President Trump promised condos on the beaches of sunny North Korea as a part of his negotiations with North Korean dictator Kim Jung Un. While it is not clear when construction on these new vacation getaways will break ground, one of the incentives the President dangled in front of the North Korean dictator was economic incentives, no doubt to enrich the lives of average North Koreans who are not living in gulags. 

One of the issues surrounding this promise is the fact that U.S. companies will then have to go into North Korea and actually do business. Unfortunately, North Korea is one of the most corrupt places on earth, with Transparency International rating the country as “highly-corrupt” with a score of 17 on its 2017 Corrupt Perceptions Index. North Korea ranked at number 171 out of 180 countries listed on the most recent report. All of this means, it will be very risky from an anti-corruption perspective if U.S. companies go in and do business in North Korea. 

One only need consider what happened to U.S. firms that raced in to do business in Libya after it became open to the west in the past decade. First and foremost, there has never been any U.S. government that instructed U.S. businesses to go into a country and do business illegally. Yet, that is what many U.S. companies did and immediately got themselves into FCPA hot water for doing so. There have been several FCPA enforcement actions involving U.S. companies that violated the FCPA in their business operations in Libya. To date, this group has included Och-Ziff, Legg Mason, and BNY Mellon. There are several more U.S. companies that have self-disclosed investigations around allegations of FCPA violations in Libya. 

In addition to the pervasive corruption which permeates the North Korean society, there is also the flip-flop of the Trump Administration itself on just about every issue imaginable. What and who the Administration praises now may well not be the same person, group or country tomorrow. Further, just as the President ordered the Commerce Department to reduce its sanctions on ZTE, he could just as well order the same Department to place a company under sanctions. 

If you are considering doing business in North Korean, go in with your eyes very wide open.