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Who Needs FEPA?

shrug

As long as political actors have existed, political actors have taken credit for filling a perceived legal gap by enacting new laws.

Time will tell of course, but query whether the recently enacted Foreign Extortion Prevention Act (FEPA) (a law which seeks to capture the so-called “demand” side of foreign bribery) was even needed.

As has been discussed on these pages over the last several years when various versions of FEPA were introduced in Congress, the Department of Justice already has several criminal statutes available to prosecute alleged “foreign officials” who receive bribes and has been prosecuting such cases for a long time.

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Stay Ahead Of The Curve

Curve

One reason to read FCPA Professor is to stay ahead of the curve and to learn about issues others will be focused on in the weeks and months ahead.

For instance, this January 19th post highlighted a disclosure by Calavo Growers, Inc. “a global leader in quality produce, including avocados, tomatoes and papayas, and a pioneer of healthy fresh-cut fruit, vegetables and prepared foods.”

Although the disclosure did not mention the Foreign Corrupt Practices Act, the post surmised that the disclosure was likely FCPA related given that a recent FCPA enforcement action concerned a guacamole manufacturing plant in Mexico. The post mentioned that, in certain instances, when one company resolves an FCPA enforcement action based on a certain issue in a specific country, it then leads to scrutiny of other companies in the same industry operating in the same country.

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Who Needs FEPA?

shrug

As long as political actors have existed, political actors have taken credit for filling a perceived legal gap by enacting new laws.

Time will tell of course, but query whether the recently enacted Foreign Extortion Prevention Act (FEPA) (a law which seeks to capture the so-called “demand” side of foreign bribery) was even needed.

As has been discussed on these pages over the last several years when various versions of FEPA were introduced in Congress, the Department of Justice already has several criminal statutes available to prosecute alleged “foreign officials” who receive bribes and has been prosecuting such cases for a long time.

Two examples occurred in just the past few weeks while much attention has been focused on FEPA and how it plugs a purported legal gap.

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FCPA Related Securities Fraud Action Against Ericsson Dismissed

Dismissed

This prior post covered the 2019 Foreign Corrupt Practices Act enforcement action against Ericsson. The enforcement action concerned conduct in Djibouti, China, Vietnam, Kuwait, Indonesia, and Saudi Arabia and included a DOJ and SEC component. The DOJ matter involved a one count criminal information against Ericsson subsidiary Ericsson Egypt Ltd. charging conspiracy to violate the FCPA’s anti-bribery provisions resolved through a plea agreement and a criminal information against Ericsson charging conspiracies to violate the FCPA’s anti-bribery, books and records, and internal controls provisions resolved through a deferred prosecution agreement. The DOJ matter was resolved through payment of a $520 million criminal penalty.

As highlighted in this prior post, in 2021 the DOJ suggested that Ericsson was in breach of its DPA obligations and in March 2023 the DOJ announced that “Ericsson has agreed to plead guilty and pay a criminal penalty of more than $206 million after breaching a 2019 Deferred Prosecution Agreement (DPA).” (See here for the prior post).

In between, reports suggested that “Ericsson may have made payments to the ISIS terror organization to gain access to certain transport routes in Iraq.” (See here for the prior post).

As sure as the sun rises in the east and dogs bark, investors brought a securities fraud class action in related to the above events.

Recently, Judge William Kuntz (E.D.N.Y.) dismissed the complaint.

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Potpourri

Potpourri

Humorous

It is always a bit humorous (among other things) when a former FCPA enforcement official changes his/her position on a topic when they leave the government and go into or back into private practice (as nearly all do).

While at the DOJ, Daniel Kahn (like other FCPA enforcement officials) was a big proponent of voluntary disclosure.

However, in this Law360 article, commenting on recent DOJ policy charges (see here for the prior post) Kahn stated that the discount for companies that self-disclose is a nice reward, but that there is still a question about whether it will incentivize companies to report if they were otherwise not inclined to disclose or cooperate.

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