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FCPA Violations: Foreign Corrupt Practices Act Defense
The FCPA did not become safer in 2025. It became less predictable.
What the executive branch presented as a pause in enforcement was, in operation, a recalibration of the statute’s prosecutorial architecture. The Foreign Corrupt Practices Act itself changed by not a single word. The exposure of individual executives remained largely intact. And the companies that treated the period as permission to relax their compliance programs will discover, in the quarters ahead, that they misread the signal.
For the business owner or corporate officer who has received a target letter, a grand jury subpoena, or a Wells notice referencing the FCPA, the relevant question is not whether the government is still enforcing the statute. It is whether the defense strategy that would have been effective three years ago remains viable under the current enforcement posture. In most cases, it does not.
The February 2025 Executive Order
On February 10, 2025, President Trump signed Executive Order 14209, directing the Attorney General to halt new FCPA investigations for 180 days and to review all existing matters. The stated purpose was to restore proper bounds on enforcement and to preserve presidential foreign policy prerogatives. In practice, the order produced a period of selective discontinuation: certain corporate deferred prosecution agreements were terminated early, including those involving Glencore, Albemarle, Stericycle, and Honeywell. The SEC’s dedicated FCPA unit lost its chief and deputy chief, then was dissolved without public acknowledgment.
The DOJ’s FCPA Unit lost approximately a third of its prosecutors to attrition, reassignment, and the reallocation of white collar resources toward immigration enforcement and drug trafficking. The FBI disbanded its Foreign Influence Task Force and a public corruption squad in the Washington field office during the same period.
The Cognizant matter offers, if we are being precise, the clearest illustration of the period’s character. Gordon Coburn and Steven Schwartz, former senior executives at Cognizant Technology Solutions, had been indicted in 2019 on charges related to approximately $3.6 million in payments to Indian government officials in Tamil Nadu to secure construction permits. Their trial was scheduled for March 2025. The day after the executive order was signed, the presiding judge issued a sua sponte order asking the DOJ to state its position on the upcoming proceedings. After weeks of procedural exchange, prosecutors moved to dismiss with prejudice, citing the executive order. The case ended not because the evidence had weakened but because the enforcement priorities had shifted beneath it.
The government did not lose interest in corruption. It acquired a narrower definition of which corruption it intended to prosecute.
That is what the Cognizant dismissal clarified.
But the pause was not absolute. Individual prosecutions already in motion continued through the moratorium. Three defendants were tried and convicted. The DOJ charged five additional individuals during the same period.
And in October 2025, a federal grand jury returned an indictment against Smartmatic for conspiracy to pay bribes to a Philippine government official, a corporate indictment that practitioners who had written off this category of enforcement did not anticipate. The executive order reorganized the statute around a narrower set of interests, and those who fell within the new perimeter became more exposed, not less.
The June 2025 Guidelines
On June 9, 2025, Deputy Attorney General Todd Blanche issued the Guidelines for Investigations and Enforcement of the FCPA, ending the pause and articulating the priorities that would govern enforcement going forward. The Guidelines direct prosecutors to evaluate four factors when determining whether to pursue an FCPA matter: whether the conduct involves cartels or transnational criminal organizations; whether it harms American economic competitiveness; whether it threatens national security in sectors such as defense, intelligence, or critical infrastructure; and whether the misconduct bears strong indicia of individual corrupt intent tied to identifiable persons.
The cartel nexus represents the most significant departure from prior enforcement practice. FCPA cases had little historical overlap with cartel activity. Under the current framework, corruption linked to cartels and TCOs is a primary enforcement consideration. The TIGO Guatemala deferred prosecution agreement, announced in November 2025, involved a cash-for-votes scheme in which some payments were funded by narcotrafficking proceeds. The case signals that FCPA enforcement and counter-narcotics enforcement now occupy the same prosecutorial territory.
I am less certain than some practitioners that the competitiveness factor will operate as a meaningful constraint on prosecution, though the early signals are mixed. In the Zaglin case, the DOJ noted that the defendant’s bribery scheme had harmed other American companies competing for the same Honduran government contracts. The competitiveness rationale, it turns out, can cut in either direction.
Whether these priorities survive the current administration or calcify into a permanent reorientation is a question that cannot be answered from the present vantage. The statute’s text has not changed.
Statutory Defenses and Their Limits
The FCPA provides two affirmative defenses and one statutory exception, and the distinction between them carries procedural consequences that most defendants do not appreciate until they are inside a motion.
The local law defense permits a defendant to establish that the challenged payment was lawful under the written laws and regulations of the foreign official’s country. The emphasis on “written” is functional, not decorative. In United States v. Kozeny, the court held that the defense requires an affirmative authorization in the foreign country’s statutory text. The absence of a prohibition does not satisfy the requirement. Nor does a provision that relieves a payer of liability for reporting a bribe after the fact; as the court observed, the focus of the defense is the payment, not the payer. Countries that authorize payments to their own officials tend not to put that authorization in writing.
The reasonable and bona fide expenditure defense applies to payments related to the promotion, demonstration, or explanation of products or services, or to the performance of a contract with a foreign government. Travel and lodging for foreign officials attending product demonstrations or contract meetings can fall within this defense. The burden is on the defendant to show the expenditure was genuine, proportionate, and documented. The word “directly” in the statutory text does real work. An expenditure that is adjacent to a business purpose, or that funds activities beyond the stated scope (a side excursion, a spouse’s airfare, an evening that resembles hospitality more than demonstration), will not satisfy the requirement.
Both defenses are affirmative. The defendant carries the burden of proof by a preponderance of the evidence. This is not a procedural detail. The difference between an exception and an affirmative defense is, in this context, the difference between the prosecution carrying a weight and the defense carrying it.
The facilitating payments exception operates on different terms. A payment to a foreign official to expedite a routine governmental action (processing a visa, scheduling an inspection, providing a utility connection) is exempt from the anti-bribery provisions, and the government bears the burden of showing the exception does not apply. The distinction is between non-discretionary acts and discretionary ones. A clerk who stamps a permit is performing a routine action. An official who selects among competing bidders is exercising discretion. The line sounds clean in a treatise. In the field, at a government office in a country where the distinction has no cultural cognate, the line becomes a matter of interpretation that a compliance officer will be asked to defend years later in a conference room in Washington.
The Individual Remains Exposed
Corporate enforcement may have contracted. The individual calculus, however, has not shifted in a direction that provides comfort.
In September 2025, a Miami jury convicted Carl Zaglin on counts related to a bribery scheme involving the Honduran National Police procurement apparatus. In December, a Houston jury convicted a Texas executive for bribing officials at a foreign state-owned oil company, with evidence of six-figure payments and luxury goods exchanged for contract advantages. Glenn Oztemel received a fifteen-month sentence for Petrobras-related bribery. In the 1MDB matter, Pras Michel was ordered to forfeit close to sixty-five million dollars. Former Goldman Sachs banker Asante Berko faces trial on FCPA charges later this year.
There are exceptions to this pattern, though in practice they tend to confirm it. The revised Corporate Enforcement Policy may offer corporations more favorable disposition terms for self-disclosure and cooperation. For the executive whose name appears in the wire transfer records or the authorization chain, that leniency accrues to the entity, not to the person.
Constructing a Defense
Before the first subpoena, before the target letter arrives in its plain government envelope, the defense has either already been constructed or it has not. There is no intermediate condition in FCPA matters. The company that receives a DOJ inquiry and begins, at that point, to organize its documentation and assess its compliance architecture is a company that has conceded the first several moves of the engagement.
We approach the initial assessment in a sequence that differs from what the standard practice suggests. Many firms begin with the compliance program: evaluate its structure, identify gaps, present a remediation plan. That sequence has merit. But it begins at the wrong end. We begin with the transaction. Which payment is at issue. Who authorized it. What documentation exists. What the counterparty understood about the purpose. The compliance program matters as context for the specific conduct under review. It is not a separate inquiry.
I drafted parts of this analysis in early spring, while several of the trials referenced here were still producing verdicts.
Voluntary self-disclosure under the revised Corporate Enforcement Policy remains the most reliable path to a favorable corporate resolution. The current policy provides for certain declinations for companies that self-disclose, cooperate, and remediate, absent aggravating factors. Cognizant self-disclosed within two weeks of its board learning of the payments, cooperated fully, and received a corporate declination. Its executives were indicted regardless. The corporate resolution and the individual exposure are, in the DOJ’s framework, separate questions with separate answers.
The third-party intermediary remains the most common source of FCPA liability. A sales agent in a country where procurement decisions involve officials whose compensation does not correspond to their lifestyle. A consulting firm retained for government relations services whose deliverables, upon examination, consist of introductions rather than analysis. A joint venture partner whose political connections are the principal reason for the partnership. In each arrangement, the company’s defense turns on what it knew, what it should have known, and whether its due diligence was designed to discover the truth or to construct a record of having looked.
One does not conduct due diligence to confirm what one already suspects. One conducts due diligence to determine whether the suspicion has a foundation, and if so, whether the foundation can be addressed or whether the relationship must end.
The accounting provisions of the FCPA impose a separate obligation that is often overlooked. Issuers must maintain books and records that accurately reflect transactions and must devise internal accounting controls sufficient to provide reasonable assurances that transactions are properly recorded. A payment recorded as a consulting fee when it is in substance a facilitation payment creates liability under the accounting provisions. The accounting violations carry their own penalties and do not require proof of corrupt intent.
- Identify the specific transaction or payment at issue and preserve all associated records.
- Assess whether any third-party intermediary involved in the transaction has connections that implicate the current Guidelines’ cartel and TCO enforcement priorities.
- Determine whether the company’s existing due diligence file on the relevant counterparty would survive review under current standards.
For the company operating in sectors now designated as priorities (defense, infrastructure, energy), supply chain audits must incorporate an assessment of whether any counterparty has connections to organizations that the DOJ classifies as transnational criminal enterprises. The definition of what constitutes an FCPA risk has expanded beyond the question of whether an official was paid to include the question of who else benefits from the arrangement.
Something like forty percent of the compliance reviews we conduct reveal a third-party relationship that was approved years ago under a due diligence standard that would not survive current scrutiny. The files exist, the approvals were documented, and the red flags were in most cases noted but not acted upon.
The FCPA punishes a specific failure of recognition: that the relationship between a private company and a foreign government official carries a risk that no contract clause can eliminate and no compliance program can entirely contain. The defense begins with that recognition. It begins before the transaction, before the partnership, before the first meeting with the intermediary whose value proposition is access rather than expertise.
A first consultation assumes nothing and costs nothing. It is the beginning of an assessment, not a commitment. In this area of practice the distance between an early conversation and a late one is measured not in weeks but in outcomes.