Meaning of "Foreign Official" Under the FCPA

Meaning of "Foreign Official" Under the FCPA

Excerpt:

Before the government's recent increased focus on prosecuting individuals, there were few litigated cases involving the Foreign Corrupt Practices Act ("FCPA") and, accordingly, few judicial decisions interpreting the statute. In recent years, however, there has been a significant increase in the number of defendants (including some corporate defendants) challenging FCPA charges at trial or otherwise litigating FCPA issues. This creates risks both to prosecutors-whose interpretations of the FCPA until now had been largely unchallenged in settlements-and to defendants-who face the uncertainties that come with litigation. Recent activity has delivered victories and setbacks for both groups.

In three recent cases, defendants prosecuted under the FCPA challenged their indictments using a similar argument-employees of state-owned entities do not fall within the definition of "foreign official" under the FCPA. To violate the FCPA, a corrupt payment must be directed to a "foreign official." The FCPA defines "foreign official" as:

any officer or employee of a foreign government or any department, agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality, or for or on behalf of any such public international organization.

The FCPA does not define "instrumentality," and, historically, there has been little guidance on which state-owned or -controlled entities qualify as FCPA instrumentalities and therefore which of their officials and employees would be deemed foreign officials under the statute. In many investigations and in a number of settlements and charging documents, the government has broadly interpreted the term to include state-owned entities and therefore has applied the FCPA to cover bribery of officials and employees of such companies. Until recently, enforcement officials' interpretation that such officials and employees were "foreign officials" within the meaning of the FCPA went unchallenged.

In 2011, US district courts in two FCPA prosecutions issued significant opinions on the meaning of "foreign official." Declining to adopt a categorical rule, both courts held that state-owned companies may qualify as governmental instrumentalities, depending on a fact-specific analysis of multiple, non-exclusive, non-dispositive factors. In January 2012, a third district court also rejected a challenge based on the meaning of the term "foreign official," but did so without a written opinion. Judges have also addressed the issue in jury instructions. [footnotes omitted]

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