FEPA: A Huge Step on Foreign Bribery

We have a Christmas season surprise for all you anti-corruption enthusiasts out there! Washington has just passed the Foreign Extortion Prevention Act, a law that makes it a crime for foreign government officials to demand or accept a bribe from a U.S. company.

FEPA, as the legislation will now be forever abbreviated, was folded into the larger National Defense Authorization Act, which Congress enacted earlier today. The bill will now go to President Biden for his signature, and then become law immediately.

The text of FEPA is actually rather short and to the point. It prohibits any foreign government official from soliciting a bribe from any person or company under U.S. jurisdiction. Here’s the relevant passage: 

It shall be unlawful for any foreign official or person selected to be a foreign official to corruptly demand, seek, receive, accept, or agree to receive or accept, directly or indirectly, anything of value personally or for any other person or non-governmental entity, in or affecting interstate commerce, in return for:

1. 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 of such official or person; or
   3. conferring any improper advantage,

in connection with obtaining or retaining business for or with, or directing business to, any person.

For those of you thinking, “Isn’t that language a lot like the Foreign Corrupt Practices Act?” — yes it is, and that’s the point. FEPA is a long-missing statutory counterpart to the Foreign Corrupt Practices Act and its ban on companies offering bribes. Now U.S. law enforcement can go after the foreign officials seeking those bribes, too.

Anti-corruption groups are, naturally, elated. 

“Today the U.S. government comes one critical step closer to helping provide real justice for victims of corruption around the world,” Scott Greytak, of Transparency International US, said in a statement. “FEPA is a landmark, bipartisan law that holds the potential to help root out foreign corruption at its source. It is arguably the most sweeping and consequential foreign bribery law in nearly half a century.” 

And we should give credit to the bipartisan group of lawmakers in Washington who spent years nudging FEPA forward and got it over the finish line this week: U.S. Sens. Sheldon Whitehouse (D-R.I.) and Thom Tillis (R-N.C.), and Reps. Sheila Jackson Lee (D-Texas) and Joe Wilson (R-S.C.)

What FEPA Means for Compliance Officers

In the immediate term, passage of FEPA isn’t likely to mean much to corporate compliance officers. We all know that FCPA cases take years for the Justice Department to assemble and prosecute, so presumably FEPA cases will unfold along similar, quite long timelines.

At some point in the future, however, FEPA prosecutions are going to arrive. So how will the prosecution of those cases affect enforcement of the FCPA? 

For example, if the Justice Department insists that a company under FCPA investigation must provide evidence against all participants in the wrongdoing if that company wants cooperation credit (a point Justice Department officials reaffirm all the time), wouldn’t that mean the company must cooperate in FEPA prosecutions too? After all, by definition, the foreign official accepting or soliciting the bribe is complicit in the bribery scheme. 

And if a company does need to cooperate in FEPA prosecutions, how would that work in practice? Will the company need to provide employees as witnesses giving testimony? Would resolution of the FCPA case be paused until the FEPA case results in the foreign official getting indicted? If the foreign government actually extradites the corrupt official and he or she stands trial, would the company need to testify in court? 

Even better: If the foreign official is a high-priority target for the United States on national security grounds — say, some crony of Vladimir Putin that the feds want to indict to exert pressure on Putin — would that give the company leverage in its FCPA case? Some “If you want us to help you nail this guy, we want a non-prosecution agreement with no penalty” sort of gambit? 

The people who will figure out the answers to those questions are (a) prosecutors; (b) outside counsel; and (c) corporate legal teams — none of whom are the compliance team. But compliance officers need to watch these conversations closely anyway, so you can tailor your compliance policies, procedures, and controls to keep pace with whatever answers emerge. 

For example, if it comes to pass that, yes, company witnesses will be expected to testify in court at FEPA trials, you’ll need to add that point to your training materials and employment contracts. If the practice emerges that companies can score better deals on their FCPA cases by cooperating on companion FEPA prosecutions, that might change the calculus about documentation you require from intermediaries or sales teams when dealing with foreign governments. 

So yes, we can all applaud the enactment of FEPA; it’s a huge step forward to crack down on the scourge of government corruption. It will also have implications for FCPA enforcement that the corporate compliance community is only beginning to grasp.