US Congress Passes Foreign Extortion Prevention Act, Addressing “Demand Side” Accountability for Foreign Bribery
On December 14, 2023, US Congress approved the Foreign Extortion Prevention Act (“FEPA”) as part of the $841 billion 2024 National Defense Authorization Act (“NDAA”) recently passed in Congress with bipartisan support. FEPA imposes “demand side” liability on foreign government officials who solicit or accept bribes from US companies or individuals, or from any person while in the United States.1 FEPA seeks to fill a gap left by the design of the Foreign Corrupt Practices Act (“FCPA”), which focuses solely on the “supply side” of foreign bribery—that is, charging companies and individuals for offering, promising, authorizing, or paying bribes to foreign government officials. FEPA’s passage also fulfills a key goal of the Biden Administration’s 2021 Strategy on Combatting Corruption, which prioritized creating improved tools for addressing the demand side of bribery.2 If, as anticipated, President Biden signs the NDAA into law, FEPA will come into effect immediately, representing a major—and long-anticipated—addition to the US corruption enforcement regime.
A New Federal Criminal Offense Similar to the FCPA’s Anti-bribery Provisions
Rather than adding to the FCPA, FEPA amends the domestic bribery statute, 18 U.S.C. § 201, by adding “foreign officials” to the class of persons covered by the statute. The text of FEPA is short and closely analogous to its FCPA equivalent. Going forward, FEPA will make it unlawful for a foreign government official, as broadly defined, “to corruptly demand, seek, receive, accept, or agree to receive or accept, directly or indirectly, anything of value” from any US issuer or domestic concern, or from any person while in the territory of the United States, while: (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 connection with obtaining or retaining business for or with, or directing business to, any person. Those found to be in violation of FEPA face up to 15 years’ imprisonment, fines of up to $250,000 or 3 times the monetary equivalent of the bribe received, or both.
Most of FEPA’s key terms are closely aligned with the FCPA, with some small points of difference:
- “Foreign Official” is broadly defined: FEPA’s definition of “foreign official” largely mirrors the FCPA’s, but notably extends to individuals acting in both official and unofficial capacities for, or on behalf of, a government, department, agency, or instrumentality, or a public international organization. FEPA’s inclusion of employees of “instrumentalities” of foreign governments indicates a similar treatment to that under the FCPA where, under certain circumstances consistent with the Eleventh Circuit’s 2014 holding in United States v. Esquenazi,3 a state-owned or controlled enterprise can be considered a government instrumentality. Further, the inclusion of “senior political figure” within FEPA’s definition, drawn from federal anti-money laundering regulations, will also capture senior executives of foreign state-owned enterprises.4
- Similar bases to establish a US nexus: FEPA applies to equivalent categories of bribe payers for establishing US jurisdiction: (a) any “domestic concerns,” expressly cross-referenced to the FCPA’s definition to include US citizens or residents, as well as entities with a principal place of business in the US, or which are organized under the laws of the US; (b) “issuers” as defined in the Securities Exchange Act of 1934; and (c) any person while present in the territory of the United States.
- “Anything of Value” requires a similar quid pro quo: Like the FCPA, FEPA also requires a corrupt exchange of “anything of value” as broadly defined in return for influencing official government action or otherwise conferring an improper business-related benefit.
Filling the Gap: What to Expect from a Demand-Side Complement to the FCPA
By filling this enforcement gap, FEPA is expected to serve as a natural complement to the FCPA’s historic successes in charging companies and individuals around the world with bribery offenses. Its enactment also confirms a shift away from comity concerns about the application of US laws to foreign officials. In excluding the foreign officials who accept bribes from FCPA liability, Congress had originally considered the “inherent jurisdictional, enforcement, and diplomatic difficulties” raised by the prosecution of non-citizens, and the fact that foreign nations may themselves prohibit the receipt of a bribe by an official.5 FEPA brings US law in line with the Department of Justice’s focus on individual accountability for bribery offenses, which, for a number of years now, has seen the Department actively pursue individual foreign government officials for their role in bribery schemes under other federal laws, including the federal money laundering statutes, mail and wire fraud statutes and the Travel Act.
DOJ has used money laundering statutes in particular to pursue individual officials in a number of high profile FCPA cases. This includes, for example, the conviction of the former Minister of Mines of the Republic of Guinea for laundering approximately $3.9 million in bribes through US bank accounts. The US government has also used sanctions to target foreign officials involved in corrupt activities, including, for example, the Global Magnitsky Sanctions program, which allows the Department of Treasury to sanction persons determined, among other things, to have directly or indirectly engaged in certain corrupt acts anywhere in the world.
With the establishment of a long-missing statutory counterpart that directly addresses the “demand side” of foreign bribery, the US government continues to build upon these efforts, and the Department of Justice adds another, more targeted tool to its existing arsenal for pursuing individual accountability in foreign bribery cases. Earlier this year, Senator Sheldon Whitehouse stated that the bill “send[s] a clear message” to “international kleptocrats and criminals seizing any and every opportunity to extort American businesses and undermine our national security,” that “demanding a bribe from American companies will not be tolerated.”6
As enforcement under FEPA takes shape in the coming years, it can still expect to face jurisdictional challenges in targeting foreign officials who remain beyond the reach of a US courtroom, as well as potentially complex political and diplomatic repercussions from pursuing foreign officials. While all global companies should be alert to developments under FEPA, state-owned or -controlled entities and foreign government instrumentalities doing business with the United States, and all US companies that do business with such entities, should be particularly focused on how FEPA may impact their enforcement risks and compliance program controls going forward.
1 The text of the bill is available here: https://www.congress.gov/bill/118th-congress/senate-bill/2347/text.
2 See our earlier Legal Update on the Biden Administration’s US Strategy on Countering Global Corruption here: https://www.mayerbrown.com/-/media/files/perspectives-events/publications/2021/12/firstever-us-strategy-on-countering-corruption-globally-key-takeaways-for-corporations-to-match-enforcements-increasingly-global-integrated-and-holistic-approach.pdf?rev=6a440ca113a245488081c893bb8d053c
3 752 F.3d 912 (11th Cir. 2014).
4 In at least one respect, FEPA’s “foreign official” definition is narrower than the FCPA’s. The latter includes candidates for foreign political office, see, e.g., 15 U.S.C. § 78dd-1(a)(2), while the former does not. This omission may not make much difference in practice, both because we are unaware of an FCPA enforcement action focused on bribes made solely to a candidate rather than an officeholder, and because the broad definition of a “senior foreign political figure” included in FEPA’s definition may sweep in at least some candidates for foreign political office.
5 United States v. Castle, 925 F.2d 831, 835 (5th Cir.1991), citing legislative history.
6 Senator Sheldon Whitehouse, "Whitehouse, Tillis Applaud Senate Passage of Bipartisan Foreign Extortion Prevention Act" (Jul. 28, 2023), available at https://www.whitehouse.senate.gov/news/release/whitehouse-tillis-applaud-senate-passage-of-bipartisan-foreign-extortion-prevention-act.
