Business Day
BU S I N E S S DAY.CO. Z A
Friday 30 May 2025
Business Law & Tax Review
Ripple effects of Trump FCPA pause Despite order, businesses cannot afford to relax their anticorruption compliance efforts By STEVEN POWELL ENS
On February 10 2025, US President Donald Trump signed an executive order (EO) directing Attorney General Pam Bondi to pause enforcement of the Foreign Corrupt Practices Act (FCPA) for 180 days. The move, framed as an effort to reduce regulatory burdens and promote American competitiveness, has raised serious concerns about the future of global anticorruption enforcement. For decades, the US has led the charge against corporate bribery, holding multinational companies accountable under the FCPA. The pause in enforcement does not repeal the law. Still, it signals a fundamental shift in the US Department of Justice’s (DOJ) approach, potentially creating ripple effects across international compliance landscapes. What is the FCPA and why does this matter? The FCPA, enacted in 1977, prohibits US companies and individuals from bribing foreign officials to gain business advantages. The law, which was introduced in response to major corporate corruption scandals, imposes severe penalties, including: ● Up to 20 years in prison for individuals convicted of bribery-related offences; and ● Corporate fines reaching billions of dollars for companies guilty of violating FCPA provisions. Strict internal accounting requirements ensure that companies maintain accurate books and records to prevent fraud. Trump’s anti-FCPA stance is not new. During his first term, he called the FCPA a “ridiculous and horrible law” arguing that it made it difficult for US companies to compete overseas. His recent executive order aligns with his administration’s pro-business, deregulation-focused policies. What does this mean for corporate compliance? Although the pause in enforcement temporarily limits DOJ-led FCPA actions, companies should not interpret this as a green light for corruption. Key considerations include: ● The SEC’s FCPA enforcement continues — the US Securities and Exchange Commission (SEC), responsible for civil FCPA violations, has not paused enforcement. Companies must still ensure compliance with books and records provisions. ● Bribery remains illegal — the FCPA itself has not been repealed. Companies engaging in corruption during this pause may still face prosecution in the future. ● Other jurisdictions are stepping up — many countries have strengthened anticorruption enforcement in recent years. Even if the US steps back, global regulators are unlikely to follow suit. Will other countries fill the void? The US has long been the global leader in anticorruption enforcement, often coordinating cross-border investigations with international counterparts. However, with the DOJ stepping back, attention now turns to other major enforcement players: ● UK — the Bribery Act 2010 is one of the strictest anticorruption laws globally, imposing criminal liability for failing to prevent bribery. ● France — Sapin II, enacted in 2016, requires companies to implement strong compliance
programmes or face heavy penalties. ● Germany and China— both countries have taken an increasingly aggressive stance on corporate bribery. ● SA — the recent Prevention and Combating of Corrupt Activities Act (Precca) amendments introduce a Failure to Prevent Corrupt Activities offence, similar to the UK Bribery Act. As a result of the FATF greylisting enforcement is a key state priority. In major cases such as Rolls-Royce, Airbus and the Brazilian Car Wash Scandal, global regulators worked alongside US authorities to pursue
Bribery remains illegal … companies engaging in corruption during this pause may still face prosecution in the future corruption charges. With the US stepping back, it remains to be seen whether the UK, France or Germany will take the lead in major international investigations. What should companies do now? Despite the DOJ’s pause, businesses cannot afford to relax their anticorruption compliance efforts. Companies should: ● Maintain robust compliance programmes — future administrations may pursue retroactive enforcement, holding businesses accountable for misconduct during this period. ● Strengthen internal controls — ensuring compliance with SEC requirements, international regulations and best practices remains crucial. ● Monitor global enforcement trends — companies with operations outside of the US remain subject to foreign anticorruption laws and should expect continued scrutiny.
Will the FCPA pause last? Trump’s executive order is temporary, lasting only 180 days. However, it raises broader concerns about the US’s longterm commitment to fighting corruption. Several uncertainties remain, including: ● Will the SEC also scale back enforcement? Currently, there is no indication of this, but regulatory priorities may shift in the coming months. ● Will a future administration reinstate strict FCPA enforcement? The Reuters FCPA has a five-year statute of limitations, meaning violations committed during this pause could be prosecuted by a new administration. ● Will global anticorruption enforcement weaken? While the US pause creates uncertainty, most experts believe international regulators will remain active. SA’s evolving anticorruption framework While the US moves toward deregulation, SA is moving in the opposite direction. Precca has been strengthened with the addition of Section 34A, which introduces: ● A Failure to Prevent Corrupt Activities offence, holding companies accountable for corruption within their ranks. ● A requirement for companies to demonstrate “adequate procedures” to prevent bribery. ● Alignment with global best practice, mirroring provisions in the UK Bribery Act. Additionally, the National Prosecuting Authority (NPA) has introduced an Alternative Dispute Resolution (ADR) directive, offering nonprosecutorial outcomes for companies that selfreport corruption and cooperate with authorities. Compliance still matters The temporary pause in FCPA enforcement does not mean the end of anticorruption efforts. Ethical businesses will continue to uphold high compliance standards, recognising that: ● Bribery is not a sustainable business strategy — it increases costs, reputational risk and legal exposure. ● Global enforcement remains strong — the UK, France, Germany, China and SA continue to aggressively pursue corporate corruption cases. ● Future US administrations may reintroduce stricter enforcement — companies engaging in bribery now may still face legal consequences later. As the legal and regulatory landscape shifts, businesses must stay vigilant. Companies are advised to obtain expert advice to navigate these changes to ensure compliance and to mitigate risk in an evolving enforcement environment.
TAXING MATTERS
LEONARD WILLEMSE COLUMNIST
Navigating indirect taxes in Namibia-SA trade
R
ecently, import tariffs have become quite a topical issue, with US President Donald Trump increasing tariffs quite substantially for many countries. These tariffs are, in the main, customs tariffs. It is now a good time, more than ever, to consider indirect tax implications for importing goods between the two southern African neighbours. Indirect taxes, for the most part, consist of customs duties and value-added tax (VAT). From a customs perspective, both SA and Namibia are members of the South African Customs Union (Sacu), established in 1910, with a common external tariff and shared customs revenues that allow for less strenuous customs clearance procedures between its members. Namibia and SA are also members of the South African Development Community (SADC), which allows for the importation of goods between the two countries to be free from customs duty. Customs duty for Namibian and South African businesses is, therefore, generally not an additional cost. The same cannot be said for VAT. Both countries’ VAT legislation operates a regime where the importation of goods is subject to VAT at 15% in Namibia and 15% in SA. The VAT is payable by the importer of the goods and depends on the customs value thereof as determined by customs legislation. Therefore, it is very important for businesses to understand the customs valuation principles set out in the Namibian and South African customs legislation. For goods imported from SA into Namibia, the value of imported goods for VAT purposes is the greater of the free-on-board (FOB) value plus 10% of that value or the open market value of the goods. For importation from Namibia into SA, the VAT is calculated based only on the customs value of the goods (there is no 10% “step-up”). The goods’ sale terms are also critical in establishing who the importer of record is, as the importer is liable for VAT in the relevant country of importation. The Incoterms are therefore essential as, for example, a sale on the FOB basis would make the buyer effectively the importer. In contrast, a delivery-duty-paid (DDP) basis would make the seller the importer. Furthermore, which party is responsible for the exportation and the mode of transport would need to be considered to determine whether the seller may zero-rate the supply of the goods for VAT purposes. Whether the supply constitutes a direct or an indirect export significantly impacts whether the seller has to levy VAT on the sale of the goods. In addition to the importation and exportation considerations, the two countries’ VAT legislation provides for the importation of goods under certain circumstances to be exempt from VAT. -Leonard Willemse is Director: SA Indirect Tax at specialist tax and transaction adviser AJM.