Bridging the Gap: FEPA Beefs Up U.S. Anti-Bribery Enforcement

April 2, 2024

The new Foreign Extortion Prevention Act ("FEPA"), which criminalizes the "demand" side of bribery, has significant implications for U.S. companies operating around the globe.

FEPA's passage will likely alter the Department of Justice's ("DOJ") reporting expectations and enforcement priorities and necessitate that companies re-examine anti-corruption risk, as well as anti-corruption policies and procedures.

The long established Foreign Corrupt Practices Act ("FCPA") prohibits US companies and individuals from offering or paying bribes to foreign officials in furtherance of business objectives. Unlike anti-bribery laws in the UK, France, Switzerland, and other countries, however, the FCPA does not prohibit foreign officials from demanding bribes from US companies and individuals in the same circumstances. Historically, the DOJ relied on other criminal laws-such as the Travel Act and statutes covering money laundering and fraud-to target the recipients of bribes, but these methods are burdensome and indirect methods of enforcement compared to the anti-bribery regimes in other countries. Now, the DOJ can rely on FEPA to go directly after foreign officials demanding bribes.

What FEPA Does

As American businesses have become increasingly faced with illegal demands from foreign officials, criticism of the demand-side gap and calls for Congress to address the gap increased sharply. FEPA, added not to the FCPA but to the domestic bribery statute (18 U.S.C. § 201), was introduced and enacted with the aim of putting the US anti-bribery laws in line with other international anti-bribery laws, some 46 years after the passage of the FCPA. The bill's sponsors called it "the most significant international criminal anti-corruption legislation since 1977."

FEPA may provide US companies operating internationally with much-needed leverage against bribe-seeking foreign officials because of the potential severity of violations. FEPA violations carry a possibility 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 Attorney General to submit an annual report about enforcement.

It is unlawful under the FEPA to solicit or accept anything of value from any person (as defined by the FCPA) while in the US, from any issuer (as defined by the Securities Exchange Act of 1934) or domestic concern (as defined by the FCPA) in exchange for (1) "being influenced in the performance of any official act"; (2) "being induced to do or omit to do any act in violation of the official duty"; or (3) "conferring any improper advantage."

The FEPA's definition of "foreign official" also expands on that of the FCPA to include individuals acting in an unofficial capacity for the government and senior foreign political figures. In a notable departure from the FCPA, the FEPA narrows its coverage by adding an additional requirement. It implements an "official act" requirement by criminalizing bribes paid to influence any act or decision of a foreign official in her official capacity.¹

A Renewed Focus on Anti-Bribery

The DOJ has indicated a renewed and increased focus on cracking down on anti-bribery enforcement, including FEPA violations. Earlier this month, the Deputy Attorney General announced that DOJ is implementing a whistleblower program designed, in part, to encourage individuals to report violations of anti-corruption law, including "FCPA violations … and violations of the recently enacted Foreign Extortion Prevention Act." The DOJ also announced at that event that FEPA will be enforced by its Fraud Division. All signs point to the DOJ being eager to utilize FEPA, and US companies should expect to see this new statute being incorporated into investigations and enforcement actions soon.

Compliance Takeaways

FEPA will likely impact the way DOJ conducts investigations into allegations of corruption and bribery. Compliance programs should be updated to account for these changes, and companies should implement policies that help employees navigate and respond to demands for bribes.

Understanding FEPA-and the protections it offers-can help a company guard against demands for bribes from foreign officials.

1. Update Training Programs

Any employees, subcontractors, or representatives of a company that interact with foreign officials should receive training on FEPA so that they can recognize conduct the statute prohibits. In particular, companies should train employees on FEPA's expanded definition of what constitutes a foreign official, as the definition is notably broader than that of the FCPA.

2. Consider Incentives to Self-Report and Changes to Information Requests

FEPA's enactment, coupled with the DOJ's continuing emphasis on voluntary disclosure and cooperation, should incentivize companies to consider swift and voluntary self-reporting. Specifically, the DOJ's recently revised policies that emphasize self-reporting and cooperation incentivize companies to alert US authorities of bribe demands. Being the first in the door with a disclosure may also provide capital with the US government for the company in related FCPA proceedings and may mitigate repercussions. Companies should implement policies and procedures to involve counsel immediately upon learning that a foreign official has demanded a bribe.

Companies should also be prepared for the additional requests for information during DOJ investigations into allegations of corruption and bribery. For example, companies cooperating with such government investigations should now expect the DOJ to request information on individual government officials.

3. Account for FEPA's Lack of Exception for Facilitation Payments and Lack of Affirmative Defenses

Companies should revise their internal controls and trainings to ensure that any facilitation payments will not lead to FEPA violations. Unlike the FCPA, the FEPA does not contain an exception for facilitation payments, and thus, even payments made to expedite a routine a governmental action could implicate the recipient of the payment under FEPA.

Unlike the FCPA, FEPA has no affirmative defenses. Under the FCPA, a company has a possible defense if the payment is "lawful under the written laws and regulations" applicable to the foreign official or if the payment constituted a "reasonable and bona fide expenditure" that was incurred by the foreign official and directly related either to the promotion, demonstration, or explanation of products or services; or to the execution or performance of a contract with the foreign government. Such protections do not exist under FEPA. Companies should ensure that their compliance programs and policies do not reflect the assumption that "lawful" payments will be immune from FEPA scrutiny.

1. Courts have declined to extend the "official act" requirement in 18 U.S.C. 201 to the FCPA. See United States v. Ng Lap Seng, 934 F.3d 110 (2d Cir. 2019).↩