In 2012, compliance lawyer Alexandra Lage found it unexpected to be a guest on CNBC’s Squawk Box to discuss anti-corruption measures. With a hint of humor, she wondered, “Has anyone found someone to make a pro-corruption argument?”
The program featured the chairman of the Trump Organization right before Donald Trump began his presidential campaign. Trump had previously criticized the U.S. Foreign Corrupt Practices Act (FCPA), labeling it a “horrible law.”
Enacted in 1977, the FCPA made it illegal for U.S. companies to offer bribes to foreign government officials. This legislation was a pioneering move in global anti-corruption efforts, inspiring similar laws in numerous countries, though many do not enforce them as stringently as the United States does.
Trump stated during a 2012 CNBC segment, “Every country in the world is doing that. That’s not allowed. It puts us at a huge disadvantage.”
After Trump ended his call, Lage, who founded TRACE International to combat corruption, responded, addressing the audience, “American businesses will never gain from illegal actions.”
When Trump assumed the presidency in 2017, his presence had a noticeable impact on the Justice Department, the agency responsible for enforcing the FCPA.
Fry Wernick, who was in charge of the FCPA division at the time, recalled that many wondered about the implications for corruption enforcement during Trump’s presidency. Indeed, several investigations initiated under President Obama were promptly wrapped up as Trump took office.
In the first month of his presidency, Trump discussed with Secretary of State Rex Tillerson the perceived unfairness of the FCPA impeding American companies’ ability to pay bribes for business opportunities overseas. However, Tillerson, who previously led ExxonMobil, reportedly corrected Trump, asserting, “Actually, that’s not the case. The FCPA is good law.” Wernick reflected positively on this because he believed such laws create a more level playing field for American companies abroad.
Prosecutions for Corruption During Trump’s Administration
Wernick noted that, contrary to concerns, the first term of the Trump administration saw robust enforcement of the FCPA, arguably the strongest period ever. He reported that the number of prosecutors dedicated to anti-corruption efforts in the Justice Department nearly doubled during this time, with the FBI enhancing its focus on international corruption.
Nevertheless, Drago Kos, the former chair of the OECD’s bribery task force, expressed uncertainty about future enforcement, indicating that while the administration met international corruption obligations, things might not remain consistent moving forward.
Kos emphasized that the U.S. was generally not in danger of failing to initiate investigations, as international partners can charge corrupt firms under the U.N. Convention Against Corruption. “The more significant risk lies in the potential for the U.S. to pursue investigations without justifiable grounds for political gains,” he warned.
He cautioned that the FCPA could be manipulated for political ends, similar to how Russia has seen bribery accusations used against political rivals of President Vladimir Putin. High-profile cases have illustrated how corruption charges serve as a weapon against dissenters in various countries, including Russia.
In remembrance of Sergei Magnitsky, who died in a Russian prison after being wrongfully detained, Bill Browder has been a vocal advocate for human rights, leading to the passage of the Global Magnitsky Human Rights Accountability Act in 2016. This law gives the U.S. government the power to sanction foreign nationals responsible for human rights abuses.
After Trump was elected just months following the act’s passage, Browder was initially anxious about the potential for diminished enforcement under the new administration. To his relief, he found that Trump maintained a hands-off approach, allowing competent individuals to uphold the law effectively.
However, Browder is concerned about a potential shift in priorities for Trump’s next term, citing fears that the administration may politically target specific individuals, especially in light of Trump’s connections with foreign leaders such as Saudi Crown Prince Mohammed bin Salman, amid discussions of sanctions related to journalist Jamal Khashoggi’s murder.
Wernick highlighted that the discretion exercised by the executive branch could be advantageous. In the current geopolitical landscape, where nations like China, Russia, and Iran pose challenges, using anti-corruption laws strategically could bolster U.S. diplomatic efforts.
He suggested that there might be innovative ways to leverage the FCPA as part of an “America First” foreign policy, potentially transforming anti-corruption initiatives into a tool to enhance U.S. interests abroad.
Ultimately, the future of corruption enforcement will hinge significantly on Trump’s appointed officials.
Recently, Trump declared his intention to nominate Senator Marco Rubio for Secretary of State, which could influence the enforcement of the Global Magnitsky Act since Rubio co-sponsored it. Moreover, Trump revealed Matt Gaetz as his pick for Attorney General, promising to eradicate systemic corruption within the Justice Department.
Questions remain about how the new administration intends to approach crime and whether corruption will be a central focus.
“HR is policy,” Wernick concluded. “It all comes down to who is in leadership roles.”
