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Earlier this week, an Executive Order directed Attorney General Pam Bondi to pause DOJ enforcement of the Foreign Corrupt Practices Act for 180 days. Here’s more detail from the fact sheet:

The Order directs the Attorney General to pause FCPA actions until she issues revised FCPA enforcement guidance that promotes American competitiveness and efficient use of federal law enforcement resources.

– Past and existing FCPA actions will be reviewed.

– Future FCPA investigations and enforcement actions will be governed by this new guidance and must be approved by the Attorney General.

The Order implies that the new enforcement guidance will give U.S. companies more leeway with their global business practices. But before you get carried away with bribing foreign officials, it’s important to keep in mind that – at least for now – the SEC still has power to bring civil enforcement actions for FCPA-related violations. This Cleary Gottlieb memo gives more color on how that could play out:

It remains to be seen whether, once confirmed, Atkins will bring the SEC’s enforcement policy in-line with the DOJ’s. The SEC, which enforces the FCPA only on U.S. and foreign issuers of U.S. securities, will also need to consider the impact on investors of pausing enforcement wholesale.

In particular, the SEC enforces the books and records and internal controls provisions of the FCPA, which are codified as part of the Securities and Exchange Act, against numerous companies both inside and outside of the FCPA context to ensure that issuers have accurate books and records and reasonable internal controls over financial accounting, regardless of whether evidence of corrupt payments is established.

According to the memo, the Executive Order and a related DOJ memo create a number of open questions – and that’s part of the reason companies will still benefit from maintaining their anti-corruption compliance programs during this pause and beyond. A memo from BakerHostetler summarizes why FCPA still matters:

■ Foreign and Regulatory Anticorruption Regimes Remain Unaffected. Foreign anticorruption architecture and FCPA analogs in the UK, the EU and other major economies remain in place. The executive order also does not impact the Securities and Exchange Commission’s (SEC) FCPA civil enforcement programs, which include a robust and successful whistleblower program. Companies will still be subject to these laws and regulations.

■ Bribery Impacts the Bottom Line. Bribery often causes companies to lose money through slush funds and other undocumented expenditures that cannot be internally tracked or audited. Indeed, prior FCPA cases, such as the recent trial in United States v. Aguilar in the Eastern District of New York, show that executives may embezzle money in tandem with bribery schemes.

■ FCPA Enforcement will be Decentralized. Bondi’s memorandum lessens the gatekeeping function over FCPA cases related to cartels and TCOs and gives more autonomy to United States Attorney’s Offices (USAOs) around the country, which might undermine prior goals of consistency. While the character of FCPA cases may change, this reduced DOJ oversight and new independence for USAOs could increase overall FCPA enforcement. However, it could also lead to more inconsistent and less predictable enforcement, requiring businesses to maintain comprehensive and flexible FCPA compliance policies — especially with respect to prosecution of companies/individuals that could be considered to be aiding or transacting with cartels or TCOs as described above.

■ Other Statutes Remain Applicable. Statutes for crimes such as wire fraud and money laundering can be used in traditional FCPA fact patterns and support criminal enforcement. The False Claims Act can be used similarly in civil cases.

■ DOJ May Revisit Past Conduct. After the review period mentioned in the executive order, the Attorney General is authorized to “determine whether additional actions, including remedial measures with respect to inappropriate past FCPA investigations and enforcement actions, are warranted” and to “take any such appropriate actions.” This leaves the door open for a reexamination of past FCPA-related investigations or conduct. Companies that relax their FCPA compliance policies may find themselves vulnerable to later enforcement actions. This may be especially so with foreign companies, given President Trump’s comments about the unfair impact to date on U.S. entities.

Also see this White & Case memo, which predicts foreign companies will be at greater risk once FCPA enforcement comes back online – and check out other analysis in our “Foreign Corrupt Practices Act” Practice Area.

We are also posting memos about all of the Executive Orders and transition issues in our “Regulatory Reform” Practice Area!

– Liz Dunshee