A new president at the helm means new priorities and new emphases. Will this administration strengthen or slacken anti-corruption laws? A month into Trump’s presidency, there are a number of updates to keep abreast of.

Transparency International USA. The United States achieved an 18th place ranking in this year’s Transparency International Corruption Perception Index, but the anti-corruption body is no longer accredited with the global umbrella organisation based in Berlin. Transparency International announced the split one day prior to the release of this year’s CPI, citing differences “in their philosophies, strategies, and priorities.”

The loss of accreditation for TI USA is emblematic of the political uncertainty ushered in by Donald Trump’s election victory, despite the president’s campaign promise to “drain the swamp’” of corruption and cronyism in Washington D.C.

Accusations of conflict of interest between Trump, his family and his businesses have undermined his anti-corruption rhetoric. Incidentally, a recent TI blog offered a detailed critique on the track record of populist leaders tackling corruption, pointing out that corruption tends to increase on their watch.

Joint House Measure Resolution 41. The president signed this measure in February, revoking a transparency rule (Publish What You Pay – “PWYP”) that the U.S. Senate had voted to repeal. Trump’s measure removes the obligation placed on U.S. energy and oil firms to disclose payments to domestic or foreign governments.

The obligation was intended as a line of defence against corruption and derived from the Dodd-Frank Act. Repealing such laws is in line with Trump’s promise to remove regulation in a bid to encourage businesses to operate in the United States, providing jobs for American workers.

The U.S. Chamber of Commerce said that the law placed too high a compliance cost on companies; Oxfam America stated that measure will “make it easier to get away with corruption.”

Securities and Exchange Commission. Trump’s selection for chief of the Securities and Exchange Commission, Jay Clayton, was described in The Wall Street Journal as a “180 from Chairman Mary Jo White” head of the SEC from 2013-2017.

Compliance professionals will have to monitor changes to anti-corruption laws closely in a Senate and White House that are intent on shaking up the rules.

Clayton will lead an organisation charged with enforcing a law that the president had vowed in his election campaign to dismantle: Dodd-Frank. It’s more likely that the act will lose its teeth, rather than disappear entirely, although second-guessing Trump’s plans is fraught with difficulty.

White entered the SEC with a reputation for unflinching toughness; her tenure as agency executive has been marked with criticism, including flak for the sluggish implementation of Dodd-Frank that led to Elizabeth Warren imploring Obama to replace her.

Dodd-Frank Act. Contentious since its inception, the Dodd-Frank Act now finds itself sandwiched and under assault from two U.S. titans: Wall Street and the White House. Wall Street has consistently said that this regulation stifles banks, whilst Trump’s spokesman Sean Spicer has described it as “rippling” the U.S. economy, despite statistics pointing to the contrary.

As such, the PWYP anti-corruption component of Dodd-Frank has already been tossed aside by a Congressional Review Act. Other aspects of the Act will perhaps follow PWYP into oblivion. From an anti-corruption perspective, the focus will be on whether Dodd-Frank’s whistleblowing procedures remain intact.

Dodd-Frank enhances whistleblowing policies outlined in Sarbanes-Oxley 2002. It mandates that the Securities and Exchange Commission reward whistleblowers who provide information based on violations of the Foreign Corrupt Practices Act. As of August last year, the SEC has paid out at least $85 million to over 30 whistleblowers.

Foreign Corrupt Practices Act (FCPA). Considered the cornerstone of U.S. anti-bribery legislation, the FCPA is another statute that the president has expressed his opposition to, describing it in 2012 as a “horrible law.”  Despite this assessment, FCPA resolutions yielded a record haul in 2016, taking $2.43 billion in fines and penalties.

The past twelve months has seen FCPA settlements rise after a dip in 2015. Just two FCPA investigations were resolved that year, with the small figure attributed to the increasing complexity of investigations.

The nomination of Jeff Sessions as attorney general and Jay Clayton as head of the SEC had led to speculation that the FCPA will be enacted with less vigor than before. There’s the possibility, however, that Trump’s political interests could align with the enforcement of the FCPA, as the act may be used to punish foreign businesses and support of American companies.

2017 and beyond. This is an absorbing time to follow anti-corruption in the United States. Trump campaigned on an anti-establishment, anti-corruption, Wall-Street-bashing ticket, and any slackening of anti-corruption efforts will surely result in the president’s supporters pointing to his pre-election anti-corruption plan.

Yet the rolling-back of Obama-era regulation has led some to believe that, for this administration, business comes first. But it isn’t all one-way traffic: Analysts expect a protracted stand-off in Congress should further steps be taken to dilute anti-corruption statutes.

Compliance professionals will have to monitor changes to anti-corruption laws closely in a Senate and White House that are intent on shaking up the rules.

International Compliance Training has recently opened an office in New York. You can find out more about the professional certifications and qualifications they offer in financial crime, governance, risk, and compliance and anti-corruption at the ICA Open House, New York City, March 9, 2017.

About the Author

Jake Plenderleith, Editorial Manager, International Compliance Training

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