Recent Anti-Corruption Updates

Two recent Foreign Corrupt Practices Act court cases, a key update to the Foreign Extortion Prevention, and a new pilot whistleblower rewards program highlight that the U.S. Department of Justice is keeping Anti-Corruption Enforcement at the forefront.

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About the authors:
Luke Cass
Joe D. Whitley

Transcript

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Two recent Foreign Corrupt Practices Act court cases, a key update to the Foreign Extortion Prevention, and a new pilot whistleblower rewards program highlight that the U.S. Department of Justice is keeping Anti-Corruption Enforcement at the forefront.

Last year’s National Defense Authorization Act included changes to the Foreign Extortion Prevention Act, making it a crime for foreign officials to solicit bribes, even unofficially, while in the U.S. This complements the Foreign Corrupt Practices Act, which targets those offering bribes. As we’ve previously discussed, the FCPA goes after the bribe payers, whereas FEPA targets those requesting bribes.

Originally slated to fall under 18 U.S.C. § 201, the bribery statute for domestic officials, the FEPA has been moved to 18 U.S.C. § 1352 by the recent Foreign Extortion Prevention Technical Corrections Act. This July 2024 legislation not only realigns FEPA closer to the FCPA but also clarifies its jurisdiction. Specifically, FEPA doesn’t cover situations where neither the bribe requester nor payer has ties to the U.S., unless the foreign official is physically present in the country. Moreover, FEPA doesn’t account for foreign officials acting unofficially, and its quid pro quo requirement is satisfied by influencing any act or decision made by a foreign official in their official role. Lawmakers intended these two acts to work hand-in-hand, and the revised FEPA language aims to synchronize these anti-corruption laws.

In a recent court case in Connecticut, three defendants faced FCPA charges related to a scheme involving bribes to Brazilian company officials in exchange for contracts for a Connecticut-based trading firm. One of the defendants, Glenn Oztemel, sought to dismiss the charges, arguing that certain wire transfers weren’t related to the bribery scheme and were outside the statute of limitations. However, the court kept the motion, citing the broad conspiracy to bribe officials at a state-run oil company for business gains. 

In another recent case, the owner of an American aviation firm pleaded guilty in the District of Columbia to conspiring to violate the FCPA. The case involved paying bribes to South African Airways Technical officials to secure a five-year aircraft parts servicing contract. This plea resulted from a South African task force investigation into aviation industry corruption. As part of the agreement, the defendant admitted to the scheme and agreed to testify in future proceedings.

The Foreign Extortion Prevention Act (FEPA) is a robust tool designed to address bribe demands from foreign officials, closely resembling the Foreign Corrupt Practices Act (FCPA). Companies are encouraged to revisit and update their training and compliance materials to ensure that employees are well-informed about FEPA’s structure, provisions, definitions, and penalties.

Latin America continues to be a hotspot for anti-corruption enforcement, as highlighted in recent analyses. Companies operating in this region should bolster their compliance and training programs with strong anti-corruption measures to mitigate risks.

Recent cases demonstrate the extensive reach of the FCPA, impacting not only the U.S. but also countries like Brazil and South Africa. A recent court case in Washington, D.C., suggests a broader investigation into aviation companies in South Africa. The Department of Justice (DOJ) has historically taken firm action against foreign-owned companies under the FCPA, similar to its approach with American firms, and this assertive enforcement is expected to continue with FEPA.

Additionally, the DOJ has launched a Pilot Corporate Whistleblower Awards Program to enhance investigative activities by encouraging tips related to foreign corruption and bribery. This program offers rewards to tipsters who meet specific criteria, aiming to strengthen efforts against corruption on a global scale.

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