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'While the current pause offers temporary reprieve and alleviates any immediate legal pressure, the long-term implications remain uncertain.'
The suspension of the nearly 50-year-old Foreign Corrupt Practices Act (FCPA) by American President Donald J Trump's administration could delay or halt legal proceedings against the Adani group in the United States, experts have said, adding that the duration of the pause and outcome of the US department of justice's review of FCPA enforcement guidelines has to be watched closely.
"It is important to note that the executive order directs a review of current and past actions related to the FCPA, and the future of these cases will depend on the new guidelines established by the attorney general," said Rishabh Gandhi, founder of law firm Rishabh Gandhi and Advocates.
Trump on Monday signed an executive order directing the DoJ to halt all persecutions of Americans accused of bribing foreign officials while trying to win or retain business in their respective nations.
The FCPA, enacted in 1977, prohibits US companies and foreign firms listed on US stock exchanges from bribing foreign officials to obtain or retain business.
In November last year, the DoJ accused Gautam Adani, founder of the Adani group, along with his nephew Sagar Adani and other company executives, of offences including conspiracy to violate the FCPA, securities fraud, and wire fraud.
The indictment alleged the Adani group orchestrated a bribery scheme involving over $250 million in payment to government officials in India to secure lucrative solar energy contracts.
Trump's Monday order halts implementing the FCPA and orders Attorney General Pam Bondi to review current and past decisions related to the law and make guidelines for enforcement.
'It's going to mean a lot more business for America,' Trump said while signing the order.
In the past, Trump had termed it a 'horrible law' and said the world was laughing at the United States for implementing it, according to a Reuters report.
Alay Razvi, managing partner, Accord Juris, said the DoJ might de-prioritise or dismiss the ongoing foreign bribery cases after Trump's order.
This could in turn lead to weakening enforcement and therefore embolden companies to engage in dubious transactions without fear of US prosecution, potentially increasing corruption risks, Rizvi said, adding that countries that relied on the US for financial oversight might now tighten their domestic anti-corruption laws, shifting the burden to local regulators.
"International trade relations could shift, with businesses in countries like India facing less scrutiny from US authorities on foreign deals," he said.
With the enforcement of the FCPA now halted, immediate legal pressures on the Adani group may alleviate at least in the short term but this does not equate to exoneration, said Kunal Sharma, partner, Singhania & Co.
"The only implication is that the legal framework within which they were being investigated is now being reviewed," explained Sharma.
"The executive order mandates a review of both ongoing and past FCPA enforcement actions, with an aim to recalibrate the DoJ's approach potentially under revised parameters," Sharma added.
"If the review results in a softened enforcement stance, the Adani group and similar entities may see reduced legal exposure because this development could provide temporary relief to the Adani group," Sharma said.
Conversely, if the revised enforcement guidelines maintain strict oversight under a different regulatory framework, the threat of future legal action against the Adani group remains "real", he said.
"Therefore, while the current pause offers temporary reprieve and alleviates any immediate legal pressure, the long-term implications remain uncertain," Sharma said.
The policy shift has triggered a significant backlash from anti-corruption watchdogs, legal experts, and international regulators.
Anti-corruption watchdog Transparency International stressed that the US became a leader in addressing global corruption by enforcing the FCPA.
However, Trump's order introduces a period of uncertainty, Sharma said.
"Companies previously under scrutiny must remain vigilant and prepared for potential legal challenges once the new guidelines are established," he said.
Feature Presentation: Ashish Narsale/Rediff.com
