The Hidden Costs of the FCPA Pause (Part 1): Corruption as a Business Practice & Erosion of Integrity
- Michele Crymes
- Mar 20
- 2 min read
The Trump administration issued an executive order (EO) pausing enforcement of the Foreign Corrupt Practices Act (FCPA) to prioritize American economic and national security. The EO may result in the watering down of the norms and best practices underlying global business integrity. This pause may result in fewer restrictions for some businesses, but it also threatens to weaken the global norms of ethics, integrity, and accountability.
One of the most concerning consequences of pausing FCPA enforcement is the emergence of new norms that allow unethical business practices. The FCPA, the UK Bribery Act, and emerging European regulations, have provided clear guidelines for global ethics and transparency. If the FCPA pause results in weakened FCPA enforcement, this pause will represent a change in global compliance, integrity, and ethics. In a climate of weak enforcement coupled with an unstable regulatory environment, businesses may start a race to the bottom. As businesses seek less regulation, corruption will emerge as an acceptable business strategy.
Increase of Corruption: A reduction in oversight will lead to an increase in corruption. Companies with weaker policies and procedures in place will take advantage of opportunities to engage in unethical behaviors, creating a race to the bottom where corruption becomes an acceptable business strategy.
Decreased Stakeholder Confidence: Regulators, investors, and shareholders rely on accurate and truthful information to make business decisions. Over time, the erosion of integrity could damage the reputation of US companies and reduce trust in American businesses globally.
Long-Term Competitive Disadvantage: Many international business partnerships require transparency. Erosion of integrity could result in a competitive disadvantage. Companies that take advantage of a weaker regulatory environment will be seen as high-risk and may struggle in the long term to compete globally.
We do not fully understand the costs of pausing FCPA enforcement. What we do know is that the EO undermines transparency, integrity, and trust critical to global business. Weakening the FCPA represents both an economic and reputation risk. These are risks that global markets cannot afford to ignore.
Anti-Corruption and Governance Expert