In December 2023, President Joe Biden signed the Foreign Extortion Prevention Act (FEPA) into law under the broader Fiscal Year 2024 National Defense Authorization Act (NDAA). While FEPA’s sponsors hailed it as “the most significant international criminal anti-corruption legislation” since the passage of the Foreign Corrupt Practices Act (FCPA) of 1977, many in the legal community are questioning how enforceable it will be in practice.

The FCPA has only ever criminalized the “supply” side of foreign bribery—the offering, promising, authorizing, or paying bribes to a foreign government official. “There has been a long-time push by folks in Congress and outside groups to have both sides of a foreign bribery relationship criminalized,” commented Goodwin partner James Gatta, former chief of the Criminal Division at the U.S. Attorneys’ Office for the Eastern District of New York.

That’s where the FEPA comes into play, by criminalizing the “demand” side of foreign bribery from a U.S. issuer, US domestic concern, or any person in the territory of the United States.

The FEPA defines “foreign official” to include “any official or employee of a foreign government or any department, agency, or instrumentality thereof” or “any senior foreign political figure”; any official or employee of a public international organization; or any person acting in an “unofficial” capacity on behalf of those entities.

At just a few paragraphs long (starting on p. 1,843 of NDAA), the FEPA’s brevity still packs a strong punch, carrying a potential fine of up to $250,000 or three times the monetary equivalent of the bribe’s value, whichever is greater. Comparably, the FCPA caps potential fines at twice the monetary gain obtained. FEPA violations also carry a potential 15 years’ imprisonment, compared to the FCPA’s statutory maximum of up to five years.

Legal hurdles

Conceptually, the FEPA makes it easier for the Department of Justice (DoJ) to pursue foreign officials in a corruption case. Practically speaking, however, a FEPA case could be as difficult to prove as an FCPA case in some respects.

For one, because the FEPA amends the domestic bribery statute (18 U.S.C. Section 201), as opposed to amending the FCPA, the FEPA establishes a more stringent quid pro quo standard than that of the FCPA. Specifically, prosecutors have a higher bar to meet because they must prove that a bribe was paid by a foreign official abroad in exchange for a specific “official act,” said Brian Whisler, a partner at Baker McKenzie and senior leader of the firm’s Litigation and Government Enforcement Practice. “Those are tough cases because prosecutors have to pinpoint the specific act that follows the allegedly corrupt payment.”

Under 18 U.S.C. Section 20, the FEPA criminalizes foreign officials who “corruptly demand, seek, receive, accept, or agree to receive or accept, directly or indirectly, anything of value personally or for any other person or nongovernmental entity” in return for:

• being influenced in the performance of any official act;
• being induced to do or omit to do any act in violation of the official duty of such foreign official or person; or
• conferring any improper advantage, in connection with obtaining or retaining business for or with, or directing business to, any person.

Additionally, because FEPA is designated as a domestic bribery statute, all 94 U.S. attorneys’ offices can bring FEPA cases directly without necessarily having Main Justice involvement. In contrast, FCPA cases are coordinated centrally within the Fraud Division of the DoJ, Whisler noted. “Theoretically, that could create some uncertainty and inconsistency in terms of how FEPA cases are prosecuted,” he said.

Only time will tell how the courts ultimately interpret “official acts” under the FEPA, or how other legal theories will be applied and addressed. Another possibility is that the DoJ will continue to rely on tried-and-true methods of enforcing foreign bribery cases, including money laundering and wire fraud statutes that have an extraterritorial reach.

Jurisdictional Considerations

Another significant factor that could make the FEPA’s application negligible is that many countries now have anticorruption laws in place. The enactment of FEPA, together with the FCPA, brings the United States in closer alignment with the U.K. Bribery Act, which addresses the demand side of bribery and whose scope is far more expansive than the FCPA alone.

Moreover, the United States and the United Kingdom are not the only countries with anti-bribery laws in place. Similar legislation includes France’s Sapin II and Germany’s Anti-Bribery and Anti-Corruption law, for example.

Over the last decade, the DoJ has increasingly coordinated with international partners on cross-border corruption investigations and resolutions, so the DoJ might not want to leverage the FEPA in all cases, Gatta said. “If recent history is any indication, I think you’re going to continue to see DoJ’s continued and likely enhanced cooperation with our allies and foreign partners,” he said.

Another area of uncertainty is the broader policy implications the FEPA could create. “Is this going to create a reciprocal incentive for other countries to investigate U.S. government officials?” Whisler said.

Even when U.S. prosecutors charge foreign officials under the FEPA, they still aren’t necessarily within their enforcement scope. “If a foreign jurisdiction becomes aware that U.S. authorities are scrutinizing foreign officials, they might jump in to investigate and engage in a halfhearted investigation or refuse to extradite,” Whisler added. “It seems that there may be multiple challenges from a policy standpoint in terms of the ability to effectively prosecute under the statute.”

Compliance Takeaways

The message here for in-house counsel and chief compliance officers is that FEPA provides the DoJ with yet another tool in its toolbox to pursue a foreign corruption investigation or foreign bribery case, Gatta stressed.

Beyond that, Whisler warned, “an FCPA case could spawn a FEPA case, and vice versa. If there is enforcement scrutiny of conduct on the demand side, then the supply side will likely come under review.”

These factors combined reinforce how important it is for companies to have in place robust anti-corruption compliance programs. “Companies that desire to have strong anticorruption policies and procedures may be covering a lot of the bases already,” Gatta said, “but it is critical for companies to make sure their compliance programs consider this new prosecutorial tool.”

Still, companies looking to enhance their anti-corruption compliance programs should make some small adjustments in light of the FEPA. “Companies are going to have to broaden their review of what constitutes a foreign official in the countries where they operate and particularly focus on risk assessment training exercises to ensure everyone has full awareness of the implications of this new law,” Whisler said.

Specifically, companies might want to refresh their anticorruption compliance training to make employees aware of the broader definition of who constitutes a “foreign official” under FEPA, particularly for those who directly interact with foreign officials.

Cooperation Credit

Given that DoJ officials in recent years have continued to emphasize the value of cooperation and voluntary self-disclosure, the FEPA may provide companies with another avenue for obtaining cooperation credit where it self-discloses a foreign official’s bribery demands.

Moreover, because the FEPA is part of the White House’s broader National Security Strategy, a FEPA case could have national security implications where the foreign officials who are being targeted are part of a national security investigation. “Thus, cooperation could add value to a national security investigation in a way that wouldn’t necessarily add value in a bribery investigation,” Whisler noted.

Moving Forward

The FEPA directs the Attorney General to annually submit to Congress, and make publicly available on the DoJ’s website, a report that, in part, provides an overview of “the scale and nature of bribery involving foreign officials, including an analysis of where these crimes are most likely to be committed” and that summarizes “enforcement actions taken and penalties imposed,” among other things.

That said, prudent legal and compliance professionals will want to review the DoJ’s annual reports to Congress because those reports ultimately will answer how enforceable the FEPA is in real-world application. They also will provide legal and compliance professionals with case studies on how U.S. prosecutors enforce FEPA cases in practice, and perhaps even provide greater transparency into which foreign officials may pose a high bribery or corruption risk.

C5 and ACI will be covering FEPA in several upcoming conferences, for a list conferences taking place this spring, please visit: https://www.americanconference.com/conferences/anti-corruption-fcpa/