New Anti-Extortion Law Expands Liability for Global Corruption

The Foreign Extortion Prevention Act provides US prosecutors with new tools to fight global corruption. For decades, the Foreign Corrupt Practices Act has enabled the prosecution of the “supply side” of foreign bribery. FEPA expands the US government’s ability to prosecute the “demand side” of foreign bribery by expressly criminalizing the solicitation and acceptance of bribes by foreign government officials.

Since FEPA has only been in effect since December, it’s impossible to know exactly how it will be used or what impact it will have, especially considering the legal and political hurdles to prosecuting foreign officials. What we do know is that US and international companies now have increased corruption risks and exposure.

FEPA’s Reach

Prosecutions on conspiracy and aiding and abetting charges may subject companies and individuals to FEPA liability. While FEPA can’t be used to prosecute conduct that violates the FCPA, the differences between the two statutes may allow prosecutors to pursue cases under FEPA for conduct beyond the scope of the older statute.

For example, FEPA expands the definition of foreign official to include not just those working in an official capacity on behalf of a foreign government, but also those acting in an unofficial capacity.

This broader definition appears to cover individuals who have no official government role but nevertheless have significant political influence. In addition, while FEPA doesn’t cover political candidates, it does cover the potentially broader category of “any senior foreign political figure.”

The likelihood of US prosecutors bringing conspiracy and aiding and abetting charges against companies and individuals under FEPA is enhanced by the law’s placement in the domestic bribery statute instead of in Title 15 of the FCPA.

It’s not uncommon for prosecutors to include these charges when prosecuting bribery cases. The language and placement of FEPA in the bribery statute may also remove the limitations placed by United States v. Hoskins on the prosecution of foreign individuals in FCPA cases. In Hoskins, the US Court of Appeals for the Second Circuit held that where Congress excludes a class of individuals from liability under a criminal statute, the government may not rely on accomplice theories of liability to prosecute those same individuals.

US prosecutors might take the position that with FEPA’s placement in the bribery statute, as well as its clear language establishing extraterritorial jurisdiction, Hoskins arguably doesn’t apply to conspiracy and aiding and abetting prosecutions against foreign individuals under the new statute.

The potential exposure for companies under FEPA could be even broader. It may provide prosecutors with another tool for pursuing civil asset forfeiture cases, as it can allege a violation of FEPA as a specified unlawful activity rather than having to rely on the application of foreign laws. Similarly, prosecutors may bring Racketeer Influenced and Corrupt Organizations Act cases by alleging a FEPA violation as a predicate act.

FEPA may increase the number and scope of FCPA investigations and prosecutions as well. A statute expressly authorizing the prosecution of foreign officials provides more leverage to encourage them to cooperate with prosecutors about the conduct of companies and individuals who offer or provide bribes. This could identify additional targets for prosecutors and expand their FCPA investigations.

FEPA’s reporting requirements may increase information sharing between international law enforcement agencies, which could lead to more corruption investigations as well. FEPA requires the attorney general to submit reports annually to the House and Senate Judiciary Committees and post them publicly online. These reports must include the efforts of foreign governments to prosecute corruption cases, summarize major actions taken under FEPA in the previous year and penalties imposed, evaluate prosecutors’ effectiveness in enforcing the statute, and detail what resources or legislative action prosecutors need to ensure adequate FEPA enforcement.

Outlook

Companies should expect FEPA’s impact to expand prosecution of international corruption, weigh how that could impact their anti-corruption risks, and consider taking the following steps:

• Update anti-corruption and compliance risk assessments, policies, procedures and training to incorporate the expanded scope of FEPA. This is especially true for foreign companies.
• Ensure that the company’s reporting mechanisms are robust, accessible, and designed to facilitate prompt and thorough investigation of complaints with appropriate remediation.
• Maintain effective whistleblower programs that encourage internal reporting and require thorough investigations of complaints. This is critical given FEPA’s potential to expand prosecutors’ sources of information—including from increased information sharing and cooperation by foreign authorities and the flipping of corrupt foreign officials.
• Whistleblower programs will allow companies to identify and remediate anti-corruption compliance issues quickly. Reviewing and strengthening compliance programs, as needed, will help foreign companies and companies with foreign ties navigate the new law.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Patrick Campbell is partner in BakerHostetler’s white collar, investigations and securities enforcement and litigation team.

Jonathan Barr is partner in BakerHostetler’s white collar, investigations and securities enforcement and litigation team.

Carlos Ortiz is partner in BakerHostetler’s white collar, investigations and securities enforcement and litigation team.

Jonathan New, Kayley Sullivan, and Maria Luevano contributed to this article.

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