Law School Case Brief
SEC v. Jackson - 908 F. Supp. 2d 834 (S.D. Tex. 2012)
Nothing in the legislative history of the Foreign Corrupt Practices Act (FCPA) suggests that Congress intended to limit the application of 15 U.S.C.S. § 78dd-1 to those cases where the government could show that a defendant knew, either by name or job description, precisely which foreign officials would be receiving the illicit payments he had authorized. The United States Court of Appeals for the Fifth Circuit has recognized that, subject to the narrow exception for facilitation payments, Congress intended, with the FCPA, to cast an otherwise wide net over foreign bribery. Indeed, in explaining the requirement that a defendant act knowingly, Congress specified that the statute is intended to cover both prohibited actions that are taken with actual knowledge of intended results as well as other actions that, while falling short of what the law terms positive knowledge, nevertheless evidence a conscious disregard or deliberate ignorance of known circumstances that should reasonably alert one to the high probability of violations of the FCPA.
Noble Corporation (Noble) was an international provider of offshore drilling services and equipment. Noble's wholly owned subsidiary, Noble Drilling (Nigeria) Ltd. (Noble-Nigeria), operate in Nigeria. Noble-Nigeria had up to seven drilling rigs that operated offshore in Nigeria. To operate drilling rigs offshore in Nigeria, the Nigerian laws require the owner of the rig to either pay permanent import duties or obtain a Temporary Import Permit (TIP). TIPs allowed drilling rigs to operate in Nigerian waters without payment of permanent import duties. The Securities and Exchange Commission (SEC), alleging that Noble and Noble-Nigeria authorized a customs agent to pay bribes to Nigerian government to obtain false documentation, filed an enforcement action against former and current officers of Noble. According to the SEC, Noble and Noble-Nigeria, through a customs agent, paid bribes to Nigerian government officials for TIP extensions. In the present action, SEC charged the officers with multiple violations of the Foreign Corrupt Practices Act (FCPA), and other federal securities laws in connection with actions they allegedly took to obtain TIPs and TIP extensions in order to avoid paying permanent import duties. The officers filed a motion to dismiss, arguing that the FCPA required a plaintiff to allege the identity of the foreign official whose authority a defendant sought to misuse.
Under the FCPA, was it necessary to allege the identity of the foreign official whose authority a defendant sought to misuse?
The Court held that the language of FCPA did not require that the identity of the foreign official involved be pled with specificity. Indeed, the terms of the FCPA make it unlawful corruptly to authorize payments to any person, knowing that any portion of those payments would be offered to any foreign official. Furthermore, 15 U.S.C. § 78dd-1(a)(3)(A)(iii) provided that the purpose element can be satisfied by factual allegations that a payment was made with the purpose that some foreign official would be paid money to secure some improper advantage, which also did not appear to require allegations about that individual's job responsibilities. According to the Court, nothing in the legislative history of the FCPA suggested that Congress intended to limit the application of 15 U.S.C. § 78dd-1 to those cases where the government could show that a defendant knew, either by name or job description, precisely which foreign officials would be receiving the illicit payments he had authorized.
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