The federal government categorically refuses to recognize an economic extortion defense to liability under the Foreign Corrupt Practices Act (FCPA), even while it recognizes an FCPA defense based on physical extortion. The distinction is unsupported by law and policy and must change, particularly in view of the recent passage of the Foreign Extortion Prevention Act (FEPA) and the growing power of autocrats to destroy U.S. businesses through economic as well as physical extortion.

Legislative History and Interpretation of the FCPA's Extortion Defense

Payments made to foreign officials are punishable under the FCPA only if made "corruptly." The drafters of the FCPA recognized that extorted payments lack the requisite corrupt purpose, contrasting in the Senate Report accompanying the legislation (the "FCPA Senate Report") payments made as a price of "gaining entry into a market or to obtain a contract," which should not be shielded from FCPA liability because "at some point the U.S. company would make a conscious decision whether or not to pay a bribe," with payments made in "true extortion situations," which "should not be held to be made with the requisite corrupt purposes." S. Rep. 95-114 at 10. The drafters of the statute described "a payment to an official to keep an oil rig from being dynamited" as an example of an extorted payment that would not be corrupt. Id.