Recent Developments In US Anti-Bribery Efforts–Foreign Extortion Prevention Act — Is It Relevant To Vietnam?
Introduction
On December 14, 2023, The US enacted the Foreign Extortion Prevention Act (“FEPA”) that criminalizes the act of a foreign official who requests, demands or receives a bribe from a US citizen, US corporation or its subsidiary, or from a multinational corporation that is listed on the US Stock Exchange. The crime arises from the mere request for a bribe. That is, neither payment nor receipt of the bribe is necessary.
FEPA’s stated goal is to protect US individuals and US companies operating abroad. FEPA disincentivizes a foreign official from soliciting and accepting a bribe from a US entity by establishing a mandatory framework for the US entity to report the request for a bribe and the taking of a bribe to the United States Department of Justice (“DOJ”). DOJ, through diplomatic channels, is required to report the foreign official’s bribery activities to his/her own government for criminal prosecution. FEPA also permits the DOJ to prosecute the foreign official criminally if he “seeks, receives, accepts, or agrees to accept a bribe to influence the performance of an official act or otherwise confer an improper advantage in connection with obtaining or retaining business” for a US or US-related entity.
Unlike the Foreign Corrupt Practices Act (“FCPA”) that punishes US and US-related entities that pay a bribe to a foreign official, FEPA punishes the foreign official who requests or receives a bribe from a US entity in exchange for an official act that would confer an improper business advantage to the US entity.
Enforcement provision
FEPA contains an enforcement provision and a reporting provision.
Under the enforcement provision, FEPA amends the existing domestic bribery statute by adding 18 USC. § 201(f)(1) which makes it unlawful for any foreign official directly or indirectly, to:
(a) corruptly demand, seek, receive, accept, or agree to receive or accept; directly or indirectly;
(b) anything of value personally or for any other person or non-governmental entity;
(c) by making use of the mails or any means or instrumentality of interstate commerce…while in the territory of the United States;
(d) from an issuer (as defined in section 3(a) of the US Securities Exchange Act of 1934 (15 USC 78c(a)) or from a US domestic concern (as defined in section 104 of the FCPA (15 USC 78 dd-2));
(e) in return for being influenced in the performance of any official act; being induced to do or omit to do any act in violation of the official duty of such foreign official or person; or conferring any improper advantage;
(f) in connection with obtaining or retaining business for or with, or directing business to, any person.”[1] (Emphasis added).
Is the FEPA a Viable Deterrent
A reading of the plain language of 18 USC. 201(f)(1) suggests that a foreign official can only be criminally charged when he is engaged in bribery through using mails or any instrumentality of interstate commerce “while in the territory of the United States.” If this were the only viable path to prosecution, FEPA would have narrow application indeed. 18 USC. 201(f)(3), however, states that “[a]n offense under paragraph (1) shall be subject to extraterritorial Federal jurisdiction.”[2] It is unclear from 18 USC. 201(f)(1) whether a foreign official would be in criminal violation of FEPA if he demanded a bribe or received a bribe while outside of the territory of the United States. In the past, the DOJ has said that it would exercise extraterritorial Federal jurisdiction over foreign officials only in cases such as murder, kidnapping, assault, or threats to an internationally protected person or other crimes where “the assertion of such jurisdiction is permissible under the “universal” principle which authorizes a state to prosecute certain extraterritorial offenses recognized by the community of nations as of universal concerns. See United States v. Yunis, 924 F.2d 1086, 1091 (D.C. Cir. 1991).[3] Based on some US case law it is unlikely, that the DOJ will criminally charge a foreign officer for engaging on bribery within their own county.
But using the limited language of FEPA, any request for a bribe by a foreign official while in the US is a violation by the foreign official. Once the request for a bribe made inside the United States is reported, the DOJ then has exclusive authority: (1) to investigate the foreign official for potential violation of FEPA, (2) to charge and indict the foreign official who has violated FEPA, and (3) to issue an arrest warrant inside the United States or to issue an arrest warrant on foreign law enforcement officials in countries with extradition treaties with the United States and request foreign law enforcement officials to extradite the foreign officials charged with FEPA violations to the United States.
Any “foreign official” who violates FEPA while on US territory can be fined “not more than US$250,000 or 3 times the monetary equivalent of the thing of value,” and receive “imprisonment for not more than 15 years, or both.”[4]
Reporting Requirements
But DOJ can and must act even if a bribe is requested outside the US, say, in the official’s home country. In such cases, the DOJ is mandated to work with foreign governments to persuade them to prosecute their own officials who demanded or received a bribe in their home country or abroad. FEPA requires the DOJ to report and document bribery activities of foreign officials, and to forward such reports to foreign governments and to Congress.
Each year, the Attorney General must submit a FEPA report to Congress noting its activities under the statute and the statute’s efficacy in enforcing FEPA. The DOJ’s annual report to Congress must include the following information: (1) demands by foreign officials for bribes from US entities, and the efforts of foreign governments to prosecute such cases; (2) US diplomatic efforts to protect US entities from foreign bribery, and the effectiveness of those efforts; (3) summary of major actions taken by the DOJ, including enforcement actions taken and penalties imposed; and (4) evaluating DOJ’s effectiveness in enforcing FEPA. In addition to issuing a detailed report to Congress, the DOJ’s annual report must appear on the DOJ’s website accessible for the public to review.[5]
Although the DOJ has not formulated details about its own reporting requirements to Congress, we believe that DOJ’s reporting will mirror the DOJ’s ten guiding principles established in its manual to prosecute business organizations under the FCPA, which may include the following factors:[6]
- The nature and seriousness of the offense by the foreign official, including the risk of harm to the public.
- The pervasiveness of wrongdoing by the foreign official.
- The foreign official’s history of similar misconduct, including prior bribery activities.
- The willingness of the foreign government to prosecute the foreign official who engaged in bribery.
- The adequacy and effectiveness of cooperation between the foreign government and the DOJ to prosecute the foreign official who engaged in the bribery.
- The foreign government’s remedial actions to replace the foreign official who engaged in acts of bribery against the US entity.
- The collateral consequences, including whether there is disproportionate harm to the US corporation, as well as impact on the US public, of the foreign official’s actions.
- The adequacy of remedies such as civil or criminal enforcement actions taken by the foreign government against the foreign government official.
- The adequacy of the investigation and prosecution by the foreign government of the government official who engaged in bribery.
Conclusion
Because of FEPA’s recent enactment, it remains to be seen how the DOJ will implement its requirements. The passage of FEPA, however, constitutes a major attempt to prevent corruption abroad in business transactions involving US companies. FEPA criminalizes “demand-side” bribery and seeks to punish foreign government officials who solicit and/or receive a bribe from US individuals and US corporations that operate abroad.
Interestingly, there is a US diplomatic role to protect US entities from foreign bribery and the US efforts to protect will be assessed.
The FEPA allows the DOJ to prosecute current as well as past foreign officials who solicited and/or accepted bribes from US individuals and US companies while physically present in the United States. As stated above, in certain fact situations the US may prosecute an official who requests a bribe–even if the request is not made while the official is physically in the US. Furthermore, FEPA requires the DOJ to file an annual report of incidents where foreign government officials violated FEPA while they are in their own home country. The DOJ must attempt to work with foreign governments to persuade them to prosecute their own government officials.
For further information, please contact:
Dao Hong Diu, Russin & Vecchi
DHDiu@russinvecchi.com.vn
[1] 18 USC 201(f)(1).
[2] 18 U.S.C. §201(f)(3).
[3] See: US Department of Justice Criminal Resource Manual, 1500-1999, p.1617.
[4] 18 U.S.C. §201(f)(2).
[5] 18 U.S.C. 201(f)(4).
[6] See: Justice Manual, Title 9-28.000 Principles of Federal Prosecution of Business Organization.
