DOJ Receives New Enforcement Power for Foreign Officials

Almost 50 years ago, Congress enacted the Foreign Corrupt Practices Act (FCPA) to prohibit the offering of payments to foreign officials to obtain business advantages or contracts by U.S. companies. Its broad prohibitions encompass not only U.S. companies and individuals, but also foreign companies doing business in the U.S. as well as those who qualify as an issuer of securities on U.S. exchanges. Its scope was designed to reach from “small businesses transacting abroad for the first time to multinational corporations with subsidiaries around the world.” A Resource Guide to the U.S. Foreign Corrupt Practices Act, second edition.

One complaint by enforcement agencies was that the FCPA did not directly prohibit, or encompass, foreign public officials who solicited or demanded bribes. In other words, it focused on the persons paying and not on those requesting, the bribes. With the Foreign Extortion Prevention Act (FEPA), that has now changed.

In December 2023, Congress enacted FEPA. Rather than amending the FCPA, this new law was added to the federal statute prohibiting bribery of public officials, 18 USC § 201. It directly prohibits foreign officials from soliciting or obtaining bribes in connection with any business opportunity. This is not, however, a policy change by the Department of Justice. Past investigations of foreign officials used the FCPA conspiracy provision, money laundering laws, or the wire fraud statute for its prosecutions, which are just some examples. Now, the DOJ has a specific law focused directly on those foreign officials who seek illegal payments.

The FEPA adopts the broad definitions used in FCPA prosecutions. It takes the expansive definition of “foreign official” and enlarges it to address those persons “acting in an unofficial capacity” for a governmental entity as well as “senior foreign political figures.” Under this approach, employees who work for government-owned businesses may be considered foreign officials, such as employees of a government-owned health service or airline. The FEPA, however, does not include any enforcement authority for the Securities and Exchange Commission because the new law is part of a criminal bribery statute. In addition, because the FEPA is included in the federal bribery statute, the impact of recent Supreme Court challenges to this law could cause complications.

While there has been criticism of the DOJ for the declining number of white-collar prosecutions, this new law signals DOJ’s continuing emphasis on international business transactions and the spectre of unlawful payments. Corporate compliance and voluntary disclosure programs gain increased importance for all businesses, small and large, and should be reviewed in light of the newly enacted FEPA.

If you have any questions about the information in this supplemental update, please contact Jonathan Feld or your Dykema relationship attorney.