On December 22, 2023, President Biden signed a new law called the Foreign Extortion Prevention Act (FEPA), which may well be the most important anti-corruption statute enacted since the passage of the Foreign Corrupt Practices Act (FCPA) nearly a half century ago and has the potential to dramatically expand the scope of federal enforcement in this area.
The FCPA makes it a crime for certain classes of U.S. persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. In that sense, although it has been aggressively enforced over the decades, the FCPA (unlike many other federal bribery laws) criminalizes only the “supply-side” of overseas corruption, an obvious imbalance noted by the law’s critics over the years.
The FEPA attempts to close this statutory gap by targeting those foreign officials on the receiving end of a bribe. It does so not by amending the FCPA, but rather by expanding the scope of the domestic anti-bribery statute, Title 18, U.S. Code, section 201, to include “foreign officials” as being among those covered by its prohibitions.
Like the FCPA, the FEPA defines the term “foreign official” broadly to include “any official or employee of a foreign government or any department, agency, or instrumentality thereof.” However, the FEPA goes one step further than the FCPA to include “any person acting in an unofficial capacity” for such entities as well as “any senior foreign political figure,” thereby dramatically expanding the list of potential violators.
The FEPA makes it unlawful for any foreign official, as defined above, to corruptly “demand, seek, receive, accept, or agree to receive or accept” anything of value, personally or for any other person or nongovernmental entity, from any U.S. citizen or resident or person in the territory of the United States in exchange for: (a) “being influenced in the performance of any official act”; (b) “being induced to do or omit to do any act in violation of the official duty of such foreign official or person”; or (c) “conferring any improper advantage.”
In terms of penalties, a violation of the FEPA will carry fines of up to $250,000 or three times the monetary equivalent of the bribe and/or imprisonment of up to 15 years. This penalty is significantly more severe than that of the FCPA anti-bribery provision, which imposes a maximum fine of $100,000 and maximum imprisonment of five years.
While the enactment of the FEPA is a step forward in the Biden administration’s stated efforts to combat foreign corruption, questions remain as to how the new law will be enforced. For example, it is unclear whether federal prosecutors will be inclined to charge two sides of the same corrupt transaction in the same indictment using both the FCPA and FEPA, which could conceivably confuse jurors. Foreign officials charged under the new law will likely argue that they are outside the reach of the FEPA under immunity principles. There are also significant challenges to prosecuting a FEPA case in that extradition likely will be required in most cases. Prosecutions under the FEPA may also complicate diplomatic relations between the United States and foreign countries whose officials have been charged.
In any event, enforcement in foreign bribery matters is only going to intensify with the addition of the FEPA to the federal anti-corruption arsenal. It is thus more important for companies to focus on their compliance programs and training, and to monitor the impact of the FEPA.
Client Alert 2024-003
