BREAKINGVIEWS-Trump’s graft leniency sets bad global example

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. Refiles to add hyperlinks. Updates to add graphic.

By Pierre Briancon

BERLIN, Feb 13 (Reuters Breakingviews) - On corruption at least, Donald Trump has been consistent. As a real estate promoter, back in 2012, he criticisedthe United States’ Foreign Corrupt Practices Act (FCPA), which bans business bribes to foreign officials, as a “ridiculous” and “horrible” law. The FCPA, he said, was causing U.S. companies to lose contracts overseas. But by instructing the Department of Justice to suspend enforcement of a law passed by Congress in 1977, he may make those same firms’ lives harder and introduce more friction in global trade.

Most industrialised nations adopted laws similar to the U.S. as globalisation took off in the mid-1990s. The Organisation for Economic Co-operation and Development adopted in 1997 a convention against bribery modelled on the U.S. statute. Europeans strengthened their own regulations further in later years. It made sense then to create a level playing field, at least among western businesses, and to incite big companies to compete on the merits of their offers instead of the size of their bribes.

Over time, the FCPA amassed a high-profile roster of miscreants. Goldman Sachs GS.N, hit for a total of $2.9 billion in 2020 by the U.S. and other governments in connection with a scheme to pay over $1 billion in bribes to Malaysian and Abu Dhabi officials, was slapped with one of the largest fines. But Ericsson ERICb.ST, Siemens SIEGn.DE, Glencore GLEN.L, TotalEnergies TTEF.PA and Halliburton HAL.N all received thwacks in the billions or hundreds of millions of dollars.

Trump cannot abolish the FCPA, which would require a decision by Congress. His executive order only states he wants the government to come up with new guidelines for its criminal enforcement. But he leaves no doubt that they should be softened. And he keeps quiet about the role of the Securities and Exchange Commission, which can slap civil fines against the perpetrators.

The suspension of the law’s enforcement does not mean that the corrupters have been given a free rein. The FCPA remains in the books, and nowhere is official legislation about to change. But Trump has sent the signal that leniency, if not carelessness, will be the official U.S. approach toward corruption. So companies seeking to clinch big contracts worldwide now have a reason to approach their own governments in London, Paris or Berlin to request the same official magnanimity.

They should resist the temptation. The return of graft would mean more uncertainty, higher costs for doing business, and doubts over the accounts of companies engaging in it. To use one of Trump’s favorite words, it would make “losers” all around.

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CONTEXT NEWS

President Donald Trump on February 10 instructed the U.S. Department of Justice to cease for a period of 180 days any investigation or enforcement action of businesses or individuals under the Foreign Corrupt Practices Act, and to review its guidelines and policies under the same act.

The FCPA has “stretched beyond proper bounds and abused in a manner that harms the interests of the United States,” Trump wrote in an executive order.