Key Points
- The FCPA remains valid and enforceable U.S. law, and violations of the law may serve as a predicate offense under state and local laws.
- Companies should be prepared for continued enforcement of anti-corruption laws by state AGs and state agencies despite shifting federal priorities.
- Companies should assess differing enforcement landscapes in state and local jurisdictions in which they operate and adjust compliance assessments accordingly.
Increasing State-Level Enforcement
On April 2, 2025, California Attorney General Rob Bonta issued a Legal Advisory to remind businesses operating in California that making an improper payment to foreign government officials for the purpose of obtaining or retaining business is illegal. The alert also confirms that violations under the Foreign Corrupt Practices Act (FCPA) are actionable under California’s Unfair Competition Law (UCL) even if federal enforcement of the FCPA is suspended.
California’s UCL was enacted to preserve fair business competition and protect consumers. The UCL prohibits illegal business practices and provides a private right of action to plaintiffs. Additionally, pursuant to the UCL, state and local prosecutors may bring civil enforcement actions against companies engaging in unlawful, unfair or fraudulent business practices. Throughout the years, the UCL has been used to address false advertisement, consumer fraud and antitrust violations. Under the UCL, violations of federal and criminal laws may also serve as a predicate offense for a UCL cause of action. Importantly, in 2003, the California Supreme Court noted the appeals court’s determination that a UCL claim may be predicated upon a violation of the FCPA.
On February 10, 2025, President Trump issued an executive order instructing U.S. Attorney General Pam Bondi to pause all investigations and enforcement actions under the FCPA. The six-month pause was enacted so that the U.S. Attorney General may issue enforcement guidance that prioritizes American interests and ensures the economic competitiveness of U.S. companies. (For background on the order, see our February 11, 2025, article “Trump Orders Attorney General To Temporarily Pause FCPA Enforcement.”) In a press release accompanying the Legal Advisory, California Attorney General Bonta reiterated that “bribing foreign officials is illegal under California law and will not be tolerated” despite the shifting federal enforcement priorities.
More broadly, the Legal Advisory “emphasizes the need for all businesses and individuals to continue complying with all applicable laws … regardless of the federal administration’s pronouncements.” Other state AGs are expected to follow California’s lead and increase enforcement efforts in several focus areas to address perceived gaps in federal enforcement. (For information regarding other areas of focus for state AG enforcement, see our March 3, 2025, article “State Attorneys General May Fill Enforcement Void Left by Shift in Federal Priorities”). Given the Department of Justice’s pause on FCPA enforcement and the current uncertainty surrounding enforcement by the Securities and Exchange Commission, state and local officials may intensify their enforcement efforts against corrupt practices and fill any enforcement void left by the federal government. In particular, state and local authorities may step in to coordinate multistate initiatives and pursue wide-reaching and broad investigations, which may be burdensome and costly.
Indeed, California Attorney General Bonta warns: “Illegal activity is still illegal. Paying bribes to foreign officials is not only unethical, it’s also bad for business.” While the Trump administration has signaled that it is pulling back from anti-corruption enforcement, companies should continue to maintain robust internal controls and effective compliance programs to prevent and detect corruption. Implementing and developing risk-based compliance programs, which account for risks posed by local and state regulators, continues to be considered the best practice.
Final Thoughts
State AGs may increase regional and local enforcement initiatives to cover any relaxation of anti-corruption enforcement resulting from shifting federal priorities. Now is an opportune time for companies to be proactive, assess their potential state AG anti-corruption enforcement risks and enhance their compliance programs.
See the Executive Briefing publication
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.