State AGs Can Fill Federal Government's Absence in FCPA Enforcement, Law Firm Says
State attorneys general may take the lead on Foreign Corrupt Practices Act enforcement in light of the Donald Trump administration's pause on enforcing the act, attorneys at Crowell & Moring said in an April 14 alert. There's good reason to believe states will follow California's lead in announcing that it will enforce anti-foreign bribery efforts, the firm said.
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Trump paused all new FCPA actions in February for 180 days until DOJ can issue new guidelines for FCPA enforcement that "prioritize American interests" and U.S. "economic competitiveness" (see 2502110045). In response, California AG Rob Bonta issued a legal alert reminding businesses operating in California that it's still illegal under California law to bribe foreign officials to obtain or retain business. Foreign bribery is outlawed in California under the state's Unfair Competition Law.
The alert said the FCPA remains an "applicable" federal law that's actionable under the UCL, which bars unlawful or fraudulent business practices. The alert said the UCL can be invoked by "borrow[ing] violations of other laws and treat[ing] them as unlawful practices that the statute makes independently actionable."
Attorneys at Crowell & Moring said it's unclear if other states will follow California's lead but that there's "good reason to believe they will." For instance, state AGs have been quick to challenge Trump's executive orders "and are moving to fill the void when federal agencies, and the federal government more broadly, abdicate long-standing norms and practices," the firm said.
In addition, state AGs "care deeply about consumer protection, bribery and foreign influence in their state economies" and "most states have unfair and deceptive practices ... laws that provide" the AGs with "broad authority to take action against 'unfair' or 'deceptive' practices."
While some laws, like New York's, limit enforcement to instances of direct consumer harm, states with laws akin to California's, that cover actions that are generally unfair or deceptive, "would have the legal infrastructure to pursue foreign bribery cases," the Crowell & Moring attorneys said.