Foreign Extortion Prevention Act (FEPA) Expands US Authority to Reach Foreign Bribery

Congress Enacts the Foreign Extortion Prevention Act
On December 22, 2023, President Biden signed the Foreign Extortion Prevention Act (FEPA), a new anti-bribery statute long considered as a likely accompaniment to the Foreign Corrupt Practices Act of 1977 (FCPA). The legislation, which was passed by the US Congress as a part of the National Defense Authorization Act, criminalizes the “demand” side of foreign bribery by making it illegal for any foreign government official to demand, receive, or agree to receive a bribe from a United States citizen, company, or resident in exchange for obtaining business. The FCPA criminalizes only the “supply” side of illegal foreign bribery—the offering or payment of bribes to foreign government officials. With this addition, both sides are now criminalized.

Key Provisions: A Complement to the FCPA
The FEPA largely shares the FCPA’s baseline elements. For instance, the FEPA requires the same jurisdictional nexus to the US—demands must be made to an issuer of US securities, to a US domestic concern, or to any person within the territory of the United States—and at the heart of each law is the corrupt exchange or quid pro quo requirement: the bribe demand must be in return for the taking or omission of some official government act or otherwise conferring some business-related benefit. While the FEPA mirrors in significant part the FCPA’s elements, the FEPA is not an amendment to FCPA; rather, it amends 18 U.S.C. §201, the US domestic bribery statute, to include foreign officials. The FEPA also expands on the FCPA’s definition of a foreign official to include not only “any official or employee of a foreign government or any department, agency, or instrumentality thereof” but also any person “acting in an unofficial capacity” on behalf of those entities.

Violators of the FEPA will face a maximum of 15 years imprisonment and a maximum fine of $250,000 or three times the value of the bribe, whichever is greater. The FEPA also requires the US Attorney General to submit an annual report summarizing demands made by foreign officials, US diplomatic efforts to protect US entities from foreign bribery, actions taken by the Department of Justice (DOJ) under the new law, and resources or legislative action needed by the DOJ to enforce the FEPA.

Until now, US enforcement authorities have relied largely on the FCPA to combat foreign corruption. Under the FCPA, companies and individuals may be charged for the offering, promising, authorizing, or paying of bribes to foreign government officials. But the language of the FCPA has long left the recipients of foreign bribes outside of its scope.¹ In the interim, the DOJ has used other tools in its arsenal to reach the beneficiaries of bribery overseas, including federal money laundering, tax, and wire fraud statutes, as well as forfeiture actions.

The FEPA was designed to fill this gap. Its sponsors in Congress describe FEPA as the “most significant international criminal anti-corruption legislation in half a century.” The US Helsinki Commission further describes the FEPA as a measure to “combat kleptocracy and corruption by criminalizing bribery demands by foreign officials” and to upend the status quo which “gives unscrupulous companies operating in a corrupt environment a competitive edge while disadvantaging companies beholden to the rule of law.” Notably, this brings US anti-bribery enforcement in line with the UK Anti-Bribery Act, widely regarded as the most expansive anti-bribery legislation. It also continues the international trend of the expansion of anti-bribery legislation generally. For example, in recent years, both France and Germany have introduced extensive anti-bribery and corruption legislation.

Although the FEPA primarily seeks to hold to account corrupt foreign officials who have thus far skirted US prosecution, some obstacles to such investigations remain. Foreign officials, even if charged under the statute, can remain beyond the grasp of US authorities. Further, attempts by US authorities to prosecute foreign officials may risk drawing diplomatic ire. Additionally, while the FCPA confers jurisdiction to the US Securities and Exchange Commission (SEC), the FEPA does not grant the SEC the authority to pursue civil enforcement actions for violations. Nevertheless, the FEPA underscores the expansion of the DOJ’s ability to investigate and prosecute foreign officials and offers new protections for US businesses facing extortion demands.

Implications & Takeaways
The FEPA reflects a further expansion of the US government’s robust anti-corruption toolkit, as well as the current White House’s prioritization of combating foreign corruption. Additionally, the FEPA echoes an ongoing expansion of the DOJ’s continued focus on individual prosecutions and on rewarding voluntary self-disclosure of criminal misconduct, providing companies with an additional avenue to obtain cooperation credit in DOJ investigations by voluntarily self-disclosing information about foreign officials demanding or accepting bribes. 

However, it is unclear how the DOJ will work to enforce the FEPA in practice. The existence of similar statutes in many foreign jurisdictions available to prosecute foreign officials may mean that the passage of the FEPA will have negligible impact on DOJ foreign corruption enforcement efforts. Indeed, there have been significant efforts by the DOJ and foreign authorities to work in parallel on significant bribery investigations, and since many other jurisdictions already have similar statutes in place to prosecute foreign officials, US authorities may not leverage the FEPA in such corruption investigations. The DOJ may continue to rely on more tried and true methods of overseas enforcement – including fraud, tax and money laundering charges with extraterritorial reach. This is especially true in the near term, given DOJ efforts to work in parallel with foreign authorities on significant international bribery investigations. One example is the DOJ’s recent deferred prosecution agreement with SAP to resolve an FCPA investigation stemming from schemes to pay bribes to officials in South Africa and Indonesia, which was coordinated with South African prosecutorial authorities.²

While the FEPA may make it easier for American prosecutors to target foreign officials, it may also be subject to certain limitations that have been placed on the FCPA. For example, the Second Circuit has affirmed that the government could not use accomplice or conspiracy liability to circumvent the FCPA’s jurisdictional limitations, holding that a person may not be held liable under the FCPA as a co-conspirator or accomplice if they are otherwise incapable of committing the crime as a principal.³ The court upheld the presumption against extraterritorial jurisdiction, finding that Congress did not intend for persons outside of the statute’s “carefully delimited categories to be subject to conspiracy or complicity liability.”⁴ The Second Circuit further determined that the FCPA does not impose liability on a foreign national who is not “an agent, employee, officer, director, or shareholder of an American issuer or domestic concern” unless that person commits a crime within the United States.⁵

While the FEPA shares a similar definition of “foreign official” with the FCPA, the domestic bribery statute may be the object of a conspiracy under 18 U.S.C. § 371. Time will determine whether courts will apply extraterritorial limitations to the FEPA as they have the FCPA, and it is unclear how courts will treat any attempts to charge a FEPA violation in conjunction with the conspiracy and complicity statutes. Further, it is unclear how courts and prosecutors will construe the FEPA’s “official act” element. While courts have declined to extend to the FCPA 18 U.S.C. § 201’s requirement that the public official at issue must take an official act in exchange for the bribe,⁶ the FEPA’s decision to amend the domestic bribery statute instead of the FCPA makes it likely that US prosecutors will have to prove evidence of an official act by a foreign official abroad to prove a FEPA violation. This alone may result in the DOJ continuing to leverage other statutes rather than the FEPA to reach corrupt conduct. Nevertheless, it would be prudent for companies to ensure their compliance policies are in line with the FEPA requirements.

Whether or not the passage of the FEPA will immediately yield increased foreign bribery prosecutions, companies should continue to bolster their foreign-corruption-based compliance programs so that any potential violations can be detected and addressed. Companies, including those in the M&A process, should ensure that compliance programs include:

• Clear anti-corruption policies and procedures that prohibit the offering or receiving of bribes and highlight the new, broader definition of who constitutes a “foreign official” under the FEPA
• Anti-corruption compliance training for employees who may interact with “foreign officials” as defined by the FEPA to notify the employees that the US law has changed and make them aware about the company’s policy regarding internally reporting potential corruption
• Internal investigation policies and procedures that allow companies to investigate potential corrupt conduct, correct course, and—where necessary—self-disclose the conduct to the DOJ

Moreover, companies should also monitor ongoing DOJ guidance regarding the FEPA and stay up to date on the government’s enforcement of the FEPA, including reviewing the DOJ’s annual reports to Congress.

 

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^[1] See U.S. v. Castle, 925 F.2d 831 (5th Cir. 1991). 
^[2] “SAP to Pay Over $220M to Resolve Foreign Bribery Investigations,” Press Release, US Dept. of Justice (Jan. 10, 2024); see also “Glencore Entered Guilty Pleas to Foreign Bribery and Market Manipulation Conspiracies,” Press Release, US Dept. of Justice (May 24, 2022) (coordinated FCPA resolutions with criminal and civil authorities in the U.K. and Brazil).
^[3] U.S. v. Hoskins, 902 F.3d 69 (2d Cir. 2018).
^[4] Id. at 84.
^[5] Id. at 96.
^[6] See U.S. v. Ng Lap Seng, 934 F.3d 110, 132-33 (2d Cir. 2019) (“[W]e conclude that the McDonnell “official act” standard, derived from the quo component of bribery as defined by § 201(a)(3), does not necessarily delimit the quo components of other bribery statutes, such as [18 U.S.C.] § 666 [federal program bribery] or the FCPA.”); United States v. Porter, 886 F.3d 562, 565–66 (6th Cir. 2018) (“In McDonnell, the Supreme Court limited the interpretation of the term ‘official act’ as it appears in § 201, an entirely different statute than [§ 666]”).

 

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