LSHC Horizons Brochure 2024 - Flipbook - Page 67
Hogan Lovells | 2024 Life Sciences and Health Care Horizons | APAC
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U.S. Foreign Extortion Prevention Act and its likely impact
on life sciences companies, particularly in Asia
Late in 2023, President Biden signed into law
the bipartisan Foreign Extortion Prevention Act
(FEPA, or the Act). Within the Act, provisions
seek to criminalize the demand-side of foreign
bribery by making it illegal for any foreign public
official to corruptly demand or accept a bribe
from a United States (U.S.) person or company
in exchange for influencing an official act,
favors, or an improper advantage. The penalty
is $250,000, or three times the item of value,
or up to 15 years in prison.
The 1977 Foreign Corrupt Practices Act (FCPA),
seen as a benchmark law with extra-territorial
international impact in anti-bribery and
corruption, prohibits the payments to foreign
officials as one of its headline provisions.
The FCPA had not provided for the demand
element by a foreign official (something
that is present in one of the other primary
international benchmark laws: the UK Bribery
Act). Like the FCPA, the conduct considered
under the Act need not take place in the U.S.
Coupled with other enforcement tools consider the deployment of sanctions on
oligarchs and state officials in the wake of
Russia’s invasion of Ukraine - the Act is
another weapon in the arsenal against foreign
officials. Money laundering offenses and
fraud have been the traditional route for
enforcement against foreign officials. Those
offenses, though, are often limited to proving
transactions occurred through the U.S.
financial system. The Act does not have that
requirement and can therefore be a supplement
to existing enforcement strategies.
Stephanie Yonekura
Partner
Los Angeles
Now, in theory, this Act is significant in
extending the possible targets of U.S.
enforcement, but it does raise questions on
how enforcement will actually take place, and
is set in a complicating diplomatic angle. Even
if a foreign public official is alleged to have
requested an improper payment, would the
U.S. Department of Justice (DOJ) succeed
beyond charging foreign officials? Imagine the
geopolitical consequences of naming an ally or
enemy’s public official in an indictment. We
will need to see how this element of the Act
plays out, but we suspect it is likely to lead to
international cooperation between government
agencies on bribery allegations (which itself may
lead to domestic enforcement in local nations).
This will impact life sciences companies in that
(1) there may be confusion in local markets as to
what is the impact of the Act on future business;
(2) many Asian life sciences and health care
organizations or personnel are State-connected,
and therefore would classify as public officials;
and (3) this may result in more proactive
disclosure of improper conduct as this builds
cooperation with the regulator, though may
impact peers. Suppose a public official physician
in Vietnam or in China has demanded a bribe or
extravagant beyond-business norms hospitality,
the company experiencing that conduct may
report it. We expect the DOJ to ask soon
thereafter if the company knows which other
U.S. persons or companies do frequent business
with that doctor.
Khushaal Ved
Counsel
Singapore
In recent years, we have witnessed and are
advising various life sciences companies in Asia
– in India, Southeast Asia, and China – who
are in the crosshairs of FCPA enforcement.
Life sciences companies with a nexus to public
officials are an enforcement hotspot, and FEPA
fans those flames.
