Businesses with international operations should ensure their compliance programs are prepared for a new U.S. law which broadens the U.S. Department of Justice’s ability to prosecute international bribery and corruption. 

 

Specifically, in late December, President Biden signed into law the Foreign Extortion Prevention Act (FEPA) as part of the National Defense Authorization Act of 2024. FEPA aims to punish the “demand” side of foreign bribery by amending the existing domestic federal bribery statute, 18 U.S.C. Section 201, to make it a federal crime for foreign officials to solicit or demand bribery payments from US-based companies, SEC registered issuers, or individuals in the United States.

 

In this way, FEPA creates a counterpart to the anti-bribery provisions of the Foreign Corrupt Practice Act (FCPA), which, broadly speaking, prohibit US companies, US-registered issuers, or individuals in the US from offering or making corrupt payments to foreign officials. Until now though, federal law did not directly criminalize foreign officials’ solicitation or receipt of bribe payments.

 

Impact of FEPA on U.S. Businesses

 

For several reasons, businesses with international operations should be mindful of FEPA.

 

First, FEPA passed with bi-partisan sponsorship and shows strong Congressional support for, and interest in, U.S. anti-corruption efforts. For example, FEPA requires the Department of Justice (DOJ) to report annually to Congress on its efforts to investigate and prosecute foreign bribery. This Congressional attention may lead to a renewed focus by the DOJ on anti-corruption prosecutions more generally, following a perceived decline from their height in the early and mid-2010s. Notably, nothing in FEPA prohibits the DOJ from investigating, and potentially charging, both the “demand” side of an alleged payment under FEPA and the supply side of the payment under the FCPA and other statutes.

 

Second, FEPA broadly defines who is a “foreign official” subject to its prohibitions. Indeed, FEPA’s definition of “foreign official” goes beyond the FCPA’s. For example, FEPA’s definition includes not only “official[s]” or “employee[s]” of foreign governments and their agencies and instrumentalities, but also “any person acting in an unofficial capacity” on behalf of a foreign government or agency or instrumentality thereof.

 

FEPA’s “foreign official” definition also goes beyond the FCPA by including “any senior foreign political figure,” which it defines by incorporating by reference U.S. Federal Treasury regulations. Those regulations cover (1) ”[s]enior official[s] in the executive, legislative, administrative, military, or judicial branches of a foreign government (whether elected or not)”; (2) “senior official[s] of a major foreign political party”; (3) “senior executive[s] of a foreign government-owned commercial enterprise”; (4) immediate family members of such individuals; and (5) “a person who is widely and publicly known (or is actually known by [a] relevant covered financial institution) to be a close associate of such individual.

 

Companies should consider whether their compliance, training, and third-party diligence processes account for FEPA’s broader definition of “foreign official.”

 

Further, companies considering cooperating with DOJ investigations or self-disclosing potential misconduct should be aware that the government’s definition of “complete cooperation” in settlements may now include the need to cooperate against potential FEPA defendants, such as those who solicited, received, or who facilitated foreign bribes. Companies should consider updating compliance policies and training to ensure that potential FEPA issues are identified and reported internally so that companies can appropriately weigh risks and benefits of self-disclosure.

 

Finally, while FEPA may very well lead to an increase in foreign corruption investigations, it remains to be seen how many “foreign officials” will be successfully prosecuted under FEPA. FEPA investigations and prosecutions—as with any investigation or prosecution of an official of a foreign government—will likely raise a host of diplomatic, legal, and practical issues. And, if anything, the potential issues are likely to be even greater in FEPA cases, given, among other things, its broad, somewhat nebulous definition of “foreign official” and continued litigation surrounding what constitutes a crime under the federal domestic bribery statute, 18 U.S.C. Section 201, which FEPA was grafted onto. With respect to the latter point, for example, in 2016, in a decision which continues to reverberate in corruption-related investigations, a unanimous U.S. Supreme Court held in McDonnell v. United States that merely “setting up a meeting, calling another public official, or hosting an event does not, standing alone, qualify as an ’official act’” that could be prosecuted under Section 201 and thus reversed the conviction of the former governor of Virginia. Further, in FEPA prosecutions, one could also foresee protracted litigation over the extent to which a person who is not a “foreign official” could be guilty of conspiracy to violate, or aiding and abetting violations of, FEPA.

 

No matter, in an era of hyper partisanship, FEPA broadly shows the bi-partisan support of the legislative branch and the executive branch for increased anti-corruption enforcement reaching beyond the borders of the United States. As such, it would be prudent for companies with foreign operations to assess their anti-bribery and anti-corruption compliance programs as we enter 2024, and to incorporate FEPA into their internal reporting and training.

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