially met with criticism from the business community, which argued it put U.S. companies at a competitive disadvantage. The law was amended in 1988 to clarify certain provisions and again in 1998 to align with the OECD Anti-Bribery Convention, which was heavily promoted by the U.S. and eventually signed by 37 countries. Enforcement of the FCPA has been a consistent priority across both Democratic and Republican administrations, viewed as crucial for leveling the playing field for ethical American businesses and as a key national security tool. Enforcement actions, jointly handled by the Department of Justice (DOJ) and the SEC, have increased significantly since the early 2000s.

Why Now? The Political Calculus:

  • Shifting Priorities: The executive order reflects a long-held view by some, including former President Trump, that the FCPA is a "horrible law" that hinders U.S. businesses abroad. The order's language suggests a belief that vigorous anti-bribery enforcement is a self-imposed handicap in a competitive global market.
  • Economic Competitiveness: The administration argues that pausing enforcement will help American companies secure strategic business advantages in sectors like critical minerals and infrastructure, which it links directly to national security.
  • Pushback Against "Overreach": The order criticizes what it calls "overexpansive and unpredictable FCPA enforcement," tapping into complaints from some in the business community about the aggressive enforcement tactics and broad interpretations of the law by the DOJ and SEC.

Your Real-World Impact

The Direct Answer: This directly affects U.S. corporations operating internationally and their employees, but has little immediate, direct impact on most Americans.

What Could Change for You:

Potential Benefits:

  • Supporters of this order argue that a less aggressive FCPA enforcement posture could lead to increased profits for U.S. companies abroad, which could theoretically boost the U.S. economy and shareholder value.
  • It could lower compliance costs for businesses, which are often significant.

Possible Disruptions or Costs:

Short-term (1-2 years):

  • A pause in enforcement may create an uneven playing field, where companies willing to engage in bribery gain an advantage over those committed to ethical practices.
  • It could damage the international reputation of the U.S. as a leader in the global fight against corruption.

Long-term:

  • Critics argue that encouraging bribery ultimately undermines the rule of law, destabilizes foreign markets, and can lead to "market inefficiencies, instability, [and] sub-standard products."
  • It could expose U.S. companies to greater risks if corruption becomes more entrenched in the markets where they operate.

Who's Most Affected:

Primary Groups:

  • U.S. multinational corporations and their officers, directors, and employees.
  • Foreign companies that list on U.S. stock exchanges.

Secondary Groups:

  • Anti-corruption and human rights NGOs, who see this as a major setback.
  • Foreign officials in countries where bribery is common.
  • Competing companies from other countries.

Regional Impact: The impact will be most felt in regions where U.S. companies are competing for business and corruption risks are high.

Bottom Line: This executive order changes the risk calculation for American companies abroad, potentially allowing for business practices that were previously illegal, which supporters say levels the playing field and critics say promotes global corruption.

Where the Parties Stand

Republican Position: "Promoting American Competitiveness"

Core Stance: The party platform has historically shown varied stances, but the executive order aligns with a faction that believes the FCPA, as currently enforced, unfairly burdens U.S. companies.

Their Arguments:

  • ✓ Aggressive FCPA enforcement puts American businesses at a "huge disadvantage" against foreign competitors who do not face similar restrictions.
  • ✓ Resources used for FCPA prosecutions could be better used to fight other crimes.
  • ⚠️ The stated purpose of fighting corruption is valid, but enforcement has become overly broad and unpredictable, punishing "routine business practices."
  • ✗ The current enforcement regime is seen as an impediment to achieving key foreign policy and national security goals through economic means.

Legislative Strategy: The strategy is executive in nature: use the President's authority over the Justice Department to pause and reshape enforcement policies without needing congressional action. This follows a 2018 DOJ policy to avoid "piling on" penalties with other jurisdictions.

Democratic Position: "Upholding the Rule of Law"

Core Stance: Democrats have generally been strong supporters of robust FCPA enforcement, viewing it as a cornerstone of U.S. leadership on anti-corruption and human rights.

Their Arguments:

  • ✓ The FCPA levels the playing field for ethical U.S. businesses and is good for the American economy by fighting market-distorting corruption.
  • ⚠️ While open to ensuring fair and consistent application, any move to weaken the law is viewed with deep suspicion.
  • ✗ Pausing enforcement is seen as a gift to unscrupulous actors, undermining national security by allowing corruption to flourish, which can destabilize foreign governments.

Legislative Strategy: Oppose the executive order through public statements and congressional oversight. They would likely work with civil society organizations to highlight the negative impacts of reduced enforcement and prepare to reverse the policy under a future administration.

Constitutional Check

The Verdict: ⚠️ Questionable

Basis of Authority:

The Executive Order cites the President's authority under Article II of the Constitution, which grants the President executive power and authority over foreign affairs. This is linked to the President's duty to "take Care that the Laws be faithfully executed."

Relevant Portion of the Constitution (Article II, Section 3): "[The President] shall take Care that the Laws be faithfully executed..."

Constitutional Implications:

[Prosecutorial Discretion]: The Supreme Court has long held that the executive branch has broad discretion in choosing when and how to enforce laws. The decision not to prosecute is "generally committed to an agency's absolute discretion." The executive order frames its directive as an exercise of this discretion.
[Precedent]: In Heckler v. Chaney (1985), the Supreme Court established that an agency's decision not to take enforcement action is "presumptively unreviewable" by the courts. This precedent supports the idea that the President can direct the DOJ to change its enforcement priorities. However, this discretion is not absolute.
[Federalism]: The precedent in Kendall v. United States ex rel. Stokes (1838) established that the President cannot simply refuse to execute a specific legal duty imposed by Congress. While the President can set enforcement priorities, critics could argue that a blanket pause on all new FCPA investigations amounts to a suspension of the law itself, which the President cannot do.

Potential Legal Challenges:

Legal challenges are likely. An anti-corruption organization or a company harmed by a competitor's bribery could sue, arguing the executive order is an unconstitutional suspension of a duly enacted statute and an abdication of the President's duty to "take Care that the Laws be faithfully executed." They would argue this is not just setting priorities, but a wholesale refusal to enforce a law passed by Congress.

Your Action Options

TO SUPPORT THIS EXECUTIVE ORDER

5-Minute Actions:

  • Contact the White House: Use the White House comment line or website to express your support for Executive Order 14209 as a necessary step to protect American businesses.
  • Engage on Social Media: Share articles and opinions that support the re-evaluation of FCPA enforcement.

30-Minute Deep Dive:

  • Write a Letter to the Editor: Submit a letter to your local newspaper arguing that the FCPA in its current form hurts American jobs and competitiveness.
  • Join an Organization: Connect with business and trade associations that have been critical of FCPA overreach.

TO OPPOSE THIS EXECUTIVE ORDER

5-Minute Actions:

  • Call Your Rep/Senators: Capitol Switchboard: (202) 224-3121. "I'm a constituent from [Your City/Town] and I urge [Rep./Sen. Name] to publicly oppose Executive Order 14209 and defend the Foreign Corrupt Practices Act."

30-Minute Deep Dive:

  • Write a Detailed Email: Contact members of the House and Senate Judiciary Committees to demand oversight hearings on this executive order.
  • Join an Organization: Support groups that advocate for strong anti-corruption laws. Organizations like Transparency International, Human Rights Watch, and the Open Society Policy Center have actively opposed weakening the FCPA.