How many Foreign Corrupt Practices Act (FCPA) actions have been brought every year on average by the Justice Department over the past decade?
Not very many.
On average, seven per year.
That’s according to Mike Koehler – who writes at FCPA Professor.
“Think of the denominator though,” Koehler wrote on his blog last week. “Every U.S. company – public or private – or other forms of U.S. business organization are subject to the FCPA. Every foreign company with shares traded on a U.S. exchange – approximately 1,000 in any given year – is subject to the FCPA.”
“This denominator is enormous and potentially massive.”
“Yet, seven is the average number of Department of Justice corporate FCPA enforcement actions over the last decade.”
While FCPA Inc – the legal industry built around FCPA enforcement – is in an uproar over President Trump’s pause in enforcement, Koehler’s point is a simple one – there has been anemic enforcement from the Justice Department over the past decade. It’s an unspoken pause in enforcement.
What exactly did Trump do this week on the FCPA?
“He issued an executive order that raised some valid big picture issues regarding FCPA enforcement,” Koehler told Corporate Crime Reporter in an interview last week. “In that same executive order, he encouraged the new Attorney General to issue those guidelines concerning the initiation of future FCPA enforcement actions. The word pause is in the title of the executive order, but it’s not in the body. The order essentially paused FCPA enforcement for the next 180 days.”
It was a departure from his first term where he actually brought a lot of cases under the FCPA?
“During the first Trump term corporate and individual FCPA enforcement was above historical norms or averages. So many of these cases are difficult to assign to any given president, given that many of these cases linger for three to five years.”
“There were FCPA enforcement cases during the Biden administration, but most of those cases originated in prior administrations. And that has always been the case with the FCPA.”
Why the difference between Trump’s first term and his second?
“I have no idea. We saw the Bondi memo roughly a week prior to the executive order. And the Bondi memo touched upon FCPA enforcement, albeit just in a paragraph. I was surprised by the executive order this week.”
You seem to be saying on your blog all administrations come in and announce enforcement policies. But this is a radical departure, isn’t it?
“I don’t disagree with that. I certainly don’t agree with every single word in the order – far from it. But the general issues discussed in the executive order have been percolating for at least fifteen to twenty years and have been discussed by Republicans and Democrats alike. In an ironic twist, someone who was raising these same issues, Andrew Weissmann – his disdain for President Trump is well documented.”
“The issues have been percolating for a long, long time. Anyone who disputes that is not very well informed.”
What issues are you talking about?
“I’ve been talking about these issues most of my professional life. I’ve been talking about way back when President Trump went on CNBC’s Squawk Box and said he thought the FCPA law was horrible and should be changed. That was in connection with the biggest FCPA story at the time – the enforcement action against Walmart.”
“There is a difference between FCPA law and FCPA enforcement. That’s been the focus of my professional career. This executive order is about how this statute is being enforced.”
“The whole reason for the FCPA was foreign policy. The idea that the President is linking FCPA enforcement to foreign policy and national security – that’s a no brainer. In fact, there is a national security exception embedded in the statute passed by Congress.”
“I believe the FCPA is a good and solid statute.”
You disagree with Trump when he said in 2015 that the FCPA is a horrible law?
“I can’t get inside his mind. I’m not sure he meant the statute or how it was being enforced. But no, I do not believe it’s a horrible law.”
You have long spoken about FCPA Inc. What do you mean by it?
“The FCPA has been around since 1977. For most of the FCPA’s history, the Department had two choices when a company or an individual was a subject of FCPA scrutiny. The Department could criminally charge that person or company. Or they didn’t charge that person or company.”
“In 2004, and with each passing year, the Department developed different ways of resolving FCPA cases. None of these ways are spelled out in the FCPA statute. Non prosecution agreements. Deferred prosecution agreements. Declinations. Declinations with disgorgements. Declinations where nobody knows about it.”
“It doesn’t take a rocket scientist to figure out that the more options the Department has to bring these cases, the more enforcement actions there are going to be. The more options for enforcement, the more the corporate community is paying attention to the FCPA. The more attention the corporate community is paying to the FCPA, the more vibrant an FCPA law firm or accounting firm practice is going to be.”
“When these changes occurred, was it because of a change in the law? No.”
“Was it from a Presidential decree? No.”
“Was it a decision of the Supreme Court? No.”
“At the time, the FCPA was a unique statute in that every FCPA enforcement action had to be authorized and approved by Main Justice.”
“That means that over the last fifteen to twenty years, three to five people in the government have controlled FCPA enforcement. And where do they go after they leave the government? And how much money do they make?”
“I don’t just think that’s healthy.”
“Does it take an unconventional President to do an unconventional thing? Yes, I don’t dispute that. But the underlying issue – the health of FCPA enforcement – hasn’t been talked about for a long time.”
“Let’s just pause for a second to analyze the word pause. Stanley Sporkin advocated an FCPA immunity program in 2006 in a speech to the American Bar Association. Was anyone calling that a pause?”
“At the conference held by Corporate Crime Reporter at the National Press Club in, I think it was 2013, Dennis McInerney – I asked him to define what a declination meant. And he said – ‘where you believe there was criminality, but based upon the company’s conduct and response to it, you decide you are not going to go forward with prosecuting. Just in the last couple of years in the FCPA context, we have had several dozen declinations.’”
“Is that not a pause? What is the difference between that and what is being talked about in this executive order?”
If Trump eventually lifts the pause, you seem to have the kind of profile of someone who could fit right in and be head of FCPA enforcement at the Justice Department. If they were looking for an enforcement guy with their philosophy, they might look at you to be the head of FCPA enforcement.
“That’s not going to happen.”
Why not?
“I live in a small town in Wisconsin. I’m perfectly content and happy with what I do. In addition to the FCPA, basketball is another passion of mine. I spend most of my time on the FCPA and helping kids get better at basketball. Can I do that from Metro DC? I doubt it.”
Even if they approached you, you wouldn’t be interested?
“That’s a hard no.”
Would you agree that you have the kind of profile that would fit easily into the Trump Justice Department?
“I’ll be making my own series of recommendations on my website. I have them collected. I just haven’t published it yet.”
Could you give us a sneak preview?
“These aren’t going to be a shock to you because we have already discussed this in previous interviews.”
“One, abolish non prosecution agreements, deferred prosecution agreements and declinations with disgorgement. The reason FCPA enforcement got unhealthy was because of these alternative resolution vehicles. There has been a dramatic shift in enforcement when those resolution vehicles began to gain prominence.”
Either bring a criminal prosecution under the FCPA or drop the case?
“Yes. And of course, the corporate community is not going to like this because they have come to love these alternative resolution vehicles.”
“This is a very odd situation. At least in theory you would think that the Department of Justice and the corporation under scrutiny would be adversaries. But they both love alternative resolution vehicles.”
They are both on the same team?
“In some sense. The government loves them because they result in more enforcement, they don’t have to prove anything and they know corporations are risk averse. The companies love them because they know they can get rid of the Department in a time and cost efficient manner.”
“Lost in this entire equation is the question of whether there ever was an FCPA violation. You have an area of law growing through the law of settlements, not through healthy enforcement.”
“So, number one – get rid of these alternative settlements.”
“Second, in a ten page charging document, there may be two or three paragraphs on what drove the enforcement action. And then typically, there are six or seven add-on allegations. Was the Department practicing its typing skills by adding these allegations? Or were these add-on allegations included to send the message to the corporate community about risks that needed to be on the radar screen?”
“For good reason, compliance counsel at companies are trained to look at an FCPA enforcement action, flip the allegations, and ask – could this be said of our company? And in 90 percent of the cases, the answer is no. But then you have add-on allegations concerning golf, and flowers and the karaoke bar. These are in actual FCPA enforcement actions.”
“The Department will say – there are no FCPA cases only about flowers. And they would be right.”
Your number two is – don’t throw in the kitchen sink?
“Precisely. Only include the allegations that in isolation would have resulted in your bringing this case to begin with. So much of the money being spent on compliance is not the suitcase full of cash moment. It’s the kitchen sink.”
“Third, I really think we need to prohibit the enforcement attorneys from going into private practice. The incentives are all wrong. It’s a toxic environment.”
“Four, if there are actually situations in which the Department declines to prosecute, they need to tell the corporate community what information they had and why they declined. The Department has always been opposed to this. The corporate community has always been opposed to this. But the Department does it through its Opinion Procedure release. And the Department has done it in the past when Congress asked the Department to provide information about these things.”
“Those are four that come off the top of my head.”
Okay, now I see why no administration would have you as head of FCPA enforcement.
When it comes down to it, they are all part of FCPA Inc. This is a radical proposal to put FCPA enforcement on hold, but once they get back to it, they are not going to want any of what you are proposing.”
“Probably not and that’s the problem.”
[For the complete q/a format Interview with Mike Koehler, see 39 Corporate Crime Reporter 8(12), February 24, 2025, print edition only.]