Tag: FCPA

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The Dog Bite Defense Fails Again – Defendant Found Guilty in FCPA Trial

To the surprise of absolutely no one, former Corsa Coal executive Charles ‘Hunter’ Hobson was found guilty last week for FCPA violations. As most readers of this blog know, I am a recovering trial lawyer. I almost always represented corporations as defense counsel during my trial lawyer career. In the trial lawyer world, there are four recognized defenses to any claim, which are known as the “Dog Bite Defenses”. They are:

  1. My dog didn’t bite you.
  2. Even if my dog did bite you, it’s because you provoked him.
  3. Even if my dog did bite you, you really aren’t injured.
  4. My dog didn’t bite you because I don’t have a dog.

The fourth version of the Dog Bite defense is certainly an ‘all-in’ move. You had either (1) better be right or (2) have some big kahunas to make that argument to a jury with a straight face.

Defense No. 1 – Hobson did not pay or direct anyone to pay.

Hobson’s attorneys said the government was overreaching by charging Hobson with FCPA violations on several grounds. His lawyer argued that Hobson did not know, pay, or direct Nassar to bribe anyone. “Mr. Hobson never saw Ahmed the broker pay any money to anyone,” his attorney told the jury in the opening. Further, Hobson never hired Ahmed, the broker, and claimed that Mr. Hobson never paid him. Corsa hired Ahmed, the broker; Corsa paid Ahmed, the broker; and Corsa approved Ahmed’s commissions, not Mr. Hobson.

Defense No. 2- Social custom in Egypt says it’s OK to pay a bribe.

Attorneys for Hobson tried to undermine the government’s expert witness by pointing to opinions he had given that bribery was not only not illegal in Egypt but actually socially acceptable. They confronted Mohamed Arafa, an adjunct professor focusing on comparative law at Cornell University, with law review articles he had previously written, where he said that corruption was “commonly accepted and had become the ‘social law’” in Egypt. The Professor distinguished the expert opinion on Egyptian law that he offered at trial and “his prior, scholarly opinions on whether people adhered to that law in modern Egypt. Santoni quoted him saying, “I’m not here to talk about that; I’m here to talk about the law,” Arafa said. ” … Saying something like that does not make the act legal.””

Defense No. 3- His bosses approved it.

Here, Hobson tried to argue that once Nassar was paid his commission, which was due and owing, it was not up to Hobson what Nassar did with it, nor was it “Corsa’s money” any longer. Hobson’s attorney also said that “Mr. Hobson never saw Ahmed, the broker, pay any money to anyone,” Price said. “Mr. Hobson never hired Ahmed the broker, Mr. Hobson never paid Ahmed the broker. Corsa hired Ahmed the broker, Corsa paid Ahmed the broker, and Corsa approved Ahmed’s commissions, not Mr. Hobson.” His counsel also said that Hobson had been tasked with opening up new foreign markets for Corsa. Having never dealt in Egypt before, he spoke with employees of a company that had recently merged with Corsa and had done business there, who connected him with Nassar.

Defense No. 4-Ahmed wasn’t a government official.

Here was the truly all-in defense (I don’t own a dog). It was that Ahmed was not a government official or did not work at an instrumentality of the Egyptian government. In his cross-examination of cooperating witness Frederick Cushmore, Jr., who worked for Hobson, his defense counsel questioned Cushmore about any indications he had that Al Nasr was affiliated with the Egyptian government. Obviously, trying to take the entire case out of an FCPA criminal action by alleging that one of the elements of an FCPA was not present. The issue is that payments are being directed to a government official or to someone at a government-affiliated company. But Cushmore said it was “industry knowledge” and pointed to a 2017 email from Hobson that said both the shipping company and Al Nasr were “Egyptian-owned companies”. Counsel then questioned whether Hobson really meant that to indicate “owned by the Egyptian government.”

Two prosecution witnesses eviscerated Hobson’s defense. The first was Frederick Cushmore Jr., who pled guilty to conspiring to violate the FCPA. He agreed to testify against Hobson, said their emails and WhatsApp messages talked about people at Al Nasr Co. for Coke and Chemicals being “taken care of” by keeping Corsa’s agent, Ahmed Nassar, paid high commissions for the sales he brought in, implying that Nassar’s higher-than-normal pay was being passed on as bribes to Al Nasr officials.

According to Matthew Santoni reporting in Law360, “Cushmore read a November 2016 email from Hobson, then a vice president of sales at the Somerset County, Pennsylvania-based coal mining company, that said there were “a few the agent has to take care of” during an early discussion of Nassar’s proposed commission payments. “I took that as people at Al Nasr who would be receiving bribes… I was shocked at how open the discussion was,” Cushmore, whom prosecutors said held various international sales positions with Corsa Coal. “I simply said, I suspected… ‘What’s he doing with all that money?’ Mr. Hobson said, ‘What do you think he’s doing with all that money?'””

The second was Mohamed Arafa, an adjunct professor focusing on comparative law at Cornell University. He made clear, in no uncertain terms, that bribery of government officials was illegal under Egyptian law, not a matter of social custom. The defense had no rebuttal for either witness’s testimony.

Although the trial lasted over one week, the jury was out for less than one day before finding the defendant guilty. The sentencing date has not been set.

Join us tomorrow, where we look at the lessons a compliance professional can draw from the Hobson trial.

Resources:

Articles by Matthew Santoni in Law360

Coal Exec Knew Egyptian Broker Paid Bribes, Jury Told

Coal Exec’s Co-Worker Says Emails Hinted At Egypt Bribes

Egypt’s ‘Social Law’ Doesn’t Endorse Bribery, Jury Told

Coal Exec Used ‘Mr.. Yen’ To Talk Kickbacks, FBI Testifies

Coal Exec ‘Had No Ability’ To OK Paying Bribes, Jury Told

Jury Finds Ex-Coal Exec Guilty Of Authorizing Bribes

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Compliance Into the Weeds

Compliance into the Weeds: FCPA Trial Rarity: Charles Hobson Convicted

The award-winning Compliance into the Weeds is the only weekly podcast that takes a deep dive into a compliance-related topic, literally going into the weeds to explore it more fully. Looking for some hard-hitting insights on compliance? Look no further than Compliance into the Weeds! In this episode of Compliance into the Weeds, Tom Fox and Matt Kelly look at the recent conviction of Charles ‘Hunter” Hobson for FCPA violations.

Former Corsa Coal senior sales executive Charles Hunter Hobson was found guilty in Pennsylvania of helping arrange roughly $4.8 million in bribes to officials tied to a state-owned Egyptian coal company, using an intermediary, to secure about $143 million in contracts. Also, Hobson allegedly pocketed about $200,000. Tom and Matt  Hobson’s unsuccessful “dog bite” defenses. They also discuss tensions between corporate and individual accountability, the practical reality that companies may cooperate and “turn on” individuals, and that individuals can also expose companies by cooperating with prosecutors. Finally, they speculate on why DOJ pursued trial amid shifting enforcement signals, referencing other recent FCPA matters (Millicom DPA, Smartmatic indictment) and past DOJ trial losses, and conclude that the best approach is to avoid bribery and avoid being the “last man standing.”

Key highlights:

  • Hobson Case Overview
  • Dog Bite Defense Breakdown
  • Payment Red Flags
  • Declinations and Individual Risk
  • Why Go to Trial?

Resources:

Matt in Radical Compliance

Tom

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A multi-award-winning podcast, Compliance into the Weeds was most recently honored as one of the Top 25 Regulatory Compliance Podcasts, a Top 10 Business Law Podcast, and a Top 12 Risk Management Podcast. Compliance into the Weeds has been conferred a Davey, a Communicator Award, and a W3 Award, all for podcast excellence.

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The Hobson FCPA Trial: Commissions, Coded Cash, and the Compliance Risk Indicators

The Foreign Corrupt Practices Act (FCPA) trial of a former coal company executive offers a real-time reminder that FCPA cases are rarely about a single payment. They are about systems;  how third parties are engaged, how commissions are justified, how money moves, and how people communicate when they think no one is watching. The trial of former Corsa Coal executive Charles Hunter Hobson has featured opening statements from both sides, testimony from a cooperating former colleague, testimony from an FBI agent who reviewed messages and bank records, and expert testimony on the status of the foreign counterparty and the legality of bribery under Egyptian law.

Prosecutors have advanced a bribery theory based on inflated commissions paid to a sales agent, with kickbacks allegedly returning to the executive. Defense counsel has argued a lack of knowledge, a lack of control over the agent’s downstream conduct, and challenges around whether the foreign buyer qualifies as a state-owned enterprise for FCPA purposes. At this point, the defense has not presented its Case-in-Chief, so it is unknown if the defendant will testify. The value for compliance professionals lies in seeing how ordinary-seeming commercial mechanics are translated into an FCPA narrative before a jury.

The Prosecution Narrative: High Commissions, Bribes to “the Team,” and Business Won

In opening arguments, prosecutors told jurors that the company’s Egypt-based agent received higher-than-normal commissions and used a portion of those payments to bribe officials connected to the buyer, Al Nasr, in exchange for coal purchase contracts valued at roughly $143 million. Prosecutors further alleged that the agent paid $4.8 million to individuals described as government employees or employees of a state-owned business, and that the executive received approximately $200,000 in kickbacks.

In the government’s telling, this was not incidental. It was purposeful: pay the agent more than market, allow the agent to distribute those funds to secure business, and then share the proceeds back to the executive. The business obtained through the relationship and the revenue tied to those contracts form the “benefit” side of the alleged corruption equation. The alleged bribe payments and kickbacks form the “means.”

For compliance professionals, the risk indicator is not merely “third party in a high-risk market.” It is the combination of (1) pricing and award dynamics, (2) commission pressure, (3) coded communications, and (4) money movement patterns that appear designed to avoid normal transparency.

The Defense Narrative: No Direction to Bribe, No Control After Payment, and Disputed Knowledge

The defense has pressed a different story: that the executive did not hire the broker, did not personally pay him, and did not direct bribery; that once commissions were paid, the company did not control what the agent did with his earnings; and that the executive did not know or believe the buyer was government-affiliated at the relevant time.

Defense counsel also highlighted practical gaps a jury may notice: the absence of testimony from the foreign agent and foreign officials, and the difficulty of proving what happened abroad when the investigation is largely built on U.S.-available records. This posture is familiar in many FCPA matters: the defense seeks to separate commission payments from corrupt intent and to isolate the alleged misconduct to a third party’s independent actions.

The risk indicator here is the argument itself: organizations routinely assume that once a third party is paid, the risk transfers. However, that is not true in compliance or under the FCPA. Most certainly, such a willful blindness approach will not sit well with the DOJ when there is evidence suggesting knowledge, willful blindness, or coded coordination.

Third-Party Risk: Onboarding, Commission Benchmarking, and Relationship Ownership

Across the testimony elicited to date, the third-party storyline turns on three governance pressure points: how the agent was onboarded, how commission levels were justified, and who “owned” the relationship operationally. A cooperating former colleague of the defendant testified that the commissions were unusually high compared to industry norms and described communications he interpreted as references to individuals who needed to be “taken care of,” including discussions about keeping commissions high to support pricing and approvals. That is the heart of third-party compliance risk: when the commission structure becomes the economic channel through which influence is allegedly purchased, the company’s controls on justification, approvals, and monitoring become central to how the story is told to a jury.

State-Owned Enterprise and Egyptian Law: Why It Matters and What the Jury Heard

A key FCPA element is whether the recipients are “foreign officials,” which can include employees of state-owned enterprises. The DOJ presented expert testimony that the buyer was a public entity under Egyptian law and that bribery involving public officials is illegal under the Egyptian Penal Code. The defense challenged the expert’s treatment of Egyptian corporate structure and attempted to undermine the legal framing by citing academic discussions of corruption as socially prevalent, an approach the court rejected while allowing limited exploration of the distinction between written law and real-world practice. For compliance professionals, the risk indicator is straightforward. If your counterparty’s status as state-owned is ambiguous, you must assume that ambiguity will be litigated, and prosecutors will use foreign-law testimony to make the entity’s status legible to a U.S. jury.

The Money Trail: How the Government Says Funds Moved and Why It Matters

The most operationally revealing testimony described in coverage to date comes from the FBI agent who reviewed communications and financial records. The government presented a picture of commerce and payments operating in parallel:

  1. Commercial negotiation and commission splitting. Messages allegedly mixed coal pricing discussions with references to commission allocations associated with initials that the agent said corresponded to individuals at the foreign buyer and to the two principals themselves. The government’s point was not merely that commissions were paid; it was that commissions were structured and discussed in a manner consistent with the intended distribution.
  2. Coded references to cash and timing pressure. The phrase “Mr. Yen” was presented as a coded term for money, with messages allegedly asking for “Mr. Yen” by a certain day and asking whether it would be in U.S. dollars. In the government’s narrative, the coding supports consciousness of wrongdoing and intent to conceal.
  3. Use of informal transfer mechanisms and offshore touchpoints. Testimony referenced Western Union transfer records and a Dubai-based company, with messages and timing tied to travel and financial activity. The government described the executive receiving money through these channels, including activity linked to a Dubai entity and subsequent movement of funds to a U.S. entity sharing the executive’s address.
  4. Invoice construction to facilitate payment. The jury heard about exchanges in which an invoice was drafted for a substantial payment (described as $150,000), including efforts to create documentation, such as a business seal, and then a wire to the Dubai entity, followed by the transfer of a large portion of the funds.

The compliance relevance of this money trail is not that every company has Dubai entities or international wires. The relevance is that prosecutors can take a set of operational steps that may be individually explainable and argue that, taken together, they show an intent to route funds in ways that obscure purpose and beneficiaries. In a trial context, the story is built from the alignment of sequencing, communications, and financial records.

Conclusion

The Hobson trial, at this point, is a live demonstration of how an FCPA case can be built from a combination of commission economics, business obtained, communications, and money movement. Prosecutors say inflated commissions funded bribes and that kickbacks flowed back to the executive; the defense says the executive did not direct bribery, did not control the agent’s conduct after payment, and did not know the buyer’s alleged government affiliation at the time.

For the readers of this Blog, the value is not in sensational details. The value is in the compliance risk indicators that a jury is now being asked to interpret: what was said, what was paid, how it was routed, and what business it helped secure. That is the terrain where compliance programs either demonstrate discipline or discover, far too late, that “commissions” can become the government’s favorite word for “bribery.”

Resources

All Law360 articles written by Matthew Santoni. Unfortunately, a subscription is required to access the articles.

Coal Exec Used ‘Mr… Yen’ To Talk Kickbacks, FBI Testifies

Egypt’s ‘Social Law’ Doesn’t Endorse Bribery, Jury Told

Coal Exec’s Co-Worker Says Emails Hinted At Egypt Bribes

Coal Exec Knew Egyptian Broker Paid Bribes, Jury Told

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2 Gurus Talk Compliance

2 Gurus Talk Compliance – Episode 70 – The Ethics Edition

What happens when two top compliance commentators get together? They talk compliance, of course. Join Tom Fox and Kristy Grant-Hart in 2 Gurus Talk Compliance as they discuss the latest compliance issues in this week’s episode!

Stories this week include:

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Kristy Grant-Hart on ⁠LinkedIn⁠

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From Enforcement-Driven to Purpose-Driven Compliance

For more than two decades, corporate compliance programs have been built around one central organizing principle: enforcement. Where regulators go, compliance resources follow. When the Department of Justice prioritizes anticorruption, companies invest in FCPA controls. When regulators turn to privacy, cybersecurity, or AML, compliance budgets pivot accordingly. This enforcement-driven approach has shaped the modern compliance profession.

Yet, as Veronica Root Martinez persuasively argues in her recent working paper, Purpose-Driven Compliance, this dominant model may be fundamentally flawed, certainly in the era of Trump.  Despite unprecedented investments in compliance infrastructure, corporate misconduct persists. Repeat offenders remain common. Penalties grew larger, but behavior did not meaningfully improve. For compliance professionals, this raises an uncomfortable question: are we optimizing for the wrong objective?

Martinez’s answer is both challenging and clarifying. Compliance programs should not be primarily designed to satisfy enforcement authorities or to maximize mitigation credit after failure. Instead, they should be anchored in the organization’s own purpose, business risks, and ethical standards. In short, it is time to move from enforcement-driven compliance to purpose-driven compliance.

The Limits of Enforcement-Driven Compliance

The enforcement-driven model rests on two assumptions. First, that enforcement priorities reflect a company’s most significant risks. Second, that imperfect compliance is inevitable and acceptable so long as the organization can demonstrate good-faith efforts. Martinez brings both under scrutiny.

Regulatory priorities often lag behind real business risks. Enforcement agencies focus on certain categories of misconduct because they are visible, politically salient, or historically entrenched. But the risks that most threaten an organization’s mission may lie elsewhere. Martinez highlights how firms can become over-invested in compliance areas that attract enforcement attention while under-investing in mission-critical risks to their operations.

The second assumption, that some level of misconduct is acceptable, is even more troubling. Behavioral ethics research suggests that tolerating small violations creates conditions for larger ones. When leaders frame misconduct as statistically insignificant or “within expectations,” they risk normalizing behavior that undermines culture, trust, and ultimately performance. Wells Fargo’s infamous “1% problem” illustrates this danger. Senior leadership took comfort in the idea that only a small fraction of employees were engaging in misconduct, failing to appreciate that those numbers reflected only the misconduct that had been detected.

An enforcement-driven mindset encourages this type of thinking. If the organization is sanctioned, then low detection rates look like success. But if the question is whether the organization is living up to its own purpose and values, the same data tell a very different story. This is not the broken windows theory of enforcement, but something else.

The Cost of Treating Compliance as a Cost of Doing Business

Another weakness of enforcement-driven compliance is that it can turn sanctions into a predictable line item. As firms grow larger and penalties are discounted through cooperation credit, fines risk being internalized as a cost of doing business. Empirical work cited by Martinez suggests that large, repeat offenders often pay penalties that are small relative to their assets and revenues. In that environment, enforcement loses much of its deterrent effect.

For compliance professionals, this dynamic creates a structural tension. Programs may be technically “effective” under DOJ guidance while still failing to prevent misconduct that harms customers, employees, and communities. The distinction between standards of review and standards of conduct becomes critical. Meeting the government’s expectations for leniency is not the same as meeting the organization’s ethical obligations to itself and its stakeholders.

What Is Purpose-Driven Compliance?

Purpose-driven compliance begins with a simple but powerful shift in perspective. Instead of asking, “What does the regulator expect?” the organization asks, “What risks threaten our ability to achieve our purpose and what standards of conduct are required to address them?” Martinez defines purpose-driven compliance as programs directed by three elements: the firm’s purpose, the inherent risks associated with pursuing that purpose, and the ethical standards the organization sets for itself. This approach does not reject enforcement frameworks; rather, it treats them as a floor, not a ceiling.

In practical terms, purpose-driven compliance requires leadership to articulate why the organization exists and how misconduct undermines that mission. For a bank, this may mean focusing on customer trust and market integrity. For a pharmaceutical company, it may mean prioritizing patient safety and scientific integrity. For a university, it may mean safeguarding academic freedom and institutional trust. For a summer camp, it means protecting the campers from flash floods and other storms.

Once the purpose is clearly defined, compliance risk assessments become more meaningful. Risks are evaluated not only by enforcement exposure but by their potential to compromise the organization’s core objectives. This reframing helps compliance leaders resist the temptation to chase regulatory trends at the expense of mission-critical risks.

Moving Beyond Mitigation to Aspirational Standards

A key insight in Martinez’s work is that firms often confuse mitigation with excellence. Compliance programs are designed to minimize penalties rather than to maximize ethical performance. Purpose-driven compliance challenges that mindset by encouraging organizations to adopt high, ethical, and aspirational standards of conduct.

This does not mean pursuing perfection through draconian controls or internal criminalization. Martinez rightly warns against overdeterrence and strict liability regimes that incentivize concealment rather than transparency. Instead, purpose-driven compliance emphasizes ethical framing, employee voice, and organizational learning. Compliance should never be Dr. No, sitting in the Department of Business Non-Development.

The examples of Wells Fargo and Novartis are instructive. Both organizations suffered repeated compliance failures under enforcement-driven regimes. Their subsequent reforms went beyond addressing the specific violations that triggered enforcement. They re-examined culture, leadership incentives, and ethical expectations. In Novartis’s case, tying bonuses to ethical performance and co-creating a new code of ethics signaled a shift from box-checking to values anchored in purpose.

Why Purpose-Driven Compliance Matters for the Modern CCO

For today’s chief compliance officer, Martinez believes purpose-driven compliance offers three critical benefits.

First, it creates durability. Enforcement priorities shift with administrations. Indeed, this Administration has signaled a cutback in white-collar enforcement by offering essentially get-out-of-jail-free cards to companies that self-disclose early. This underscores the importance of compliance programs. A compliance program anchored solely in regulatory expectations will always be reactive. Purpose-driven programs are more stable because they are tied to the organization’s identity rather than external politics.

Second, it improves the quality of compliance metrics. Measuring effectiveness against internal standards allows organizations to ask harder questions about culture, decision-making, and root causes. Not every initiative will succeed, but a willingness to acknowledge failure is itself a sign of program maturity.

Third, it enhances credibility with boards and senior leadership. When compliance is framed as a strategic partner in achieving the organization’s mission, rather than as a defensive function, it earns a more meaningful seat at the table.

Conclusion

Compliance has never been more sophisticated, expensive, or visible. Yet sophistication alone does not guarantee effectiveness. Martinez’s Purpose-Driven Compliance challenges compliance professionals to rethink the foundations of their programs. Enforcement-driven compliance has taken us far, but it cannot take us far enough.

The next evolution of compliance requires organizations to define their own standards of conduct, grounded in purpose, risk, and ethics. That shift is not easy. It requires courage from compliance leaders and commitment from boards and executives. But if compliance is truly about preventing harm and sustaining trust, purpose-driven compliance is not optional. It is essential.

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Daily Compliance News

Daily Compliance News: February 9, 2026, The Is Netflix a Monopoly Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen in to the Daily Compliance News. All, from the Compliance Podcast Network. Each day, we consider four stories from the business world, compliance, ethics, risk management, leadership, or general interest for the compliance professional.

Top stories include:

  • Knock off obesity pill pulled from market. (NYT)
  • Former Norwegian Prime Minister under investigation over corruption from Epstein files. (Politico)
  • Jay Clayton promises a bigger get out of jail free card. (Reuters)
  • DOJ to investigate if Netflix is a monopoly. (WSJ)
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Innovation in Compliance

Innovation in Compliance – Insights on FCPA and Anti-Corruption Enforcement Trends with Anik Shah

Innovation touches every part of the modern enterprise, and compliance professionals must be prepared not only to respond to change but to lead through it. Join Tom Fox, the Voice of Compliance, as he visits with top innovative minds, thinkers, and creators on the award-winning Innovation in Compliance podcast. In this episode, host Tom Fox welcomes Anik Shah, Global Director of Anti-Bribery and Anti-Corruption Compliance at Sandisk, for an insightful discussion on the pivotal shifts in FCPA enforcement during 2025 and what they signal for 2026.

Shah outlines his extensive professional background, including his prior roles at the SEC and DOJ. The conversation explores key developments from 2025, including the Executive Order pausing certain FCPA investigations, the Blanche Memo’s four criteria for opening FCPA cases, and the implications of revisions to the Corporate Enforcement Policy. He also analyzes the Communications Cellular enforcement action to highlight practical compliance lessons, focusing on strengthening AML controls, managing third-party risk, and deploying proactive compliance measures amid renewed anti-corruption scrutiny.

The episode concludes with a forward-looking discussion of emerging anti-corruption risks associated with advanced AI technologies, large AI construction projects, and related permitting activities, both in the United States and globally. Shah offers strategic recommendations for compliance professionals seeking to anticipate and manage these evolving risks.

Key highlights:

• 2025 as a Pivotal Year in FCPA Enforcement

• The Blanche Memo and Corporate Enforcement Policy Revisions

• Anti-Money Laundering and Third-Party Risk Management

• Large AI Construction Projects and Permitting Risks

• Global Anti-Corruption Laws and Compliance

• Key Takeaways for 2026

Resources:

Anik Shah on LinkedIn 

Sandisk

Innovation in Compliance was recently honored as the Number 4 podcast in Risk Management by 1,000,000 Podcasts.

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Blog

Is there a FEPA Future in Venezuela?

For U.S. compliance professionals, few jurisdictions raise as many red flags as Venezuela. Decades of entrenched corruption, state capture of key industries, economic collapse, weak rule of law, and the legacy of PdVSA have made the country a case study in what happens when corruption becomes systemic rather than episodic. Now that geopolitical and energy realities are shifting, some U.S. companies are again evaluating whether and how to reenter the Venezuelan market.

Against that backdrop, the passage of the Foreign Extortion Prevention Act (FEPA) represents one of the most significant developments in anti-corruption enforcement in nearly half a century. The question compliance officers are now asking is a practical one: can FEPA actually be used to prevent bribery and corruption for U.S. companies returning to Venezuela, or is it merely a symbolic addition to an already strained enforcement framework?

The answer, as with most compliance questions, is nuanced. FEPA is not a silver bullet. But when properly understood and operationalized, it can meaningfully change the risk calculus for companies operating in high-extortion environments like Venezuela.

The Historic Gap in the FCPA

For decades, the compliance community has lived with a fundamental asymmetry in U.S. anti-corruption law. The Foreign Corrupt Practices Act is a supply-side statute. It criminalizes the offering or payment of bribes by U.S. companies and individuals, but it does not criminalize the demand for those bribes by foreign officials. This gap has long distorted incentives on the ground.

In jurisdictions such as Venezuela, bribery is rarely framed as a voluntary transaction. It is far more often presented as a demand, a condition of doing business, or even a threat, as in the case of extortion. Officials do not ask politely. They delay permits, block shipments, threaten arrests, or endanger employee safety. Until FEPA, U.S. law largely treated this as background noise rather than a prosecutable offense.

FEPA directly addresses that gap by criminalizing the solicitation or acceptance of bribes by foreign officials from U.S. persons or companies. In doing so, it finally targets the demand side of corruption and aligns U.S. law more closely with how bribery actually operates in high-risk countries.

Why Venezuela Is the Ultimate Test Case

If FEPA can work anywhere, it should work in Venezuela. The country’s corruption ecosystem is characterized by pervasive extortion across customs, energy, transportation, security, immigration, and tax authorities. Payments are often demanded not to gain an advantage but to avoid harm. This distinction matters. In Venezuela, the compliance challenge is not simply rogue employees paying bribes. It is employees facing credible threats to liberty, safety, or health. FEPA explicitly recognizes this reality by treating extortion by a foreign official as a criminal act rather than merely a compliance failure by the company.

That framing gives compliance officers something they have long lacked: a legal backbone to support a firm refusal posture. Companies can now say, with credibility, that the demand itself is illegal under U.S. law and subject to DOJ enforcement, even if the official is located abroad.

Extortion, Facilitation, and the Compliance Trap

One of the most dangerous compliance traps in Venezuela has always been the mislabeling of extortion payments. Under the FCPA, facilitation payments occupy a narrow and controversial exception. Extortion payments, however, were never facilitation payments. They were survival payments. FEPA eliminates any lingering ambiguity. Extortion payments involving threats to life, liberty, or health are now clearly illegal, not merely discouraged. This forces compliance programs to confront uncomfortable operational realities.

Policies must explicitly distinguish facilitation from extortion. Employees must be trained that the company will support them if they are threatened, but that any such payment must be immediately documented, accurately recorded, and escalated. Book and record accuracy becomes critical. Mischaracterizing extortion as a routine expense is now a standalone risk under FEPA, not merely an FCPA accounting issue.

FEPA as a Deterrent Tool, Not Just an Enforcement Tool

One of the most overlooked aspects of FEPA is its potential deterrent effect. The statute introduces the possibility of DOJ investigations targeting foreign officials, including public naming and reporting requirements. For officials who interact with U.S. companies, this creates reputational and diplomatic risk that did not previously exist. In Venezuela, where many officials rely on international travel, financial access, and political legitimacy, even the threat of U.S. scrutiny can matter. FEPA does not require immediate extradition to have an impact. The mere existence of a credible enforcement pathway can alter behavior at the margins.

For compliance officers, this means FEPA can be used proactively. Risk assessments should explicitly incorporate FEPA exposure. Third-party due diligence should assess patterns of extortion, not just a history of bribery. Contractual language should reference the reporting obligations for extortion. Training should include scenario-based exercises where employees practice refusing demands and escalating threats.

The Limits of FEPA in Venezuela

None of this should be overstated. FEPA will not cleanse Venezuela of corruption. Extradition of Venezuelan officials is unlikely. Local enforcement cooperation will be minimal. Many officials operate with de facto immunity. But compliance effectiveness has never depended on perfect enforcement. It depends on shifting incentives, setting expectations, and protecting employees. FEPA strengthens all three. From a DOJ perspective, FEPA also changes cooperation dynamics. Companies that proactively document extortion demands, preserve evidence, and report credible threats may be viewed very differently from companies that quietly pay and rationalize. In a Venezuela reentry scenario, that distinction could be outcome-determinative.

What Compliance Officers Should Do Now

For companies considering Venezuela, FEPA must be embedded into program design from day one. This includes updating anti-corruption policies, revising travel and security protocols, enhancing incident reporting mechanisms, and briefing boards on the new enforcement landscape. Most importantly, compliance officers must be realistic. FEPA does not eliminate the need for robust internal controls. It heightens the consequences of getting them wrong. Venezuela will remain a high-risk jurisdiction regardless of statutory innovation.

Five Key Takeaways for the Compliance Professional

1. FEPA Changes the Risk Conversation, Not Just the Law

FEPA fundamentally alters how compliance officers should frame corruption risk in high-extortion jurisdictions like Venezuela. It is no longer only about preventing improper employee payments. It is now about recognizing, documenting, and escalating illegal demands by foreign officials. This allows compliance to move from a defensive posture to a principled refusal backed by U.S. law.

2. Extortion Must Be Explicitly Addressed in Policies and Training

Companies can no longer afford vague language that blurs the distinction between facilitation payments and extortion. Compliance programs must clearly define extortion as illegal, explain how it differs from facilitation payments, and provide step-by-step guidance for employees facing threats to health, safety, or liberty. Scenario-based training is no longer optional in Venezuela risk operations.

3. Books and Records Exposure Has Increased Under FEPA

Accurate documentation is now a frontline compliance control. Any payment made under duress must be recorded precisely and transparently. Mischaracterizing extortion payments as routine expenses or facilitation payments creates a separate and serious compliance failure. Accounting controls, escalation protocols, and audit reviews must be aligned accordingly.

4. FEPA Should Be Embedded in Risk Assessments and Third-Party Due Diligence

Venezuela reentry assessments should explicitly evaluate extortion risk, not merely bribery history. Third parties, customs brokers, security providers, and logistics partners are often the point of pressure. FEPA requires compliance officers to assess whether business partners operate in ways that expose the company to extortion demands and reporting failures.

5. FEPA Strengthens Compliance’s Role as a Strategic Advisor

FEPA gives compliance professionals a credible legal framework to advise management and the board on when and how business can be conducted safely. It reinforces the message that walking away from certain transactions is not risk aversion but risk management. In Venezuela, FEPA can help compliance professionals draw clearer red lines and protect both the company and its people.

The Bottom Line

So, could FEPA be used to prevent bribery and corruption for U.S. companies returning to Venezuela? Not entirely. But it can materially reduce risk, empower employees, and change how companies engage with corrupt systems. For the first time, U.S. law squarely acknowledges what compliance professionals have always known: bribery often begins with a demand. By criminalizing that demand, FEPA gives companies a stronger legal and ethical foundation to say no.

In a country like Venezuela, that may be the most important compliance tool of all.

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2 Gurus Talk Compliance

2 Gurus Talk Compliance – The Corruption is Free Speech Edition

What happens when two top compliance commentators get together? They talk compliance, of course. Join Tom Fox and Kristy Grant-Hart in 2 Gurus Talk Compliance as they discuss the latest compliance issues in this week’s episode!

Stories This Week Include:

  • FirstEnergy defendants in Ohio say corruption is simply ‘free speech’. (Ohio Capitol Journal)
  • British national sentenced to 6 years in jail over Wirecard fraud. (FT)
  • Corruption led to the Hong Kong fire disaster. (Bloomberg)
  • Translations as a compliance issue. (BBN Times)
  • Will Trump suspend the FCPA in Venezuela? (FCPA Compliance and Ethics Report)
  • X Faces U.K. Probe Over Grok’s Sexualized Images (WSJ)
  • Six Compliance Events to Watch in 2026 (Radical Compliance)
  • Why Are Your Policies Yelling at Me? It’s Time to Rethink Tone in Rules (CCI)
  • 10 must-know workforce trends for 2026 (Dayforce)
  • Florida man arrested after trying to flee deputies on riding lawn mower (NBC News)

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FCPA Compliance Report

FCPA Compliance Report: Going into Venezuela, Navigating the Corruption Risks, a Conversation with Matt Ellis

Welcome to the award-winning FCPA Compliance Report, the longest-running podcast in compliance. We take a short break from our 2-part series with Mike Volkov to review the issues arising from the Trump Administration’s invasion of Venezuela. Matt Ellis joins Tom Fox to look at what all this means for companies looking to do business in Venezuela.

They discuss the complex landscape of doing business in Venezuela, focusing on the rampant corruption, security challenges, and the implications of U.S. sanctions. They explore the risks associated with engaging with the national oil company, PdVSA, and the broader implications for U.S. companies considering re-entry into the Venezuelan market. The conversation also touches on Cuba’s role, international organizations, and the potential for infrastructure rebuilding in Venezuela, emphasizing the need for long-term strategies and careful risk management.

Key highlights:

  • Navigating Corruption and Security Risks in Business
  • Banking and Money Laundering Concerns
  • Cuba’s Role and Sanctions Implications
  • International Organizations and Corruption Regulations
  • Infrastructure Rebuilding in Venezuela
  • Long-term Strategies for Companies

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Miller & Chevalier LLC

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