New AG Signals FCPA Retreat

Well that didn’t take long: on the same day that Pam Bondi was sworn in as the next U.S. attorney general, Bondi issued a flurry of policy memos that will have the practical effect of taking several big steps back from enforcement of corporate misconduct laws.

Bondi arrived at the Justice Department on Wednesday afternoon and fired off at least a dozen memos outlining her enforcement priorities. Most notable: enforcement of the Foreign Corrupt Practices Act will shift away from companies that pay bribes to foreign officials to win business contracts (which is, ya know, the whole point of the FCPA), in favor of FCPA cases that involve bribery of foreign officials to “facilitate human smuggling and the trafficking of narcotics and firearms,” according to a report in Bloomberg. 

This does square with President Trump’s fixation on Mexican drug cartels, and in fairness to Bondi, she’s been an opponent of human trafficking dating back to her time as state attorney general in Florida in the 2010s. Both enforcement priorities are laudable goals unto themselves — but the decision to divert resources from corporate corruption, rather than to bolster the Justice Department’s prosecutorial resources overall, will be a big disappointment to anti-corruption and good governance enthusiasts around the world. It’s a reminder that Trump just doesn’t see corporate corruption as anything sinful, and that Bondi is at the Justice Department simply to do his bidding.

There’s more. Bondi also disbanded the Corporate Enforcement Unit of the Justice Department’s National Security Division, a team that had been elevated during the Biden Administration to bring more firepower to export-control violations. 

Bondi’s memo announcing the end of that team only says that prosecutors assigned to the Corporate Enforcement Unit “shall return to their previous posts,” so I’m not sure what happens next with export controls enforcement. I’m hard-pressed to believe the department will stop bringing cases against U.S. companies deliberately selling controlled items to our foreign adversaries; but then again, I’m also hard-pressed to believe this Administration will hold companies accountable for anything. So we’ll have to wait and see. 

And according to an article in Slate, another Bondi memo mounted a full-court press against DEI programs — including the potential for criminal enforcement against private businesses simply for having DEI programs.

To be clear, Bondi isn’t outright promising to prosecute companies that have DEI programs, which could include anything from affinity groups for black employees to policies that say minority candidates should be recruited to apply for promotions. Rather, her memo directs the Justice Department’s Civil Rights Division to draft a report by March 1 with recommendations “to encourage the private sector to end illegal discrimination and preferences, including policies relating to DEI.”

The memo also directs Justice Department underlings to generate a list of “sectors of concern” (sounds to me like code words for higher education and local government) and the “most egregious and discriminatory DEI and DEIA practitioners in each sector of concern.” She also asks for “litigation activities” that prosecutors could pursue. Translation: Bondi wants to threaten lawfare so exhausting that the targets promise never to consider that maybe women, gays, and minorities have an extra tough time in this world ever again.

And Yet, Compliance Needs Endure

Bondi’s missives from yesterday — and there will surely be more such memos, speeches, and other declarations to come — are enough to make any corporate compliance officer’s head spin. That’s one point of her effort; it’s very much in the shock-and-awe motif of the whole Trump Administration, meant to leave everyone so overwhelmed that you’ll just take the Administration’s word as gospel.  

Well, as we try to unpack and understand Bondi’s policy shifts, I’d recommend that compliance officers keep their eye on a few important balls.

First, you still need an anti-corruption compliance program, regardless of any retreat from FCPA enforcement by Bondi. Many countries now have corporate anti-corruption statutes, so if you’re a global business, you’re going to encounter one of those FCPA-like statutes somewhere. Maybe you first built your compliance program years ago for the FCPA, but you still need it now as a part of doing business globally.

Also remember that the statute of limitations for the FCPA is five years from the final act necessary to commit the bribery offense — a period that will extend beyond the end of Trump’s term in 2029. We could have a president with very different enforcement priorities by then, and it’s even possible that the 78-year-old Trump won’t finish this term. We have no idea what future enforcement priorities might be; abandoning FCPA compliance efforts today might look terrible in hindsight. 

Second, if you’ve tied your anti-corruption compliance program to the FCPA, you’re doing it wrong anyway. Anti-corruption programs can and should be designed to encompass larger issues around fraud in all forms, not just corrupt payments that might violate a specific statute. A good compliance program can track duplicate payments, find bogus vendors, uncover embezzlement schemes, and more. Those issues can be compliance risks, but they’re definitely financial risks too, that no company wants to tolerate. 

In other words, if management believes a compliance program is only meant to help avoid the threat of FCPA enforcement, they don’t understand what a compliance program is really there to do. Educate them on that before it’s too late.

Third, the Justice Department still has its whistleblower awards program — or, at least, it does for now; the Criminal Division’s website for submitting whistleblower tips was live on Thursday morning. So even if prosecutors don’t file many cases for corporate misconduct, they could still stockpile those allegations of misconduct for future action. Companies will still need to be ready to respond to potential enforcement, which means having an effective compliance program.

Granted, the Criminal Division whistleblower program is only a pilot program, so Bondi could amend or kill it at any time. Then again, she might see the utility in having a whistleblower program (remember, other parts of the Administration are using whistleblower hotlines to solicit tips on illegal aliens or DEI programs), so I wouldn’t be surprised if this program endures.

Fourth, many other regulatory compliance issues will still keep you busy. Healthcare companies will still be under scrutiny for fraud. Pharmaceutical companies will be under scrutiny for quality control. Banks will be under scrutiny for vendor risk management, financial stability, and more. State attorneys general will be watching companies for data privacy, discrimination, and consumer protection issues. 

So even if enforcement against corporate misconduct goes away at the federal level, you’ll still have lots of other regulatory compliance and enforcement at the state level. You’ll still need compliance capabilities for that too.

Fifth, plenty of the DEI stuff will be challenged in court and may never come to pass. If Bondi follows through on her jihad against DEI programs, opponents will inevitably say that her prosecutions trample on their First Amendment rights — that companies do have a free speech right to support DEI programs, a point that has been upheld in federal courts multiple times (as recently as this week, by a Trump-appointed federal district court judge).

Anyway, we’ll have much more analysis in days and weeks to come. My point is simply that, as always, a strong ethics and compliance program brings its own rewards. The capabilities that a strong compliance program brings to your organization are capabilities useful for a wide range of risk management challenges that go well beyond FCPA or export control enforcement. 

That was true in previous administrations that took corporate misconduct seriously, and it will still be true even if this new administration doesn’t. Take deep breaths, and focus on that point.