Back in 2012, Donald Trump took a dim view of the Foreign Corrupt Practices Act (FCPA) and what he saw as American overreach. Talking to CNBC, Trump trashed the FCPA in the starkest terms: “It’s a horrible law and it should be changed. We are like the policeman for the world. It’s ridiculous.”
But despite Trump’s rhetoric as candidate and then president, his administration’s Department of Justice (DOJ) and Securities and Exchange Commission (SEC) appear to be comporting themselves in the same spirit as the previous administration of Barack Obama, and have embraced an asymmetrical approach to extraterritorial law enforcement. The courts, however, are casting doubt on whether they should be.
In a recent case, US vs Hoskins, the US Court of Appeals narrowed the applicability of the FCPA where non-resident foreigners were involved to those instances where the government could demonstrate that the individual acted as an agent of a “domestic concern,” or while actually in the US.
Indeed, the extraterritorial reach of America’s laws will likely be called into question as the result of a series of indictments recently unsealed by federal prosecutors in Brooklyn, New York, against three former officials of the government of Mozambique and five business executives in connection with fraud, money-laundering and alleged FCPA violations. The nexus to the US of some of the defendants and purportedly related entities ranges between opaque and non-existent.
The case, which involves Credit Suisse employees as well as employees of Privinvest Group, an international shipbuilder, has gained notice in legal circles because of the ways it pulls its punches in the charges, an apparent reaction to the Hoskins ruling.
The indictment also has observers puzzled about why the Trump Justice Department is making such broad, international claims in the same way that the Obama Justice Department would have.
In contrast, the Trump administration has punted on bringing enforcement actions against Purdue Pharma, a leading manufacturer of opioid-based drugs and a major Republican donor, and has left the heavy lifting to the states. Instead, the administration blamed China and Mexico for America’s addiction crisis.
The first year of the Trump presidency, 2017, saw 27 FCPA enforcement actions commenced by the DOJ and eight brought by the SEC. Eleven companies shelled out approximately US$1.92 billion to resolve FCPA cases. A year later, in 2018, 16 companies paid a record $2.89 billion to settle FCPA charges. As for the first quarter of 2019, FCPA settlements have netted the government a whopping $1.1 billion, with the largest of these settlements being borne by foreign corporations for wrongdoing overseas. That is a lot of money.
Russia’s Mobile TeleSystems Public Joint Stock Company and its Uzbek subsidiary paid $850 million for paying bribes in Uzbekistan. Germany’s Fresenius Medical Care AG & Co KGaA, the world’s largest provider of dialysis equipment and services, settled for $231 million to resolve a series of FCPA violations Act across three continents.
Under Trump, the US has also weaponized the FCPA in its battle against China. Last November, then attorney general Jeff Sessions announced a 10-point “China Initiative,” and No 8 on that list was FCPA enforcement against Beijing. According to the DOJ: “The Attorney General has set the following goals for the Initiative … Identify Foreign Corrupt Practices Act … cases involving Chinese companies that compete with American businesses….”
Against that backdrop, American demands for the extradition by Canadian authorities of Meng Wanzhou, the finance chief of Huawei, and daughter of its founder Ren Zhengfei, and the China Initiative are of a single piece.
To the likely chagrin of the Trump appointees in the Department of Justice, the distance between the “American leadership” advocated by the Obamans and “We’re America, bitch” is not that great, at least not when it comes to the FCPA.