Recent Anti-Corruption Updates

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Two recent court Foreign Corrupt Practices Act (FCPA) cases, a significant amendment to the Foreign Extortion Prevention Act (FEPA), and the new pilot whistleblower rewards program show that Anti-Corruption Enforcement continues to be a top priority by the U.S. Department of Justice.

FEPA’s Legislative Fix

The FEPA, included in last year’s National Defense Authorization Act, 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 FCPA, which targets individuals who pay such bribes. As we explained previously, the FCPA targets the suppliers of bribes, while FEPA targets the demanders of bribes.

Originally, the FEPA was to be placed under 18 U.S.C. § 201, the bribery statute against domestic federal officials. The recent Foreign Extortion Prevention Technical Corrections Act (FEPTCA) repeals that prior legislation and makes some technical fixes to FEPA. In this legislation, Congress moves FEPA from Section 201, to 18 U.S.C. § 1352. The July 2024 legislation also more closely aligns FEPA with the FCPA and clarifies FEPA’s jurisdiction.

Specifically, the FEPA does not encompass scenarios where the bribe requestee or payor is neither a U.S. issuer nor domestic concern, unless the foreign official requesting the bribe is within U.S territory; the FEPA does not qualify those foreign officials acting in an unofficial capacity; and FEPA’s quid pro quo requirement may be met by influencing any act or decision taken by a foreign official in their official capacity. Legislative fixes aim to lay the groundwork for federal investigations that target conduct covered by both the FCPA and FEPA under a common statutory framework. 

Two Recent FCPA Cases

Three defendants are charged with FCPA violations in the U.S. District Court for the District of Connecticut for an alleged scheme to bribe officials at a Brazilian company, in exchange for lucrative contracts for a Connecticut-based commodity trading company. One defendant, Glenn Oztemel, moved to dismiss the indictment based on his claim that certain wire transfers were not made in furtherance of the bribery scheme, and were time barred under the statute of limitations. The court denied the motion despite conceding that “the factual connection between the substantive and conspiracy charges and the events alleged to have occurred in 2018” being “not obvious.” United States v. Oztemel, No. 3:23-CR-00026 (KAD), 2024 WL 3274721, at *9 (D. Conn. July 2, 2024). The court reasoned that the case involved “a multi-year overarching conspiracy to bribe foreign officials at a single state-run oil company as a means of gaining business advantages and thereby increasing business profits” and, at least according to the Government, “each and every payment” made “was part of the illegal scheme to bribe foreign officials.” Id.

In another FCPA case from last month, the owner of an American aviation company pleaded guilty in the U.S. District Court for the District of Columbia to one count of conspiracy to violate the FCPA. The defendant was alleged to have conspired to pay bribes to officials at South African Airways Technical, a wholly owned subsidiary of state-owned South African Airways, in order to win a bid for a five-year aircraft parts servicing contract. The guilty plea stems from a South African corruption task force that investigated corruption in the aviation industry. As part of his plea agreement, Aires signed a statement of offense admitting to the scheme and agreed to testify as a witness in future proceedings against others.

Takeaways

• The FEPA is a powerful tool that specifically targets demands from foreign officials for bribes and is similar in many respects to the FCPA. However, companies would do well to revisit their training and compliance materials and educate their employees about the FEPA’s structure, provisions, definitions, and penalties. 
   
• As we previously reported here and here, Latin America continues to be a region of intense focus by anti-corruption enforcement regulators. Companies doing business in Latin America should integrate robust anti-corruption measures in their compliance programs and training regimes.   
   
• Recent cases show that the FCPA’s long arm stretches all the way from the U.S. to Brazil and South Africa. The recent D.C. court case may signal a greater investigation underway involving aviation companies in South Africa and history shows that DOJ will not hesitate to enforce the FCPA against foreign-owned companies, just as it does against American companies. The same will likely be true of the FEPA. 
   
• Lastly, look for the DOJ’s Pilot Corporate Whistleblower Awards Program to increase investigative activity since the program specifically seeks tips related to foreign corruption and bribery involving companies, including breaches of the Foreign Corrupt Practices Act and the Foreign Extortion Prevention Act and rewards tipsters if certain conditions are met.

Womble Bond Dickinson (US) LLP’s White Collar Defense, Investigations, and Regulatory Enforcement Team navigates domestic and international clients in all manner of white collar, regulatory, corporate and congressional investigations. The White Collar and Antitrust Teams work together to assist clients facing antitrust investigations across a wide range of sectors of the economy. Our team includes a distinguished roster of veteran defense attorneys, former federal prosecutors and U.S. Attorneys who served at the highest levels of the Department of Justice and at leading United States Attorneys’ Offices. Our team also includes Chambers Ranked (Band 1) lawyers and alumni of the White House, the SEC’s Enforcement Division, the U.S. Senate, and House of Representatives.