Authors: Anna Downs and Utpal Misra*
The United States is making amply clear that it means business when it comes to the fight against global corruption. After establishing countering corruption as a core US national interest, the government is promoting new initiatives and measures to fighting graft transnationally. Last November the United States passed the milestone Foreign Extortion Prevention Act (FEPA), which allows the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) to go after foreign officials and their cronies involved in seeking, demanding, or accepting bribes. Importantly, FEPA defines its jurisdiction broadly, and foreign officials are fair game if violations occur in a US territory, involve US citizens, residents, or entities, or involve companies listed on the US stock exchange.[1] The Act has received widespread support across civil society[2]— but what are its implications for those fighting transnational corruption outside the United States? And what must US policy makers do to ensure its implementation effectively enables these actors and strengthens global anti-corruption norms?
Since 1977, the US has relied on the Foreign Corruption Prevention Act (FCPA) to prosecute the payment of bribes and corruption overseas, resulting in billions in fines and imprisonment for the corrupt actors involved. However, it did have one glaring catch—when bribes were passed from Americans to foreign officials, only the Americans faced repercussions.
FEPA changes the dynamic. It is a landmark piece of legislation that demonstrates America’s commitment to advancing global transparency by addressing a significant gap in our legal anti-corruption framework. It can be an effective tool for global activists to fight kleptocratic tactics, used frequently by corrupt high-level actors within governments and the private sector not just in authoritarian regimes but also in democracies. In these scenarios, corruption is supported from the very top and activists’ options to use local laws and judicial systems are limited—if not outright dangerous to pursue due to the complicity of powerful individuals in law enforcement, the military, civil service, and elected offices. With FEPA, the victims of kleptocracy have a chance to receive long-denied justice. Not only does the Act outline prison time, fines, and asset freezes for foreign corrupt officials, it also mandates the creation of a Victims of Kleptocracy Fund by the US Treasury.[3]
Outside of the costs to administer and enforce the Act, all fines and penalties from FEPA cases must go directly into this Fund which supports the Kleptocracy Asset Recovery Initiative. This FEPA clause is critical for international activists, as the Initiative leads to the recovery and repatriation of stolen funds back to the victims of corruption. Notably, this Initiative has been used to give back over USD $1 billion in seized funds to Malaysia related to the infamous 1MDB corruption scandal.[4]
This new Act creates incentives for global corruption fighters to work closely with US agencies in the hope of ensuring consequences for kleptocrats and corrupt government officials, despite broken justice systems in their home countries. If implemented effectively, FEPA may have an overall chilling effect on foreign official corruption once the DOJ starts hitting kleptocrats where it hurts the most—their bank accounts.
Although the formal process for reporting FEPA violations to the DOJ and SEC has not been announced, as the necessary bureaucratic architecture is built out and processes formalized, international activists should start preparing information on cases of corruption that fall under FEPA jurisdiction. Pro-transparency organizations should focus on the cases most likely to be picked up for further investigation and prosecution by the US.
For example, in January 2024 the DOJ settled its case against the Germany-based software corporation SAP for paying bribes to government officials in Indonesia, Azerbaijan, Malawi, Kenya, Tanzania, Ghana, and South Africa.[5] Although the settlement resulted in a fine of SAP of over $220 million for violations of the FCPA, this is a clear case where FEPA now opens up the possibility of repercussions for the officials involved in the country-level bribery schemes. International activists should look for similar precedents set under the FCPA on which cases are most likely to be prioritized by the DOJ that involve corrupt officials and their cronies in their countries, preparing for when the DOJ is ready to fill its docket.
International transparency advocates can also push for FEPA to be used as a blueprint for further anti-bribery legislation around the world. For countries like the US that maintain global stock exchanges or that have many home-grown international corporations, civic activists can advocate to policymakers to draft similar legislation to discourage foreign officials from seeking bribes from their companies when doing business abroad. The passage of such laws would demonstrate that a country is committed to developing fair and competitive industry norms and environments, which bring stability, confidence, and investment to national economies and financial markets.[6]
Laws targeting foreign officials demanding and accepting bribes already exist in some European countries like the Unted Kingdom and Germany but are rare to non-existent in most global regions.[7] As FEPA-like laws spread to other countries, the safe space for kleptocratic officials to solicit kickbacks and override competitive processes will shrink. However, advocates for such laws should be aware that just the passage of new legislation is not enough, and that many legal anti-corruption frameworks languish from disuse or are circumvented completely in kleptocratic states. Thus, the success of FEPA and its ability to serve as a gold standard for anti-corruption laws will depend on several factors.
First, FEPA’s impact will largely depend on the level of funding and personnel the US devotes to investigate and prosecute violations. The US can learn a thing or two from its FCPA experience. Although the FCPA is one of the most-used pieces of anti-bribery legislation worldwide, the DOJ has faced criticism for not going far enough when doling out punishments for past FCPA violators.[8] Many who have been prosecuted end up settling their civil and criminal cases, never admitting guilt and facing only fines—albeit fines in the millions and billions, which large corporations are more than able to pay.[9] However, even if FEPA is implemented in a similar manner to the FCPA, we can rest assured that although penalties may not be as steep as some would deem just, the most egregious violators will face their day in court.
Second, the United States must make clear its strategic reasoning when bringing forward FEPA cases. Even with large budgets and staffing, the DOJ will not be able to pursue every case of foreign official corruption that falls under the Act. US leaders must make clear their priorities when pursuing cases so that international activists and investigative journalists know when it is likely that the evidence of bribery they bring to the DOJ will be picked up for prosecution. The US should also commit to closely coordinate, share information, and pool resources with foreign democracies which adopt similar legislation. Doing so will not only enhance collective ability to prosecute corrupt actors but will also provide incentives for partner countries to formulate and endorse identical laws.
The world will be watching how the US wields FEPA. Activists around the globe who fight tirelessly for transparency in the most corrupt and kleptocratic states will be observing and preparing to takedown the self-enriching leaders and their supporters holding their nations back from prosperity and democracy. And hopefully kleptocrats will be afraid of what comes next.
*Utpal Misra is a Senior Governance Manager at the Center for Global Impact, International Republican Institute, where he manages a portfolio of programs on anti-corruption, democratic transitions, and governance strengthening. Prior to joining IRI, he worked with multiple development organizations in the field of governance, anticorruption, and social accountability, including at the World Bank as a Governance Specialist for over 9 years.
[1] https://www.globalinvestigations.blog/anti-corruption/fepa-the-new-tool-in-the-dojs-fight-against-corruption/
[2] https://us.transparency.org/resource/civil-society-letter-of-support-for-the-2023-foreign-extortion-prevention-act-fepa/
[3] https://www.congress.gov/bill/117th-congress/house-bill/4737/text?s=1&r=8
[4] https://www.justice.gov/opa/pr/us-seeks-recover-more-300-million-additional-assets-traceable-funds-allegedly-misappropriated; https://www.justice.gov/opa/pr/over-1-billion-misappropriated-1mdb-funds-now-repatriated-malaysia
[5] https://www.msn.com/en-us/money/companies/software-giant-to-pay-over-220-million-to-settle-foreign-bribery-charges/ar-AA1mPODg
[6] https://www.marcumllp.com/insights/bribery-and-corruption-is-the-cost-of-doing-business-worth-it
[7] https://thehill.com/opinion/congress-blog/4165883-attacking-foreign-corruption-blunts-chinas-malign-economic-influence/
[8] https://www.nytimes.com/2011/06/25/business/25stewart.html
[9] https://acgc.cipe.org/business-of-integrity-blog/corruption-hasnt-changed-a-conversation-with-frank-vogl/
