Although the Department of Justice (DOJ) under Trump imposed record penalties under the U.S. Foreign Corrupt Practices Act (FCPA”) from 2017 through 2020, it also initiated fewer and fewer new FCPA investigations during that period. Indeed, White House Economic Advisor Larry Kudlow reportedly said in January 2020 that the administration was “looking at” making changes to the law because of complaints from the U.S. business community about antibribery enforcement. We, however, expect more FCPA enforcement activity under a Biden presidency.
Effective enforcement of the FCPA requires repopulating the rank and file of the DOJ. The DOJ ranked 15th out of 16 cabinet departments in filling critical personnel positions, with only 45% of “key positions” filled as of November 2020, roughly 9/10 of the way through the term. Biden does not harbor resentments against the DOJ like Trump did. He does not consider the DOJ to be part of some secretive “deep state”. Critical personnel positions in the DOJ will be filled under a Biden presidency.
As we observed elsewhere on this site, the economic downturn and the Covid pandemic provide a perfect storm for increased fraud. We have seen that as the pandemic progresses. Resentment towards fraudsters in difficult times has also increased.
In particular, we expect stronger popular resentment against companies that fail to implement compliance measures and conduct adequate compliance investigations. This is particularly important to US companies in jurisdictions such as Thailand. In Thailand, third parties intermediaries play a greater role in dealing with local government officials. They often are subject to little or no real oversight. And this has not been lost on the DOJ.
Many compliance departments have strong compliance teams at their corporate or regional headquarters, but not on the ground in jurisdictions where compliance violations are far more likely occur. This major gap has also not been lost on the DOJ. Expect greater scrutiny of US companies operating in more opaque jurisdictions.