FEPA’s Expansion of Anti-Corruption Act Barely Moves the Needle

New corporate anti-corruption policies are often rolled out with dramatic, often exaggerated assessments of their significance. This is true of the Foreign Extortion Prevention Act enacted in December. It has been described as a sea change in federal anti-bribery law and a new statutory basis for multinational companies to reexamine their compliance programs.

In reality, FEPA’s substantive and jurisdictional limitations make it largely an anti-corruption nonevent.

FEPA amends the federal domestic corruption statute, 18 U.S.C. § 201, to cover foreign officials’ solicitation of bribes from US companies—otherwise known as the demand side of foreign corruption.

Congress enacted FEPA to address an enforcement gap in the Foreign Corrupt Practices Act: FCPA liability doesn’t extend to nonresident foreign nationals, acting outside the US, who are neither principals nor agents of a US concern. This includes attempts to reach foreign nationals on a conspiracy or accessory basis.

While federal money-laundering jurisdiction extends to the fruits of corruption by foreign officials (assuming they engage the US banking system), Congress wanted to level the playing field for US companies that are doing business with foreign governments and face corrupt solicitations from foreign officials.

Because FEPA is codified in Section 201 of the federal criminal code, it’s subject to many of the same scope limitations that courts have applied to the domestic bribery statute. Principal among these is the requirement that a corrupt payment must correspond directly to a corrupt official act.

Conditioning payments or benefits that may establish a corrupt relationship but are removed from actual official action don’t count. Nor is corruption of a private citizen who may formerly have been a public official or corruption of an agency’s “right to control” how it spends public funds criminally actionable.

Proving an illegal quid pro quo is hard when both the parties and evidence are in the US. The task becomes even more difficult when the public official is a foreign national and the official action takes place in another country.

And while FEPA’s foreign official definition is incredibly broad—including any person acting in an unofficial capacity for or on behalf of a government, department, agency, instrumentality, or public international organization—future FEPA defendants who ostensibly meet these broad characteristics will challenge the constitutionality of the statute on vagueness and notice grounds.

They will also assert that such illusory notions of who serves as a foreign official conflict with the limitations imposed by courts—including the US Supreme Court—on who is criminally liable for, and what acts constitute, domestic public corruption.

FEPA also has significant jurisdictional limitations. Given the diplomatic sensitivity of hauling a foreign official into a US court on a foreign corruption charge, both the Justice Department and courts will give due consideration to equitable notions of international comity, and the legal limits of extraterritorial application of US law in prosecuting and adjudicating FEPA matters.

FEPA’s express US jurisdictional nexus also means that unless a foreign official personally solicits a bribe while physically present in the US or directly from a US concern, the DOJ will most likely have to establish US jurisdiction under FEPA by charging that agents of foreign officials engaged in such misconduct. In short, FEPA liability will turn on whether the DOJ can establish the agency of an intermediary.

This is a tall order. In the so-called Hoskins II decision of August 2022, the US Court of Appeals for the Second Circuit affirmed a judgment of acquittal, despite a guilty jury verdict, in favor of a British citizen charged under the FCPA with engaging in corruption while serving as an agent of a US concern.

Strictly applying agency principles, the district court acquitted former Alstom executive Lawrence Hoskins because it concluded the US concern didn’t exert meaningful control, on an interim and ongoing basis, over his corrupt activities. Providing guidance, expecting to be apprised of these activities, and even supplying funding wasn’t enough.

The Second Circuit affirmed, holding that while Hoskins had worked closely with the US concern, it didn’t sufficiently control his actions to make him criminally liable.

Putative agents who are targeted under FEPA will inevitably invoke the rationale of Hoskins II—namely, that a foreign official principal must in fact control the agent’s corruption on an ongoing basis. They will claim, in other words, that the strict construction of agency for FCPA purposes in Hoskins II carries over to agent status under FEPA.

While the DOJ will respond that the FEPA’s broad definition of foreign official includes even unofficial actors, whether someone has acted “in an unofficial capacity for or on behalf of” a foreign government or public international organization plainly implicates an agency analysis and, hence, application of Hoskins II.

In addition, barring intermediary cooperation with the government’s FEPA investigation, most evidence of agency will be beyond the reach of US prosecutors, which in turn negates cooperation by a putative agent.

FEPA’s scope and jurisdictional limitations ensure it’s neither a sea change in federal anti-corruption law nor cause for US concerns to reexamine their compliance policies. Under both the FCPA and FEPA, jurisdiction is limited, and companies should look as much to these limitations as to their compliance programs in defending themselves.

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

Paul Monnin is partner on Alston & Bird’s white collar, government, and internal investigations team, and former federal prosecutor.

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