Saturday, October 31, 2020

U.S. House of Rep New legislation would criminalize extortion by foreign officials

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New legislation introduced in the U.S. House of Representatives would criminalize extortion by foreign officials, enabling the Department of Justice to indict such officials for demanding a bribe. The bill seeks to fill a gap in the Foreign Corrupt Practices Act, which prohibits only the paying or offering of a bribe.

The Foreign Extortion Prevention Act was introduced on Aug. 2 by Rep. Sheila Jackson Lee (D-Texas), Rep. John Curtis (R-Utah), Rep. Tom Malinowski (D-N.J.), and Rep. Richard Hudson (R-N.C.). The Act proposes to prevent the demanding of a bribe by amending 18 U.S. Code (USC), Section 201, the domestic bribery statute, rather than amending the FCPA.

“U.S. businesses abroad are regularly targeted by foreign extortionists,” Curtis said in a statement introducing the legislation. “Transnational kleptocrats hide under the veneer of officialdom and abuse their power to warp the regulatory environment, attempting to co-opt or eliminate legitimate job-creators and entrepreneurs who follow the rules.”

Curtis added: “The Foreign Extortion Prevention Act would protect U.S. businesses from these individuals by punishing the demand side of bribery. Currently, a business being extorted for a bribe can only say ‘I can’t pay you a bribe because it is illegal, and I might get arrested.’ This long-overdue bill would enable them to add, ‘and so will you.’ ”

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New language would also be added to the amended Foreign Extortion Prevention Act: “The term ‘foreign official’ means any officer or employee (a) of a foreign government or any department, agency, or instrumentality thereof; (b) of a public international organization; or (c) any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality, or for or on behalf of any such public international organization.”

Additionally, the amended 18 USC 201 would state that “the term ‘public international organization’ means (a) an organization that is designated by Executive Order pursuant to section 1 of the International Organizations Immunities Act (22 U.S.C. 288); or (b) any other international organization that is designated by the President by Executive order for the purposes of this section, effective as of the date of publication of such order in the Federal Register.”

The amended 18 USC 201 would also add new language stating that, “whoever, being a foreign official or person selected to be a foreign official, otherwise than as provided by law for the proper discharge of official duty, directly or indirectly, corruptly demands, seeks, receives, accepts, or agrees to receive or accept anything of value personally or for any other person or entity, in return for (1) being influenced in the performance of any official act; or (2) being induced to do or omit to do any act in violation of the official duty of such official or person, shall be fined under this title or imprisoned for not more than two years or both.”

Complementary efforts – extortion

“Pursuing the extortionists is crucial to ending the entire system of international bribery,” Hudson said. “Even if a kleptocrat cannot be immediately extradited, a U.S. indictment serves as a play-by-play of the crime committed that can be used to support additional measures—such as sanctions—and can force transnational criminals to think twice before traveling abroad to spend their ill-gotten gains. Moreover, a U.S. indictment can help the forces of the rule of law in other countries to root out corruption by pressuring the domestic government in question to charge the individual.”

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RelatedTrump grants commutation for Arkansas businessman convicted of bribery

The Foreign Extortion Prevention Act seeks to bring U.S. laws in line with international best practices. Numerous countries—including the United Kingdom, France, the Netherlands, and Switzerland—have already criminalized foreign extortion.

In addition, the Organization for Economic Cooperation and Development (OECD), which maintains the OECD Anti-Bribery Convention, published in 2018 a report, in which it examined whether public officials on the receiving end of sanctioned bribe schemes were criminally sanctioned or otherwise disciplined. The results were based on a survey sent to parties of the OECD Anti-Bribery Convention seeking information on the “flip side” of 55 supply-side foreign bribery cases that had been concluded with sanctions being imposed on a briber by another party to the Convention.

Among the key findings of that report: Enforcement actions targeting public officials do take place, but the rate of sanctioning is not particularly high. According to the findings, at least one public official was sanctioned in only one fifth of the 55 cases covered by the survey.

Conflicting language

If Congress were to enact the Foreign Extortion Prevention Act, legal hurdles in prosecuting foreign officials who demand bribes would still exist. Some of those hurdles were discussed by Mike Koehler in his blogThe FCPA Professor.

One question, for example, is what would happen if what the foreign official demands or seeks “qualifies as a facilitation payment under the FCPA’s anti-bribery provisions,” Koehler wrote. “The Foreign Extortion Prevention Act is silent on this relevant issue.”

Another question, he said, is what would happen if what the foreign official demands or seeks “qualifies as a reasonable and bona fide expenditure under the affirmative defense to the FCPA’s anti-bribery provisions? Again, the Foreign Extortion Prevention Act is silent on this relevant issue.”

Nonetheless, the compliance and legal community should welcome the introduction of the Foreign Extortion Prevention Act as it could create a more balanced approach to enforcement.

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