Two Examples of Compliance Issues in Trump 2.0
Today we have two more examples of what ethics and compliance in the Trump 2.0 era might look like: one demonstrating the need for compliance capabilities right now, the other suggesting the ethics and integrity pressures companies could face in the future — and both worth compliance professionals’ attention, because folks, this stuff is coming.
First is an article that appeared in Politico over the weekend, about how the Justice Department is pursuing nonprofit groups that received $20 billion grants in the waning days of the Biden Administration. The article says that Ed Martin, interim U.S. attorney for Washington, D.C., fired off several letters last week to groups that received money from the Greenhouse Gas Reduction Fund, a grand program managed by the Environmental Protection Administration.
The letters asked the groups for copies of their “communications with EPA staff and transactions related to the program,” Politico said, as well as copies of the groups’ articles of incorporation and policies and procedures for managing the grants. Martin also wants the groups to appear in federal court sometime soon.
What’s this dispute all about? At the surface level, the EPA under the Trump Administration now claims that the Greenhouse Gas Reduction Fund was riddled with fraud, although so far EPA director Lee Zeldin has provided zero evidence for that. One also can’t dismiss the possibility that this is yet another example of the pathological hatred that Trump and his minions have for all things Biden Administration. So they will do whatever they can to eradicate those things Biden, such as snatching back grants already awarded.
Anyway, back to the compliance dimension to all this. I couldn’t help but notice that Martin wants to see (a) all communications and transaction records the nonprofits have relating to the EPA; and (b) all policies and procedures the groups have for handling grants.
Well, an organization won’t be able to provide such things without a competent compliance function.
Recordkeeping and policy management might not be the most glamorous part of a corporate compliance program, but they are absolutely critical capabilities. That’s going to be especially true in the Trump 2.0 Administration, which has no qualms about pulling all levers of regulatory and prosecutorial power to pursue anyone anywhere who has ever done anything President Trump and his minions might decide they dislike.
Recordkeeping, written policies, documented procedures, audits, progress reports on remediation work — they’ll all become indispensable, because Trump and his minions will be firing off all manner of accusations in years to come. Compliance programs are the ability to show your homework to the teacher, so he’ll move on to the next student.
‘Exploring Mineral Rights’ and FCPA Pause
The second article that caught my eye this weekend ran in the Financial Times. Apparently the Democratic Republic of Congo has approached the Trump Administration about awarding mineral extraction rights to U.S. companies, in exchange for U.S. support of Congolese president Félix Tshisekedi — who is battling armed rebels in the eastern part of the country, which also happens to be one of the most corruption nations on the planet.
The FT article stresses that talks about a minerals extraction deal are still just exploratory, but they do seem serious. As one U.S. State Department spokesman told the FT, “The DRC is endowed with a significant share of the world’s critical minerals required for advanced technologies. The United States is open to discussing partnerships in this sector that are aligned with the Trump administration’s America First agenda.”
Who knows whether such an arrangement with the DRC will ever come to pass. It is, however, yet another example of the deals Trump might try to foist on global businesses — deals with corruption at the core, but coated in promises from Trump that his administration won’t enforce anti-corruption laws. Would your board and management team be willing to swallow that pill?
I floated this idea in a post last week about BlackRock recently acquiring two ports critical to management of the Panama Canal. Nobody has suggested any corruption in that deal — but it does fit the profile of deals Trump would want to make happen, regardless of any corruption risks that might be present.
In his executive order pausing all FCPA enforcement, Trump expressly mentioned acquisition of ports as an example of deals serving the national interests of the United States, where he wouldn’t want concerns about FCPA prosecution to spook U.S. companies from bidding on the project. That same order also cited critical minerals as another example.
Now we have this story about the DRC, which just so happens to have critical minerals up the wazoo. Unfortunately, it also has corruption risks up the same location. So if you’re a global business that normally wouldn’t touch a DRC government project with a ten-foot pole, but now Trump is making all sorts of assurances that everything will be fine — what do you do?
Even if this specific DRC deal doesn’t come to pass, the Trump Administration will inevitably push some similar arrangement somewhere else sooner or later: mineral extraction in the Ukraine, undersea oil joint-ventures with Russia, hotel and casino construction in a flattened Gaza Strip, oil development in Greenland and Canada after we invade; the list is endless.
How will you manage the corruption risks in those projects? Will you need to document and self-report the risks to the Justice Department, which will then give you some certificate of non-prosecution? What about the risk that Trump changes his mind later? What about when he asks for his cut, either from you directly or the corrupt government official?
Some of these questions presumably will be answered whenever attorney general Pam Bondi releases updated FCPA prosecution guidelines, which should be sometime later this year. Others, companies will have to answer themselves, based on their commitment to integrity and ethical business.
But if you don’t believe these scenarios are coming… well, let’s note the time and place you placed that bet. I know where I’ll place mine.