Ropes & Gray Discusses New Law to Criminally Prosecute Corrupt Foreign Officials

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On December 14, 2023, Congress passed the Foreign Extortion Prevention Act (“FEPA”) as a component of the annual National Defense Authorization Act to criminally prosecute foreign officials who seek or receive bribes from U.S. persons or businesses. President Biden is expected to sign FEPA into law, as the Biden Administration previously identified the fight against corruption as a “core national security interest of the United States” and has specifically sought “to rectify persistent gaps in the fight against corruption.”1 If enacted, the U.S. will join countries such as the United Kingdom, Germany, and France, who maintain laws that criminalize the demand side of foreign bribery.2

The law amends the domestic statute criminalizing bribery of federal officials, Section 201 of title 18 of the United States Code (“Bribery of Public Officials and Witnesses”), to include a new subsection (f) titled “Prohibition of Demand for a Bribe.” The amendment makes it unlawful for any foreign official to seek or accept anything of value from U.S. persons or certain U.S. companies in exchange for performing or omitting any official act or otherwise conferring an improper business advantage. Offenders under FEPA may face fines of up to $250,000 or three times the monetary equivalent of the thing of value received or imprisonment of up to 15 years.3

What Does FEPA Change?

The U.S. Foreign Corrupt Practices Act (“FCPA”) currently criminalizes the offering of bribes to foreign officials, but it does little to punish the foreign officials who accept or demand such bribes. FEPA targets this wrongdoing by expanding U.S. enforcement authority to criminally prosecute foreign officials who accept or demand bribes from Americans or American companies.4

Who Is Considered a Foreign Official?

FEPA defines a foreign official more broadly than the FCPA. First, FEPA adopts the FCPA’s definition of foreign official as “any official or employee of a foreign government or any department, agency, or instrumentality thereof, or of a public international organization,” or “any person acting in an official capacity” on behalf of such entities. FEPA then adds to the definition (i) “any senior foreign political figure” as defined in 31 C.F.R. § 1010.605, which includes foreign officials (whether elected or not), certain politicians, executives of government-owned commercial enterprises, and their family members, close associates, and businesses;5 and (ii) “any person acting in an unofficial capacity for or on behalf of a foreign government” or any department, agency, or instrumentality thereof.6

How Far Does FEPA Jurisdiction Extend?

FEPA uses the same jurisdictional framework as the FCPA, criminalizing bribery while in the U.S. or of persons or companies with a sufficient nexus to the United States. FEPA thus targets:

  1. Offenders whose conduct occurs within U.S. territory;
  2. Offenders who make demands of companies that are issuers of U.S. securities; and
  3. Offenders who make demands of those considered U.S. domestic concerns, i.e., U.S. citizens, nationals, corporations, or other business entities.7

Notably, as FEPA amends only the criminal bribery statute, it does not appear to confer jurisdiction on the U.S. Securities and Exchange Commission to investigate and bring civil enforcement actions against foreign officials for seeking or accepting a bribe.

Client Recommendations

The current political and legal landscape—including the Biden Administration’s continued emphasis on targeting foreign corruption, the Department of Justice’s intimations that it will “zealously pursue corporate crime” as “a matter of national security,”8 and the passage of FEPA in Congress—signals that companies should prepare for sustained and potentially new enforcement activity by strengthening their anti-bribery/anticorruption compliance programs. While it remains to be seen how the DOJ will apply FEPA to investigate and prosecute foreign government officials, companies should consider:

  • Regular anti-corruption trainings, particularly for those who interact with any person or entity who may fall under the expansive definition of “foreign official” under FEPA;
  • Maintenance of an easily accessible whistleblower resource; and
  • Increased scrutiny and due diligence involving third-party transactions with foreign officials or their associates.

ENDNOTES

  1. UNITED STATES STRATEGY ON COUNTERING CORRUPTION: PURSUANT TO THE NATIONAL SECURITY STUDY MEMORANDUM ON ESTABLISHING THE FIGHT AGAINST CORRUPTION AS A CORE UNITED STATES NATIONAL SECURITY INTEREST 4 (2021), https://www.whitehouse.gov/wp-content/uploads/2021/12/United-States-Strategy-on-Countering-Corruption.pdf; see also generally Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest, National Security Study Memorandum-1 (June 3, 2021), https://www.govinfo.gov/content/pkg/DCPD-202100467/pdf/DCPD-202100467.pdf.
  2. Foreign Extortion Prevention Act Factsheet, TRANSPARENCY INT’L U.S. (June 12, 2023), https://us.transparency.org/resource/foreign-extortion-prevention-act-factsheet/.
  3. 18 U.S.C. § 201(f).
  4. Congress Passes Landmark Law to Criminally Prosecute Corrupt Foreign Leaders, TRANSPARENCY INT’L U.S. (Dec. 14. 2023), https://us.transparency.org/news/congress-passes-landmark-law-to-criminally-prosecute-corrupt-foreign-leaders/.
  5. The term “senior foreign political figure” means (i) a current or former (A) senior official in the executive, legislative, administrative, military, or judicial branches of a foreign government (whether elected or not); (B) senior official of a major foreign political party; or (C) senior executive of a foreign government-owned commercial enterprise; (ii) a corporation, business, or other entity that has been formed by, or for the benefit of, any such individual; (iii) an immediate family member of any such individual; and (iv) a person who is widely and publicly known (or is actually known by the relevant covered financial institution) to be a close associate of such individual.31 CFR § 1010.605.
  6. 18 U.S.C. § 201(a)(4)(B)-(D).
  7. Scott Greytak, Protecting Americans from Foreign Bribery: The Legal Framework Behind the Foreign Extortion Prevention Act, TRANSPARENCY INT’L U.S. (June 2023), https://us.transparency.org/resource/the-u-s-legal-framework-for-extraterritorial-application-of-american-criminal-law-the-foreign-extortion-prevention-act/.
  8. Alert, Ropes & Gray LLP, Justice Department Announces New Policies Impacting Corporate Criminal Enforcement (March 7, 2023) https://www.ropesgray.com/en/insights/alerts/2023/03/justice-department-announces-new-policies-impacting-corporate-criminal-enforcement.

This post comes to us from Ropes & Gray LLP. It is based on the firm’s memorandum, “U.S. Congress Passes Law to Criminally Prosecute Corrupt Foreign Officials” dated December 19, 2023, and available here.