What is the Foreign Extortion Prevention Act (FEPA)?
In late 2023, Congress passed a key legislation to strengthen the legal framework for combating international bribery and corruption.
President Biden signed the Foreign Extortion Prevention Act (FEPA) into law in December 2023. It complements the existing Foreign Corrupt Practices Act (FCPA).
It directly targets foreign bribery's “demand” side by empowering the U.S. to penalize foreign officials for soliciting bribes from U.S. individuals, companies, or organizations.
FEPA makes it a crime for any foreign official, including any employee of a foreign government or any current or former senior official of a foreign government's executive, legislative, judicial, or military branches or any immediate family member or close associate to demand or accept a bribe from an American company, or from anyone while in United States territory in connection with obtaining or retaining business.
The FEPA is considered a powerful new criminal law passed by the United States Government to help bring justice to victims of corruption worldwide.
FEPA is a bipartisan law that has the potential to help weed out foreign corruption at its source. Some have described it as the most sweeping and consequential foreign bribery law in decades.
Transparency International's annual Corruption Perceptions Index shows that people in more than 120 countries face serious corruption problems. Many are governed by kleptocracies, where corrupt officials routinely steal resources from their citizens with impunity.
The FEPA could possibly disrupt these illegal practices by giving the U.S. government the legal authority to criminally prosecute any foreign official who demands or accepts a bribe from any American company anywhere in the world.
Notably, current federal law makes it a crime for an American to offer a bribe to a foreign official but does nothing to punish a foreign official who demands or accepts such a bribe.
What is the Purpose of FEPA?
The motivation behind FEPA is rooted in the need to address a significant gap in U.S. anti-corruption legislation.
While existing laws such as the Foreign Corrupt Practices Act (FCPA) penalize U.S. companies and individuals for bribing foreign officials, no corresponding legal mechanism has held those foreign officials accountable for demanding bribes.
FEPA corrects this imbalance by criminalizing the act of solicitation by foreign officials.
This aims to create a more robust deterrent against corruption by addressing both sides of illicit transactions, thereby strengthening the integrity of international markets and improving the business environment for U.S. entities operating abroad.
By targeting the demand side of bribery, FEPA endeavors to reduce corruption globally, ensuring that foreign officials can no longer exploit their positions without facing legal repercussions in the United States.
This shift aims to create a more robust deterrent against corruption by addressing both sides of illicit transactions. Research shows that most bribe-demanding foreign officials are never criminally prosecuted by their home governments.
When these corrupt officials face little to no threat of prosecution by their home governments or the U.S. Government, while U.S. companies face severe criminal charges for their involvement, justice is incomplete.
Under the FEPA, the United States will impose a harsh penalty on those who threaten Americans' safety with bribe demands.
What are the Key Objectives of FEPA?
The Foreign Extortion Prevention Act (FEPA) FEPA seeks explicitly to do the following:
- Enhance U.S. Anti-Corruption Measures: Target corrupt foreign officials to strengthen the United States' position in the global fight against corruption.
- Protect U.S. Businesses: Provide legal mechanisms to defend U.S. businesses from extortionate demands by foreign officials.
- Promote Global Transparency: Given the proliferation of corruption plaguing many foreign nations, encourage greater transparency and accountability in international business practices.
Provisions of FEPA
FEPA introduces several critical provisions designed to extend the scope of U.S. jurisdiction over foreign corrupt practices. Below, we outline the most significant components of the act.
Criminalization of Bribe Solicitation
The act defines the solicitation of bribes by foreign officials from U.S. nationals as a criminal offense. It specifies that any foreign official who demands or seeks a bribe in return for favorable action in their official capacity commits a crime under U.S. law.
Extraterritorial Jurisdiction
FEPA asserts extraterritorial jurisdiction, meaning that the U.S. can prosecute foreign officials even if the corrupt conduct occurs outside the United States. This provision builds on precedents set by other U.S. laws, such as the FCPA, which apply to acts committed abroad that have consequences or connections to the United States.
Enforcement and Cooperation
The act promotes cooperation between U.S. government agencies, including the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), to enhance enforcement capabilities. FEPA also encourages the U.S. to work with other nations and international organizations to pursue cases against corrupt foreign officials, facilitating broader enforcement and compliance.
What are the Penalties for Violating FEPA?
Foreign officials found guilty of soliciting bribes under FEPA face potentially severe penalties—more stringent, in fact, than the penalties prescribed under the Foreign Corrupt Practices Act (FCPA). These include:
- Fines of up to $250,000, or three times the value of the thing solicited/received and
- Up to 15 years in prison.
By comparison, violating the FCPA results in a maximum of five years in prison.
Implications for Individuals Under Investigation
If you are under investigation for potential involvement in an international bribery scheme, understanding the implications of FEPA is essential. Here's how this act could impact your situation:
- Increased Scrutiny on Foreign Officials: With FEPA, the emphasis of investigations may shift somewhat from U.S. persons to foreign officials. This could potentially affect the dynamics of federal prosecutions, focusing more on the demand side of bribery.
- Broader Legal Risks: The act could expand the scope of activities considered illegal and increase the number of entities and individuals who might be implicated in corruption cases.
- Defensive Measures: Understanding FEPA can help formulate a defense strategy, especially if accusations involve interactions with foreign officials who may also be scrutinized.
- Potential for Cooperation with Authorities: Individuals under investigation might find opportunities to cooperate with federal authorities in exchange for leniency, mainly by providing evidence against corrupt foreign officials targeted under FEPA.
Contact our federal criminal defense attorneys for more information. Eisner Gorin LLP is based in Los Angeles, California.
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