After years of anticipation, President Biden signed the Foreign Extortion Prevention Act (FEPA) into law on December 22, 2023, ushering in a new era of international anti-corruption prosecution. The FEPA will make it easier for the U.S. Department of Justice (DOJ) to prosecute foreign officials who demand or accept bribes from U.S. companies. As the long-awaited corollary to the Foreign Corrupt Practices Act (FCPA), the FEPA is one of the most important expansions of anti-corruption laws in decades.

In this client alert, we analyze and discuss how compliance and risk management for companies (and state-owned entities (SOEs) in particular) are impacted by the FEPA and its key differences from the FCPA.

The FEPA Focuses on New Forms of Prosecutable Bribery

The FEPA expands the scope of anti-corruption law from the “supply-side” of bribery to the “demand-side” of bribery. While the FCPA criminalizes paying bribes to foreign officials, the FEPA criminalizes seeking or receiving bribes by foreign officials. The FEPA makes it a federal offense for foreign officials and political figures to request or accept bribes from U.S. companies and individuals or from anyone within the United States.

Officials convicted under the FEPA face significant fines and prison time. They can be fined up to $250,000 or three times the amount of the bribe, and they can be imprisoned for up to 15 years per count of conviction.

Under the FCPA, the DOJ could only prosecute the U.S. entities for their corrupt payments or offers to pay bribes. Now under the FEPA, employees, executives, and directors of state-owned enterprises are themselves the target of enforcement efforts for requesting, demanding, or accepting bribes.

The FEPA Expands Foreign Government-Affiliated Targets

Although the FCPA and the FEPA will work in concert, the FEPA defines “foreign official” more broadly than the FCPA. The FCPA’s definition of foreign official includes everyone from government leaders to employees at public international organizations within its sweep. The FEPA takes it a step further, criminalizing receipt of payments by not just foreign officials as outlined in the FCPA but also “senior foreign political figures” and even individuals working on behalf of a government in an unofficial capacity. The term “senior foreign political figures” is particularly expansive. It includes current and former senior officials of foreign governments; political parties; executives of state-owned entities; politicians (elected or not) and their family members; corporations formed to benefit such politicians; and individuals widely and publicly known to be close associates of politicians.

Key Takeaways

Companies and individuals who interact with foreign government officials, politicians, or influential individuals, should pay close attention to the FEPA and incorporate the following takeaways into their compliance regimes.

1. Private-Sector Compliance: Companies should update their anti-corruption compliance plans to address and include the new list of foreign politicians that may fall within the FEPA’s reach. Although the FEPA does not change much for a private company’s liability, as it targets only foreign officials who accept bribes, it makes it easier for the DOJ to investigate bribery by giving the government another set of targets that it can charge and obtain cooperation from. Companies should also consider requiring employees to notify their legal or compliance departments if they receive a request for a bribe.

   The FEPA will also give companies under investigation another avenue for cooperating by providing information about foreign officials who have sought or accepted bribes. But, at the same time, the DOJ may come to expect companies under investigation for FCPA violations to fully cooperate with its FEPA investigations to receive cooperation credit.

2. Compliance Changes for Government-Affiliated Companies: Companies that are owned or operated even partly by foreign governments should immediately analyze their compliance programs and risk profiles. The FEPA’s expansive definition of who counts as a foreign official could require new policies and procedures. The shift suggests that the DOJ will broaden its scope when investigating foreign bribery and that SOEs could end up conducting internal investigations or responding to DOJ subpoenas or requests for information.
3. Complex Self-Disclosure Incentives: The FEPA creates a new set of complicated factors for voluntary self-disclosure. For corporations approached by foreign officials or foreign politicians for bribes, there is now an incentive to self-disclose this conduct to the DOJ—albeit with possible commercial risks. On the other side of the coin, foreign officials also may report wrongdoing or even potential wrongdoing by U.S. companies to avoid the risk of the FEPA prosecution. Further complicating these decisions are the ever-changing international diplomatic issues that accompany the United States investigating and indicting foreign government officials. Companies will need to engage in a more nuanced evaluation of whether and how to voluntarily self-disclose misconduct.
4. Evidence of America’s National Security Surge: As we discussed last year, the DOJ has sharpened its focus on national security. The FEPA is another example. It is a rare instance of bipartisan legislation, with senators from both parties championing the bill.
5. Forthcoming Justice Department Enforcement: The DOJ has not yet commented on how it intends to enforce the new law. From analyzing past trends, we expect the DOJ will make an announcement in the coming months regarding integration of the FEPA into its anti-corruption regime. Companies should be on the lookout, as DOJ policy will set the stage for how to adjust practices in the evolving anti-corruption landscape.