What Does the New FEPA Legislation Mean for FCPA and Anti-Corruption Compliance Programs?

In contrast, the FCPA does not empower US prosecutors to bring such charges against foreign officials.

The following provides an overview the FEPA’s central provisions and outlines considerations for anti-corruption compliance professionals as the new legislation goes into effect.

Overview of the Legislation

The FEPA expands the FCPA’s definition of the term “foreign official” to include: (1) any official employee of the foreign government, or any department, agency, or instrumentality thereof; (2) any senior foreign political figure; (3) any official or employee of public international organization; (4) any person acting in an official capacity for or on behalf of a government department, agency, instrumentality, or public international organization; or (5) any person acting in an unofficial capacity for or on behalf of a government, department, agency, instrumentality, or a public international organization.

The FEPA was added to the domestic bribery statute (18 U.S.C. § 201). Penalties for violating the FEPA will include imprisonment of up to 15 years and/or a fine of up to $250,000 or three times the value of the bribe, whichever is greater. The FEPA does not grant the Securities and Exchange Commission (SEC) civil authority to pursue similar violations.

The FEPA also requires the US Department of Justice (DOJ) to submit an annual report to Congress detailing the prevalence of conduct covered by the statute (foreign officials demanding or receiving something of value related to a company or individual obtaining or retaining business), as well as the DOJ effectiveness in enforcing the statute. The report is also to be posted publicly on the DOJ website.

Implications for Anti-Corruption Compliance Programs

The enactment of this legislation will likely increase the US government’s pursuit of foreign officials who seek bribes. The FEPA also likely will have significant consequences for companies conducting international business. While it remains to be seen how the legislation will fully affect companies on the receiving end of government officials requesting bribes, there are a few anticipated consequences.

The reporting obligation by DOJ will likely mean that government will want to know the scale and nature of foreign bribes that are demanded of US companies. One source of this data is the government’s own investigations. Another source of data will likely be based on continued cooperation with foreign government authorities, such as the United Kingdom, France, and Germany that already have laws prohibiting the “demand” side by foreign officials for bribery. 

But it would also not be surprising if future DOJ guidance outlines expectations that companies report bribery requests from foreign officials. In cases where there has been a potential violation, DOJ may link such reports to cooperation disclosure under the FCPA. The government also likely will require evidence from companies in enforcing the FEPA, which could have FCPA implications for such companies and individuals.

How should compliance departments address the new legislation?

• Review and Update Policies and Procedures: Policies and procedures should be updated to indicate that it is a crime for a foreign official to demand a bribe. Consider whether the policy and procedure contains instructions for how the employee should respond and any required internal reporting.
• Update Anti-Corruption Training: Notify employees that US law has changed and alert them to the company’s policy regarding internally reporting the bribe demand.
• Update Risk Assessments: If data is internally reported about bribe demands, the company should evaluate this data as part of its ongoing risk profile.
• Conduct Due Diligence and Reviews/Investigations: If there is publicly available data available from the DOJ report, screen third parties against such a list. If the company becomes aware of a business relationship with a foreign official in the DOJ report, the company should conduct further review of the scope and nature of the business relationship.
• Continue to Monitor DOJ Guidance: Stay up-to-date on the government’s evolving expectations as the FEPA is enforced and DOJ reports back to Congress on its implementation. 

The ArentFox Schiff team has extensive experience with advising companies on best practices for their compliance programs.