Four members of the U.S. House of Representatives introduced legislation Friday that will criminalize extortion by foreign officials, enabling the DOJ to indict the officials for demanding bribes to fulfill, neglect, or violate their official duties. The legislation would plug a gap in the FCPA, under which only bribe payers can be prosecuted.
The Foreign Extortion Prevention Act was introduced by Rep. Sheila Jackson Lee (TX-18), Rep. John Curtis (UT-03), Rep. Tom Malinowski (NJ-07) and Rep. Richard Hudson (NC-08). Jackson Lee and Malinowski are Democrats and Curtis and Hudson are Republicans.
The legislation was developed with the support of the U.S. Helsinki Commission.
Late last year, Tom Firestone, a partner in the Washington D.C. office of Baker McKenzie, and Maria Piontkovska, a Baker associate in DC, wrote a post for the FCPA Blog advocating U.S. legislation to attack the “demand side” of overseas bribery.
They said foreign anti-extortion legislation “would help honest companies use the FCPA as a shield to resist bribe demands. Or, to put it another way, the argument that ‘we can’t pay because we could be prosecuted under the FCPA’ would be much more powerful if coupled with the statement ‘and you could be, too.'”
In a statement about the proposed law, Rep. Jackson Lee said Friday, “We cannot leave our prosecutors without the legal tools they need to protect the rule of law.”
Rep. Curtis said, “U.S. businesses abroad are regularly targeted by foreign extortionists. The Foreign Extortion Prevention Act would protect U.S. businesses from these individuals by punishing the demand side of bribery.”
The Foreign Extortion Prevention Act will bring U.S. laws in line with international best practices, a Congressional statement said.
The UK, France, the Netherlands, and Switzerland are among the countries that have already criminalized foreign extortion.
A copy of the proposed legislation is here (pdf).
Richard L. Cassin is editor at large of the FCPA Blog.
This piece of legislation strikes me as intelligent and has the potential to add a tangibly valuable instrument to the anti-bribery/corruption tool kit and to plug a gap in the FCPA. However, when considering the massively complex human/psycho-social issues at play which generate and promote bribery and corruption in the first place, it would be naive to assume this will be comprehensively effective in itself to "help honest companies use the FCPA as a shield to resist bribe demands." Just the same, a positive step.
I support this legislation because it might have some impact at the high-level, big dollar bribe level where extortionate officials plan to visit the USA or Europe and are susceptible to arrest or extradition. Those "sophisticated" folks have traditionally relied on their complete impunity at home and the absence of accountability as soon as they get the bribe offshore.
And it gives the target a response that is more meaningful to the extortionist than "I'll go to jail if I pay". At the multi-million bribe level, government officials have likely heard about the US proclivity to assert its long-arm jurisdiction.
Of course it won't impact the lower level officials who extort bribes on a daily basis – they know that the US will not be hunting them down.
And I insist that telling an official demanding a bribe that "I can't pay because I'll go to jail" is the wrong message. What you are telling the official is that you have no problem paying a bribe but you are afraid of detection and punishment and you are talking to a person for whom detection and punishment are non-issues (even in the unlikely event YOU get caught and punished).
The message companies need to communicate consistently and directly is that they won't pay because of their values and principles and that they are prepared to suffer the consequences. Asking a corrupt official to give you what you need without a bribe because you are afraid? That is an invitation to ask again and again until the pressure overcomes your fear.
"The message companies need to communicate consistently and directly is that they won't pay because of their values and principles and that they are prepared to suffer the consequences. Asking a corrupt official to give you what you need without a bribe because you are afraid? That is an invitation to ask again and again until the pressure overcomes your fear."
As a professional who has operated in an FCPA high-risk jurisdiction for over twenty years, I couldn't agree more with Jed's comment.
Regrettably, companies sometimes communicate a mixed message that suggests they wouldn't mind paying bribes and obtaining the desired advantages if only there was a guaranteed way to avoid getting caught. Local government officials very quickly discern whether they are dealing with a firm and principled company or a shy collaborator, and they respond accordingly.
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