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Signaling the commitment of the U.S. government to combatting global corruption, Congress has passed the first U.S. legislation aimed at criminalizing the “demand side” of foreign bribery.

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While the FCPA has been an effective tool for prosecutors targeting companies and individuals offering and paying bribes to foreign officials, this legislation seeks to extend the reach of U.S. prosecutors by creating a new federal offense.&nbsp;

Companies and individuals should prepare for robust enforcement activity of both the FCPA and FEPA and adjust their compliance programs to address new areas of risk created by the implementation of this legislation.

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Adding to federal prosecutors’ tool kit in fighting global corruption, on December 14, 2023, Congress passed with bipartisan support, the Foreign Extortion Prevention Act (FEPA).<a href="#_ftn1" id="_ftnref1">[1]</a> As part of the National Defense Authorization Act for Fiscal Year 2024 (NDAA), FEPA creates criminal liability for foreign government officials who solicit or accept bribes from U.S. individuals or companies or from any person while in the U.S., in connection with obtaining or retaining business. President Biden, who has placed consistent emphasis during his presidency on targeting foreign corruption as a matter of national security,<a href="#_ftn2" id="_ftnref2">[2]</a> signed the NDAA into law on December 22, 2023. FEPA provides prosecutors with a significant new tool to combat foreign corruption, with Transparency International describing the legislation as “arguably the most sweeping and consequential foreign bribery law in nearly half a century.”<a href="#_ftn3" id="_ftnref3">[3]</a>

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The Foreign Corrupt Practices Act (FCPA) has long been a successful device for prosecutors bringing actions against companies and individuals for paying, offering to pay, promising, or authorizing a benefit to foreign government officials—the “supply side” of bribery. While the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have robustly enforced the FCPA, they have had to rely on money laundering and other criminal statutes to prosecute the foreign government official demanding or receiving the bribe. FEPA closes this gap, directly criminalizing the “demand side” of bribes to foreign government officials.&nbsp;

FEPA makes it a crime for a foreign government official, broadly defined, “to corruptly demand, seek, receive, accept or agree to accept, directly or indirectly, anything of value” from any person while in the territory of the U.S., or from any U.S. issuer or domestic concern, in exchange for taking or omitting to take any action or conferring an improper benefit. Both the FCPA and FEPA require a quid pro quo—a giving or receiving of something of value in exchange for an official act. Although FEPA will likely act as the natural complement to the FCPA and the text of the two statutes largely mirror each other, FEPA is not an amendment to the FCPA but rather to 18 U.S.C. Section 201 (Bribery of Public Officials and Witnesses).

Although the two statutes similarly define “foreign officials,” FEPA expands the FCPA’s definition of a foreign official to include not just those working in an official capacity “on behalf of” “a foreign government or any department, agency, or instrumentality [], or of a public international organization,” but also those “acting in an unofficial capacity” on behalf of those same entities. FEPA also covers “any senior foreign political figure.” However, unlike the FCPA, FEPA does not apply to political candidates.

Similar to the FCPA, prosecutors looking to bring criminal charges under FEPA must establish a sufficient nexus with the U.S. This includes officials whose conduct occurs within a U.S. territory, who make demands of companies that are issuers of U.S. securities<a id="_ftnref4" href="#_ftn4">[4]</a>, and who make demands of those considered U.S. domestic concerns.<a id="_ftnref5" href="#_ftn5">[5]</a>

However, unlike the FCPA, FEPA does not confer jurisdiction on the SEC to bring civil enforcement actions.

FEPA amounts to a significant expansion of the DOJ’s ability to investigate and prosecute foreign officials for demanding or receiving bribes. Convicted offenders face up to 15 years’ imprisonment, fines of up to $250,000 or three times the value of the bribe, or both.

As the DOJ seeks to enforce this new offense, it may run into legal and political barriers, such as jurisdictional and foreign official immunity defenses, diplomatic and foreign policy concerns, and countries refusing to extradite their foreign officials to the U.S. in order to face prosecution. However, if U.S. enforcement of the FCPA is any indication, companies and individuals should expect robust enforcement of FEPA.

Companies owned in whole or in part by foreign governments, thus making their employees “foreign officials” subject to prosecution under FEPA, should assess the new risks associated with FEPA’s enactment and review their anti-corruption compliance programs. Nongovernment-owned companies, both in the U.S. and abroad, should assess the adequacy of their anti-corruption compliance programs in anticipation of FEPA as well. Enactment of this legislation should be taken as a statement of the U.S.’s continued commitment to investigating and bringing foreign corruption cases generally, and as the DOJ opens up new investigations under FEPA against foreign officials, there will likely be increased scrutiny and investigatory demands against any companies caught up in the DOJ’s investigations.&nbsp;

All companies should ensure that their anti-corruption compliance programs include:

Strong anti-corruption policies and procedures that prohibit both the giving and receiving of bribes and account for the broader definition of “foreign official” under FEPA.

Regular anti-corruption training, in particular of those employees who interact with the broader category of foreign officials under FEPA or with vendors who do the same.&nbsp; Training curriculum geared towards the narrower definition of foreign official under the FCPA is no longer sufficient and will also need to be updated.

Robust and easily accessible reporting mechanisms, and internal investigation procedures that enable companies to quickly investigate and remediate potential corrupt conduct.

Thorough third-party agent and vendor due diligence procedures.

Ongoing monitoring and auditing of the anti-corruption compliance program.

The BakerHostetler White Collar, Investigations and Securities Enforcement and Litigation team is composed of dozens of experienced practitioners, including attorneys who have served in the DOJ and at the SEC. Our attorneys include a former U.S. Attorney, former Assistant U.S. Attorneys, branch chiefs, and unit chiefs as well as partners who have served in the SEC’s Division of Enforcement and the SEC’s Office of the General Counsel, and attorneys with extensive experience in regulatory investigations, litigation and compliance counseling. Please feel free to contact any of our experienced professionals if you have questions about this alert.

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<a href="#_ftnref1" id="_ftn1">[1]</a> S. 2347, Foreign Extortion Prevention Act, available at: <a href="https://www.congress.gov/bill/118th-congress/senate-bill/2347/text">https://www.congress.gov/bill/118th-congress/senate-bill/2347/text</a>.

<a href="#_ftnref2" id="_ftn2">[2]</a> Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest, National Security Study Memorandum-1, June 3, 2021, available at: <a href="https://www.govinfo.gov/content/pkg/DCPD-202100467/pdf/DCPD-202100467.pdf">https://www.govinfo.gov/content/pkg/DCPD-202100467/pdf/DCPD-202100467.pdf</a>; Biden Ups the Ante on Fighting Corruption – Directs the Department of Justice and Other Key Agencies to Engage in an Interagency Review Designed to ‘Prevent and Combat Corruption at Home and Abroad, BakerHostetler, June 15, 2021, available at: <a href="https://www.bakerlaw.com/insights/biden-ups-the-ante-on-fighting-corruption-directs-the-department-of-justice-and-other-key-agencies-to-engage-in-an-interagency-review-designed-to-prevent-and-combat-corruption-at-ho/">https://www.bakerlaw.com/insights/biden-ups-the-ante-on-fighting-corruption-directs-the-department-of-justice-and-other-key-agencies-to-engage-in-an-interagency-review-designed-to-prevent-and-combat-corruption-at-ho/</a>.

<a href="#_ftnref3" id="_ftn3">[3]</a> Congress Passes Landmark Law to Criminally Prosecute Corrupt Foreign Leaders, Transparency Int’l, Dec. 14, 2023, available at: <a href="https://us.transparency.org/news/congress-passes-landmark-law-to-criminally-prosecute-corrupt-foreign-leaders/">https://us.transparency.org/news/congress-passes-landmark-law-to-criminally-prosecute-corrupt-foreign-leaders/</a>.

<a href="#_ftnref4" id="_ftn4">[4]</a> As defined by the Securities Act of 1934.

<a href="#_ftnref5" id="_ftn5">[5]</a> U.S. citizens, nationals, corporations, or other business entities.

Congress Expands DOJ’s Power to Prosecute Corruption with the Foreign Extortion Prevention Act

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