Trump scraps enforcement of foreign bribery law; breather for Gautam Adani? Here’s all you need to know

“During the review period, the Attorney General shall cease initiation of any new FCPA investigations or enforcement actions, unless the Attorney General determines that an individual exception should be made,” it said.

Also, it sought “review in detail all existing FCPA investigations or enforcement actions and take appropriate action with respect to such matters to restore proper bounds on FCPA enforcement and preserve Presidential foreign policy prerogatives.”

FCPA investigations and enforcement actions initiated or continued after the revised guidelines or policies are issued “shall be governed by such guidelines or policies; and must be specifically authorised by the Attorney General.”

After the revised guidelines or policies are issued, the Attorney General shall determine whether additional actions, including remedial measures with respect to inappropriate past FCPA investigations and enforcement actions, are warranted and shall take any such appropriate actions or, if Presidential action is required, recommend such actions to the President, it added.

A White House factsheet said the law makes American companies less competitive. “US companies are harmed by FCPA over-enforcement because they are prohibited from engaging in practices common among international competitors, creating an uneven playing field.”

“It turns out that in practicality it’s a disaster,” Trump said in the Oval Office on Monday afternoon. “Nobody wants to do business with the Americans.”

A breather for Adani?

The FCPA has been central to several high-profile US Department of Justice cases, including the indictment of Indian billionaire and Adani Group head Gautam Adani and his nephew Sagar. It was under the previous Joe Biden administration, when the Department of Justice (DoJ) had indicted the billionaire on charges of “fraud” and allegedly orchestrating a bribery scheme.

Trump’s executive order to pause prosecutions under the FCPA could have significant implications for the Gautam Adani case, depending on its scope and enforcement.

The US Justice Department was reportedly looking into whether the Adani Group violated the FCPA—a law that prohibits American entities from bribing foreign officials. With Trump pausing prosecutions under this law, any ongoing or potential investigations into Gautam Adani in the US could be delayed or even weakened.

Hindenburg Research had accused the Adani Group of stock manipulation and corporate fraud, also suggesting possible corrupt dealings with foreign officials. If the US was planning to investigate these claims under the FCPA, Donald Trump’s decision might stall any legal action against Adani in the US.

With the US stepping back, the real test now lies with Indian regulators such as the Securities and Exchange Board of India and the Enforcement Directorate (ED). If these agencies choose not to pursue a deeper probe, Gautam Adani could escape immediate legal trouble.

While Donald Trump’s decision might shield Adani from US legal troubles, it doesn’t eliminate international scrutiny. Investors and watchdogs in the UK, EU, and other global markets may still closely monitor the group’s business practices.

Charges against Gautam Adani

The US Department of Justice indicted Gautam Adani, the founder of Adani Group, his nephew Sagar Adani, and other senior Adani Green executives for allegedly bribing or offering bribes to the tune of $265 million(about Rs 2,100 crore) to Indian state government officials to get them to sign solar power contracts while raising money for the same projects in the US by promising that the company abided by anti-bribery laws. This constitutes fraud under US federal securities law and, if proven, may invite criminal liabilities.

The US case rests on the premise that Adani Green bribed government officials in Odisha and Andhra Pradesh, and possibly Tamil Nadu, Chhattisgarh, and Jammu and Kashmir (J&K), to get their power distribution companies (discoms) to commit to purchasing solar power at above-market rates.

Adani Group denied the allegations as baseless and said it is fully compliant with all laws.

What is FCPA?

The Foreign Corrupt Practices Act or FCPA is a US law that prohibits American companies, individuals, and foreign firms listed in the US from bribing foreign officials to secure business deals. It also mandates accurate financial records to prevent fraud. The FCPA has led to major corporate investigations worldwide.

The act has been used to impose hundreds of millions of dollars in fines on companies around the world, including Glencore Plc and Goldman Sachs Group Inc. However, the suspension of FCPA enforcement does not mean the law is abolished. Bondi is expected to release new enforcement guidelines, which could determine the long-term impact of Trump’s order on corruption-related prosecutions worldwide.

(With Inputs from PTI, Reuters)