The Foreign Extortion Prevention Act: Bribe-Soliciting Foreign Officials May Soon Be Subject To Criminal Penalties

In today's episode, we dive into a recent legislative development. The U.S. Congress has recently passed the National Defense Authorization Act with a crucial inclusion—the Foreign Extortion Prevention Act.

Read the full article.

About the authors:
Luke Cass
Britt Whitesell Biles
Joe D. Whitley
M. Rhett DeHart
Kristina M. Moore*
Michael E. Clark
Chukwukpee Nzegwu
William D. Curtis

Transcript

Welcome to Womble Perspectives, where we explore a wide range of topics, from the latest legal updates to industry trends to the business of law. Our team of lawyers, professionals and occasional outside guests will take you through the most pressing issues facing businesses today and provide practical and actionable advice to help you navigate the ever changing legal landscape.

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On December 14, 2023, the United States House and Senate passed the National Defense Authorization Act, which included the Foreign Extortion Prevention Act. This bipartisan legislation, which Senator Sheldon Whitehouse and Congressman Joe Wilson sponsored and President Biden is expected to sign, criminalizes the solicitation of bribes by foreign officials, even those acting in an unofficial capacity, while on U.S. soil. It is a legal complement to the Foreign Corrupt Practices Act, which targets individuals who pay such bribes. In other words, the Foreign Corrupt Practices Act targets the suppliers of bribes, while the Foreign Extortion Prevention Act targets the demanders of bribes. 

This new legislation comes with significant teeth – imposing a prison sentence of up to 15 years and a fine up to $250,000, or three times the monetary equivalent of the bribe. It enhances the tools available to the U.S. Department of Justice as the agency elevates and pursues anti-corruption efforts. These efforts align with the priority that President Biden has given to combatting corruption that “corrodes democracy.” The Foreign Extortion Prevention Act steep penalties may serve as powerful deterrents to corrupt foreign officials. According to Transparency International U.S., the Act is a “powerful new tool for fighting foreign corruption at its source and for protecting Americans and American businesses working abroad.” 

In particular, the Foreign Extortion Prevention Act would make it a crime for a foreign official to demand or accept a bribe from an American or American company, or from any person while in the territory of the United States, in connection with obtaining or retaining business. The Act’s definition of a “Foreign official” is more broadly defined than under the Foreign Corrupt Practices Act and includes 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. Under the Foreign Extortion Prevention Act, the United States Government may prosecute foreign officials who demand bribes, even if their home country does not. Under this Act, it is “unlawful for any foreign official or person selected to be a foreign official to corruptly demand, seek, receive, or accept, or agree to receive or accept” something of value in exchange for: 

One, being influenced in the performance of any official act; two, being induced to do or omit to do any act in violation of the official duty of such foreign official or person; or three, conferring any improper advantage, in connection with obtaining or retaining business for or with, or directing business to, any person.

That’s a lot of information, so what are the main takeaways here?

Well, first, the Foreign Extortion Prevention Act is a new criminal offense specifically targeting demands from foreign officials for bribes and is similar in many respects to the Foreign Corrupt Practices Act. There are important differences, however, including a broader definition of a “foreign official” than under the Foreign Corrupt Practices Act. Companies should revisit their training and compliance materials and educate their employees about the Foreign Extortion Prevention Act’s structure, provisions, definitions, and penalties. 

The Act has specific jurisdictional requirements similar to the Foreign Corrupt Practices Act. The DOJ will have jurisdiction over foreign officials who violate the Foreign Extortion Prevention Act: (1) in the territory of the United States; (2) when making exchanges with any U.S. citizens, residents, or entities residing in or organized under U.S. laws; or (3) when labeled an “issuer” under Section 3(a) of the Securities Exchange Act of 1934.

Like the Foreign Corrupt Practices Act, the Foreign Extortion Prevention Act requires proof of a corrupt quid pro quo: the bribe must be provided in exchange for influencing official government action or otherwise conferring an improper business-related benefit. 

While a significant new tool to fight corruption, the Foreign Extortion Prevention Act does not address the practical enforcement considerations or procedural hurdles involved in investigating and prosecuting defendants for actions with a foreign nexus such as foreign cooperation, Mutual Legal Assistance Treaties, diplomatic immunity, and extradition.

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