Recently, the CEO of Colonial Pipeline Co. acknowledged that he authorized a $4.4 million ransom payment to the perpetrators of the recent cyberattack on the company’s distribution system. CEO Joseph Blount stated: “I didn’t make it lightly. I will admit that I wasn’t comfortable seeing money go out the door to people like this. But it was the right thing to do for the country.” (The Colonial Pipeline provides about 45% of the fuel for the East Coast).

While not an apparent Foreign Corrupt Practices Act issue, the ransom payment provides a good opportunity to explore the FCPA’s corrupt intent element and how things of value provided to a foreign official in the context of a legitimate extortion situation would not violate the FCPA’s anti-bribery provisions.

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As highlighted in this prior post, the FCPA Blog recently posed the silly question “are agents ever ‘legal’ under the FCPA?”

Now the FCPA Blog is asking why “nobody talks about the FCPA extortion defense”?

It is likewise a silly question because the Foreign Corrupt Practices Act doesn’t even have an extortion defense. The only two defenses in the FCPA are the so-called local law affirmative defense and the so-called reasonable and bona fide expenditures directly connected to a business purpose affirmative defense. (The FCPA also has a facilitation payment exception which the government has the burden of negating – see here).

Even though the FCPA does not have an extortion defense, extortion issues are relevant to corrupt intent – a prima facie element of an FCPA anti-bribery violation that the government must prove.

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