Last week, Matt Levine offered interesting thoughts – but definitely not legal advice, as he always says – on internal struggles companies face with “enforcement pauses.” Levine wrote about how corporate compliance officers might respond to pressures as a result of an Executive Order last month pausing federal enforcement of the Foreign Corrupt Practices Act (FCPA):
“… compliance officers might give answers like:
-
-
The law is still the law: Enforcement is paused, but it is still a violation of a US statute to pay bribes, and it is bank policy not to break the law.
-
Sure enforcement is paused, but it could come back. There’ll be a new president in four years, probably, and the new administration might enforce the FCPA, including for old cases. If you pay a bribe now, you might go to prison in five years.
-
For that matter, there’s nothing to stop the Trump administration from un-pausing enforcement and bringing a case against us thisyear. Trump might change his mind about enforcing the FCPA. Or he might want to punish just our bank, for unrelated reasons — maybe we expressed support for Democrats — so he will go after us for FCPA violations. The fact that the law is no longer enforced generally doesn’t mean it can’t be enforced against you.
-
State regulators and even private plaintiffs might sue us for violating the law, even if the Trump Department of Justice does not.
-
If we just manifestly go around breaking the law, that seems bad for public relations, even if the law is no longer enforced.
-
These answers are all a bit vaguer and less compelling than ‘if you pay bribes we will pay a big fine and you might go to prison’ – they are less compelling than the standard mechanism where the government enforces the law – but they are compelling enough. If you are a big regulated bank, you do not want to have a policy of ‘go ahead and break the law’ just because Donald Trump pinky-promised not to enforce it.”
These thoughts apply equally to any actions/Executive Orders concerning environmental regulations, climate policy and other sustainability matters that the administration issues. CSOs, sustainability staff and advisors may want to memorize these for when you have to answer similar questions from executives, clients and others.
Members can read more about environmental compliance here. Also, stay tuned for an upcoming podcast with Doug Parker, CEO of EcoLumix, about what companies should do in response to the new EPA deregulation announcement.
If you aren’t already subscribed to our complimentary ESG blog, sign up here for daily updates delivered right to you.
