The White House executive order pausing FCPA and its impact on Gautam Adani’s case

IN November 2024, the news of the Indian billionaire's indictment by US authorities took the internet by storm. U.S conglomerate, an Indian Business tycoon, along with several other executives, were charged with serious offences under the U.S Foreign Corrupt Practices Act of 1977 (FCPA), and US Securities Exchange Act of 1934 for allegedly offering bribes of more than $ 250 million to Indian officials for procuring solar power contracts. While the place of the alleged offence was India, the U.S. authorities were of the view that American investors were harmed..What does the law say on the US Adani bribery case?.White House Executive Order.The above executive order was published on 10th February 2025 and stated that “The President’s foreign policy authority is inextricably linked with the global economic competitiveness of American companies. American national security depends in substantial part on the United States and its companies gaining strategic business advantages whether in critical minerals, deep-water ports, or other key infrastructure or assets. But overexpansive and unpredictable FCPA enforcement against American citizens and businesses — by our own Government — for routine business practices in other nations not only wastes limited prosecutorial resources that could be dedicated to preserving American freedoms, but actively harms American economic competitiveness and, therefore, national security. It is therefore the policy of my Administration to preserve the Presidential authority to conduct foreign affairs and advance American economic and national security by eliminating excessive barriers to American commerce abroad.” ……….Following this order at least for a period of 180 days, there shall be no new investigations or enforcement actions the Attorney General determines it as an exception and the Attorney General shall review guidelines and policies governing investigations and enforcement actions under the FCPA..For Gautam Adani, this situation is a 'Wait and Watch,' as this particular issue is a lot more than just corruption charges against a corporation..To whom does the jurisdiction of FCPA extend?Applicability of the FCPA U.S. Companies and Individuals: the law extends to forms of businesses including partnerships, associations, and sole proprietorships.To all U.S. citizens, nationals, or residents, irrespective of where they are located or where the act of bribery occurs.To all the Publicly Traded Companies that are listed on U.S. stock exchanges (issuers) or under any law, rules or regulations required to file reports with the U.S. SEC (Securities and Exchange Commission). the Act also extends to the Foreign Companies and Individuals (i) who have their securities listed on the U.S stock exchanges or are obligated to file their reports with the SEC, (ii) to all the non-U.S individuals or companies who use U.S interstate commerce such as emails, calling, or banking transactions from the U.S soil or who are not physically present in the U.S territory but are involved in the act of bribery within the U.S. Any agent or third party including a consultant, or intermediaries such as distributors who are acting on behalf of a U.S. company or individual. The Act extends itself to hold the Companies liable for the actions taken by their agents or third parties if the companies knew or should have known that their agent was engaged in the act of bribery.Any Individual such as the company’s officers including its directors and shareholders can be held directly for violating the FCPA..By analyzing the above executive order by the Trump administration, we can safely assume that in the short term, this will lead to the dilution of FCPA in the U.S., which will also hamper its international image..2. The White House Fact SheetThe White House also published its statement on 10th February 2025 saying that“The order directs the Attorney General to pause FCPA actions until she issues revised FCPA enforcement guidance that promotes American competitiveness and efficient use of federal law enforcement resources. Over time there has been an average of 36 FCPA-related enforcement actions per year, draining resources from both American businesses and law enforcement.Past and existing FCPA actions will be reviewed.Future FCPA investigations and enforcement actions will be governed by this new guidance and must be approved by the Attorney General.The purpose of the order is to stop excessive, unpredictable FCPA enforcement that makes American companies less competitive by stopping US companies from engaging in practices that are common among other international competitors.”FCPA overenforcement infringes upon the President’s Article II authority to conduct foreign affairs, necessitating this review and new enforcement policies.…………..Though this move can be seen as promoting American businesses and giving them equal competing power as their contemporaries in other countries, such dilution of anti-corruption legislation indirectly leads to more corruption and may eventually turn out to be a lose-lose proposition..Another significant impact of this decision is that this order can distort markets by offering undue advantages to some parties who might not be providing the best goods or services..Does this mean that now bribery is legalised in the U.S.A.?No, Bribery is still illegal in the U.S. as of now when this article is written and published the U.S Foreign Corrupt Practices Act of 1977 (FCPA) has not been repealed but this is assumed that the above executive order weakens the law by ordering a pause on enforcement of FCPA enforcement and investigations. Also, various US states and foreign countries have their own anti-bribery laws in place such as The New York Penal Law which covers bribery and related offences involving public servants, The California Penal Code sections 67 PC and 68 PC which deals with bribery in circumstances where a person offers a bribe to an executive officer or when an executive officer solicits or accepts a bribe in California, The California Penal Code § 641.3 PC which prohibits commercial bribery by prohibiting offering or giving something of value exceeding $250 to an employee to influence their business decisions in one’s favour and to gain an advantage in business dealings, The Texas Penal Code § 36.02 makes it illegal to offer or accept benefits in exchange for decisions, votes..The ongoing events shed light on the impact of this case on the geopolitical relationship between India and the U.S..3. Will there be any impact of this executive order on Adani’s ongoing bribery case?In November 2024, U.S. prosecutors charged Mr. Gautam Adani with alleged fraud paying Indian officials over $250 million (about ₹2,100 crores) in bribes in exchange for favourable terms for solar power contracts.For Gautam Adani this situation is a “Wait and Watch”, as this particular issue is a lot more than just corruption charges against a corporation, the ongoing events shed light on the impact of this case on the geopolitical relationship between India and the U.S. For now, Gautam Adani is going to get relief for at least 180 days till the FCPA actions are reviewed by the Attorney General. It is also important to remember that the Attorney General still holds discretionary power if she believes that a case is an exception. We will have to wait and see if the U.S. agency hands this matter to the Indian authorities and shuts their investigation or maintains the status quo. On February 10, 2025, six U.S. Congressmen Lance Gooden, Pat Fallon, Mike Haridopolos, Brandon Gill, William R. Timmons and Babin wrote to Attorney General“Instead of deferring the case to the appropriate Indian authorities, the Biden DOJ decided to push forward and indict [Adani group] ‘s executives without any real injury to U.S. interests being present.”.Impact on markets By analysing the above executive order by the Trump administration, we can safely assume that in the short term, this will lead to the dilution of FCPA in the U.S. which will also hamper its international image. All the major economies have their own Foreign Anti-Corruption laws in action such as the United Kingdom – Bribery Act 2010 deals with the criminalization of bribery in the U.K. and abroad, in Canada – The Corruption of Foreign Public Officials Act (CFPOA) is one of the strictest laws across the world which criminalises bribery with fines as well as imprisonment. India has its own anti-corruption law– the Prevention of Corruption Act (1988, amended in 2018) under which corruption is a punishable offence with a minimum of three and a maximum of seven years.Another significant impact of this decision is that this order can distort markets by offering undue advantages to some parties who might not be providing the best goods or services. This will also promote a perception system where the State supports corruption and makes bribery a publicly acceptable practice.

The White House executive order pausing FCPA and its impact on Gautam Adani’s case

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