Federal prosecutors and securities regulators have gone after large companies for violations of the Foreign Corrupt Practices Act, which prohibits them from bribing foreign officials.The New York Times reports that President Trump has issued an executive order to pause the enforcement of the Foreign Corrupt Practices Act, a federal law that prohibits companies from bribing foreign officials. The order, which will last for 180 days, prevents federal prosecutors from launching new investigations or enforcement actions. The Trump administration also plans to review existing investigations in order to “restore proper bounds” on the law.
The Foreign Corrupt Practices Act, enacted in 1977, makes it illegal for companies operating in the United States to pay foreign government officials in order to secure business deals. The law is enforced by the Department of Justice and the Securities and Exchange Commission and has been used extensively in the past two decades to crack down on bribery, particularly in countries where it is a common business practice.
It is unclear how the executive order will affect the SEC, which often brings civil actions in conjunction with the Justice Department. Violations of the law can result in significant fines and prison time for individuals.
President Trump’s decision to pause enforcement of the law is based on his belief that it puts American companies at a disadvantage. The White House stated that U.S. companies have been harmed by “overenforcement” of the law, as they are prohibited from engaging in practices that are common among their international competitors. This has created an uneven playing field, according to the administration.
While the Trump administration has previously attempted to kill the Foreign Corrupt Practices Act, this effort did not gain traction. However, both Democrats and Republicans have criticized the law’s enforcement, according to Mike Koehler, a scholar of the Foreign Corrupt Practices Act.
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