FCPA freeze fallout: Trump's order stalls probes, but SEC scrutiny remains

In early 2017, as US President Donald Trump assumed office for his first term, Mondelez International agreed to pay $13 million to settle charges from the US Securities and Exchange Commission (SEC) that its Cadbury unit had violated federal anti-bribery laws during efforts to expand a chocolate plant in Baddi, India.

 

In a statement, Mondelez said it was pleased to reach the civil settlement in which it neither admitted nor denied wrongdoing.

 

In 2019, Walmart paid $282 million to settle violations under the Foreign Corrupt Practices Act (FCPA) in India and other countries. This settlement concluded a seven-year investigation by the US Department of Justice (DOJ) and the SEC.

 

Fast forward to February 2025,  President Trump’s executive order paused FCPA enforcement for 180 days. The order has introduced uncertainty for ongoing cases involving Indian companies or those with operations in India. However, investigations may still proceed under SEC jurisdiction.

 

The FCPA is enforced jointly by the DOJ (criminal penalties) and the SEC (civil penalties).

 

“While most FCPA and SEC investigations against MNCs operating in India have ended in settlements with fines, the cases involving Gautam Adani and Sagar Adani, executives of Adani Green Energy Ltd, and Cyril Cabanes, an executive of Azure Power Global Ltd, are still pending as they have opted for litigation to challenge the allegations,” said Ekta Rai, advocate at the Delhi High Court.

 

Companies like AAR Corp, Deere & Company, and SAP SE have already reached settlements, suggesting other entities may follow suit, said Arman Roop Sharma, partner at Anand Sharma & Associates. “These settlements typically involve monetary penalties, corporate governance improvements, and ongoing monitoring,” he added.

 

In October 2024, the SEC announced a settlement with Moog, a New York-based global manufacturer of motion control systems for military and commercial aircraft, space, defence and industrial operations. This was to resolve violations of books and records, and FCPA’s provisions of internal accounting controls. Moog agreed to pay nearly $1.7 million in disgorgement, prejudgment interest, and a civil monetary penalty.

 

“Moog’s case highlights how foreign companies operating in India can face penalties for misconduct through their subsidiaries,” Sharma said. “Similar cases may emerge involving other firms with Indian operations.”

 

India has emerged as the third-most common target for FCPA enforcement since 2010, tied with Mexico.

 

According to Section 2 of the February 10, 2025 executive order, the attorney general will review FCPA investigation and enforcement guidelines over a 180-day period (extendible). “During this period, no new investigations will start, existing cases will be reviewed, and any post-review actions will adhere to updated guidelines. Remedial measures for past actions may also be recommended to the President,” said Akshat Pande, managing partner at the law firm Alpha Partners.

 

Experts say that pending FCPA cases involving Indian companies and India-linked operations suggest an increasing focus on corruption enforcement, particularly in high-stakes sectors such as defence, aviation, and energy. “The outcomes of these cases will likely follow past patterns, including significant financial penalties, disgorgement, and compliance commitments,” Sharma said.

 

“The impact of the suspension on cases related to India is that the attorney general will review investigations, and no punitive action will be taken during this period,” explained Shashank Agarwal, an advocate at the Delhi High Court.

 

Trump’s executive order also mandates a review of existing FCPA cases based on updated enforcement guidelines, which are yet to be issued and may apply retrospectively, said Kunal Gupta, partner in the white-collar crimes (investigation) at Trilegal.

 

“Pending matters are expected to experience a halt in investigation and enforcement proceedings,” he explained, adding, “While the order does not currently affect the SEC’s civil enforcement actions concerning new and pending matters, this position may change in the future.”

 

Despite the current pause, experts say that the FCPA remains in effect, and policy shifts or risk of prosecution by future administrations remain.

 

“The halt on FCPA investigations and enforcement does not impact actions under domestic anti-bribery laws,” Gupta said. “Therefore, it may be argued that continuing internal investigations, voluntarily disclosing potential violations, and implementing remedial measures may improve companies’ chances of securing a DOJ declination in the future.”

 

Key FCPA cases with India link

 

> Cognizant: US-based Cognizant Technology Solutions’ Indian subsidiary paid ₹12 crore in bribes via a third party for a building permit. The third party received a commission for facilitating this payment. Upon discovering this through an internal audit in the US, Cognizant self-disclosed the issue to the SEC, which imposed ₹135 crore in disgorgement, ₹23 crore in interest, and ₹50 crore as a penalty. An FIR was filed in India against former Cognizant India employees and the third party for violating various Indian laws, including the Prevention of Corruption Act, 1988 and the Indian Penal Code, 1860

 

> Oracle: US-based tech firm Oracle Corporation was found to have violated FCPA in India and certain other countries. Oracle India’s employees purportedly offered a 70 per cent discount on a software component in a transaction involving a company owned majorly by the Railways ministry. The discount was approved without seeking supporting documents. Funds from the discount were used to create slush funds that were used for improper and unauthorised payments to government officials. Oracle self-disclosed this to the SEC, and paid ₹59 crore in disgorgement, ₹7 crore in interest, and ₹123 crore as penalty. Oracle also terminated senior managers, ended ties with the distributors involved, and improved its training programmes and policies

 

> CDM Smith: Employees of CDM Smith’s India subsidiary were found to have bribed some officials of the National Highway Authority of India via fraudulent sub-contractors, falsely recording bribes as “Allowable Business Expenditure” in tax returns. Senior personnel, including the finance director, were, it seemed, aware of the misconduct. CDM Smith, a US based engineering and construction firm, self-disclosed the violations, and paid ₹34 crore in disgorgement. It terminated all employees involved. An FIR was also filed against officials of CDM Smith India for conspiracy, cheating, forging documents, and falsification of accounts

 

> Cadbury Ltd & Mondelez International: Cadbury India hired an agent without due diligence to obtain licences for expanding its manufacturing facilities. It appears payments made to this agent were misused. There was no contract with the agent for making payments, and it was suggested that the licence applications were prepared by employees of Cadbury India and not the agent. Mondelez, which acquired Cadbury, conducted a post-acquisition due diligence and after an internal investigation, terminated the agent’s contract. It paid a penalty of about ₹107 crore to the SEC. Mondelez also conducted a comprehensive review of third-party engagements in Cadbury India’s business