Why Disney World is America’s greatest law enforcement tool

Many foreign fugitives have a lot of money, and they enjoy taking their families on vacations. Former Volkswagen executive Oliver Schmidt, for example. One of the architects of the “Dieselgate” scandal, Schmidt was indicted under seal, then arrested at Miami International Airport after taking his family on vacation to Florida in 2017. He was held without bail as an obvious flight risk.

My New Year’s prediction is that Disney World and Miami’s airport are about to get lots of extra federal law enforcement work. That’s because the Foreign Extortion Prevention Act (FEPA) was signed into law on December 22, 2023. Buried inside the massive defense spending bill, FEPA finally criminalizes the demand or receipt of bribes by foreign officials from public corporations or U.S. domestic concerns, as well as those indirectly acting on their behalf.

The Foreign Corrupt Practices Act (FCPA), enacted in 1977, made it illegal for public corporations or domestic concerns to offer or give a bribe, as well as to fail to properly account for bribes in corporate books and records. In the vernacular, this meant that federal law made bribery a crime on the “supply side” only.

Until now, Congress had never made it illegal on the “demand side” for a foreign government official to demand bribes to begin with, a gaping loophole. For closing this loophole on a bipartisan basis, Congress deserves our sincere thanks.

While little has been written about the new law, it’s probably the most important U.S. anti-bribery effort since the FCPA itself became law. The law amends the federal domestic bribery statute to add a new subsection punishing foreign government officials for demanding or receiving a bribe. The law is quite specific in that it is intended to be extraterritorial in nature. This means that demanding or receiving a bribe, even if done somewhere else, is now a crime punishable in the United States.

There are many reasons why this new law is good for American business.

First, corrupt foreign officials, and those working at their behest, create an unfair and distorted market for U.S. business. We expect American businesses to play by the rules, which already banned the giving of bribes through the FCPA. Yet competing businesses elsewhere often were able to offer such bribes, arguably putting U.S. business at a disadvantage. By punishing foreign officials, we can finally add a measure of deterrence to the “demand side” aspect of this behavior.

Second, as noted by Transparency International, foreign commercial bribery is a major source of the corruption of foreign governments, undermining the rule of law, democracy and human rights. The new law will reduce the incentives and opportunities for foreign corruption while supporting efforts at reform in those countries.

Third, by passing FEPA into law, Congress brought the United States into compliance with its international obligations. The U.S. is a member of the Organisation for Economic Co-operation and Development’s Anti-Bribery Convention. The OECD has long noted that criminalization and prosecution of “demand side” bribery was key to fighting corruption. Long prior to FEPA’s enactment, many other nations already had “demand side” criminal provisions on the books, including the UK, France and Poland. It is odd that America wasn’t at the forefront of making “demand side” bribery illegal first, but we join a growing international movement that deserves our support.

Readers may ask how this new law can be enforced in the U.S. if the foreign government official is overseas. The answer: Disney World. It boils down to the secret indictment process and the attractiveness of visiting the United States — or of visiting any number of nations that have extradition treaties with the U.S.

As of 2024, foreign officials are now subject to indictment in the United States for demanding or receiving a bribe. The indictment can remain sealed until the official is apprehended. That official is now subject to arrest when he or she enters America — or any of those more than 110 nations that have an extradition treaty with us. As the foreign government official does not yet know of the charges, any seemingly innocent visit here — such as taking one’s children to Disney World — will now result in arrest, just as happened to VW’s Oliver Schmidt.

If you doubt the power of Disney World, remember this: It can be a long prison sentence indeed for a foreign suspect to decide to serve a self-imposed imprisonment by never being able to leave his or her own nation for fear of arrest.

Dr. David P. Weber, CFE is a Professor of the Practice at the Perdue School of Business, Salisbury University, where he helps lead SU’s Fraud and Forensic Accounting Certificate Program. Prior to academia, he was the Chief Investigator for the U.S. Securities and Exchange Commission, and the Chief of Enforcement Unit I for the Federal Deposit Insurance Corporation.