Is this the end for anti-corruption investigation?

President Trump has, in the last couple of days, instructed US Attorney General Pam Bondi to stop enforcing the Foreign Corrupt Practices Act (FCPA). This raises considerable questions about the future of its sibling, the UK Bribery Act (UKBA).

The FCPA has represented the gold standard of anti-corruption legislation for nearly 50 years and extended the drive to clean up business practices around the world. Not only did the FCPA place a high penalty on companies that were found to have breached the act, it also enabled employees of US businesses to reject requests for incentives from counterparties overseas.

Clearly President Trump feels that the FCPA is limiting US companies’ ability to compete for business against, say, Chinese or Russian businesses whose governments do not have similar laws. We will wait to see what effect this has on US commerce.

In the meantime, the effect on business ethics elsewhere in the world will, undoubtedly, be negative. The FCPA was ‘extra-territorial’, meaning its fiat extended into countries where US law did not apply. So foreign companies who sold goods in the US were forced to adhere to the FCPA if they wanted to continue to do so, even if they were not headquartered there. Prime examples of this are Siemens, the German white goods and engineering giant, which paid penalties approaching $1 billion in 2008 and Ericsson, the Swedish telephony business, which paid out over $1 billion in 2019. Not to mention global banking giants such as HSBC.

The FCPA also had a significant secondary effect in galvanising other governments to prosecute corruption in their own territories. To all intents and purposes, the UKBA is a facsimile of the FCPA. If anything, it set the bar on what constituted a bribe even lower. It is also extra-territorial and, more importantly, still very much in force. But as any student of anti-corruption legislation and its enforcement will know, the prosecution success rate of the US Department of Justice and the Serious Fraud Office (SFO) are like chalk and cheese. Moreover, the SFO needs to apply for so-called ‘blockbuster funding’ from the UK government to pursue large cases.

So, let us imagine a situation where the parent of one of the 32,000+ US-owned local businesses trading in the UK, many of which are household names, finds itself offering incentives to a foreign government official to promote its business interests overseas. Is the SFO now really likely to proceed against such a business? And is the UK government likely to grant funding to launch a prosecution of such a business in the fragile political peace that seems to exist between the UK and the US?

It seems far more likely that Trump’s decision to suspend FCPA will effectively hobble anti-corruption enforcement in the two jurisdictions that have, historically, been at the vanguard of cleaning up business. The consequences of this really will be far reaching.