Pattern or Paranoia: Do U.S. Prosecutors Enforce the Foreign Corrupt Practices Act Differently Based on the Nationality of the Defendant?
Even before its adoption, the Foreign Corrupt Practices Act of 1977 (“FCPA”), which prohibits bribery of foreign officials to advance business interests, was subject to criticism that it would unfairly put U.S. companies at a competitive disadvantage in global markets. In the legislative history of the ground-breaking statute and its subsequent amendments, critics of the law called for a leveling of the playing field, either by relaxing the restrictions imposed by the FCPA or by encouraging other developed countries to take similar measures. Indeed, this desire to level the playing field played a large role in U.S. efforts to encourage the Organization for Economic Coordination and Development (“OECD”) to adopt the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (“OECD Convention”) in 1977.
After the OECD Convention went into effect, FCPA enforcement substantially increased. American prosecutors focused their efforts not only on U.S. businesses, but also on foreign companies, as the FCPA generally extends to foreign issuers of securities traded on U.S. stock exchanges and to bribery schemes with minimal touchpoints to U.S. territory. Enforcement took a major turn in 2008 with German industrial company Siemens’s FCPA resolution with the U.S. Department of Justice (“DOJ”) and U.S. Securities and Exchange Commission (“SEC”), which, at $800 million in criminal and civil penalties, was more than fifteen times greater than the next largest FCPA resolution. The landmark Siemens resolution was succeeded in short order by several other huge FCPA resolutions involving multinational companies, such as the $1.7 billion resolution reached in 2010 with a group of engineering companies (only one of which was U.S.-based) for bribes paid to government officials in Bonny Island, Nigeria, the $772 million dollar settlement reached with French rail transport systems manufacturer Alstom in 2014, and later, the record-breaking $2.3 billion resolution with French aerospace company, Airbus, in 2020.
These resolutions sparked new criticisms of the FCPA which pivoted 180 degrees from earlier concerns of disadvantage to U.S. companies. Instead, prominent voices in international law accused the U.S. of using the FCPA to advance its economic interests through selective enforcement of the law against foreign competitors. A 2019 report prepared by French National Assembly member Raphaël Gauvain and others (“Gauvain Report”), at the behest of the French Prime Minister, signaled the high- water mark of such attacks. In its opening page, the Gauvain Report asserts:
The United States of America has dragged the world into the era of judicial protectionism. While the rule of law has always been used as an instrument of regulation, it has now become a weapon of destruction in the United States’ economic war against the rest of the world, including its traditional allies in Europe.
The authors of the Gauvain Report further insist that the FCPA’s territorial basis of jurisdiction is inconsistent with principles of international law and U.S. prosecutors rely on the law’s broad jurisdiction to maliciously target foreign (primarily European) companies.
To date, nine of the ten largest FCPA resolutions still involve foreign companies, and criticisms of the FCPA akin to those raised in the Gauvain Report have not waned. So, President Donald Trump’s February 10, 2025 Executive Order directing the DOJ to pause FCPA enforcement and develop new guidance aimed at “stopping excessive, unpredictable, FCPA enforcement that makes American companies less competitive” (“FCPA Executive Order”), was truly a bolt from the blue. It revived early attacks on the law that had long been overtaken by complaints that the FCPA was a tool wielded by Americans against Europeans and others.
As evidenced by the Gauvain Report and FCPA Executive Order, criticisms of the FCPA have devolved into a classic “he-said, she-said” faceoff. These mutually contradictory set of grievances about FCPA enforcement raise the fundamental question: Has the FCPA been enforced selectively based on the nationality of the defendant? This article seeks to answer that question by looking at widely available data on criminal FCPA enforcement actions over approximately the past decade. First, we isolated criminal FCPA enforcement actions involving similarly situated U.S. and foreign companies based on severity of the misconduct, nature and history of the company, and the company’s voluntary disclosure, cooperation, and remediation. We then compared the resulting terms of resolution to see whether we could identify any apparent disparities in DOJ’s application of the U.S. Sentencing Guidelines and its own policies based on the nationality of the defendant.
Drawing from the findings of this exercise, we contend that neither of the dueling narratives leveraged by the Gauvain Report and FCPA Executive Order to advance protectionist enforcement policies are supported. The data simply does not show that U.S. or foreign companies have received harsher treatment in FCPA investigations relative to their similarly situated counterparts. What the data does show, however, is that foreign companies have generally been less willing than U.S. companies to voluntarily self-disclose potential FCPA violations and cooperate with U.S. authorities; and it is this distinction—rather than the nationality of the defendant—that accounts for the greater frequency with which foreign companies resolve FCPA violations under less favorable terms.
Supporting Data: Appendix A FCPA Enforcement Actions Data April 2015 January 2025