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United States v. Kay - 359 F.3d 738 (5th Cir. 2004)

Rule:

The Foreign Corrupt Practices Act (FCPA) criminalizes only those payments that are intended to (1) influence a foreign official to act or make a decision in his official capacity, or (2) induce such an official to perform or refrain from performing some act in violation of his duty, or (3) secure some wrongful advantage to the payor. And even then, the FCPA criminalizes these kinds of payments only if the result they are intended to produce their quid pro quo will assist (or is intended to assist) the payor in efforts to get or keep some business for or with any person.

Facts:

 Plaintiff United States of America brought a Superseding Indictment (Indictment) that charged Defendants David Kay and Douglas Murphy with the bribery of foreign officials in violation of the Foreign Corrupt Practices Act (FCPA).  The defendants filed a motion to dismiss the charges arguing that the Indictment failed to state an offense against them.  More specifically, the dispute was whether, if proved beyond a reasonable doubt, the conduct that the Indictment ascribed to defendants in connection with the alleged bribery of Haitian officials to understate customs duties and sales taxes on rice shipped to Haiti to assist American Rice, Inc. in obtaining or retaining business was sufficient to constitute an offense under the FCPA. The district court dismissed the Indictment, after concluding that, as a matter of law, the Indictment alleging illicit payments to foreign officials for the purpose of avoiding substantial portions of customs duties and sales taxes to obtain or retain business are not the kind of bribes that the FCPA criminalizes. The United States appealed.

Issue:

If proved beyond reasonable doubt, was the conduct that the Indictment ascribed to defendants in connection with the alleged bribery of Haitian officials to understate customs duties and sales taxes on rice shipped to Haiti to assist defendants' company in obtaining or retaining business sufficient to constitute an offense under the FCPA?

Answer:

Yes

Conclusion:

The Court of Appeals for the Fifth Circuit held that such bribes could (but do not necessarily) come within the ambit of the statute. Concluding in the end that the Indictment in this case is sufficient to state an offense under the FCPA, the Court remanded for further proceedings. Nevertheless, on remand the defendants may choose to submit a motion asking the district court to compel the United States to allege more specific facts regarding the intent element of an FCPA crime that requires the defendant to intend for the foreign official's anticipated conduct in consideration of a bribe (hereafter, the "quid pro quo") to produce an anticipated result. The diminution of duties and taxes that would assist (or is meant to assist) in obtaining or retaining business (hereafter, the "business nexus element"). If so, the trial court will need to decide whether (1) merely quoting or paraphrasing the statute as to that element (as was done here) is sufficient, or (2) the government must allege additional facts as to just what business was sought to be obtained or retained in Haiti and just how the intended quid pro quo was meant to assist in obtaining or retaining such business. We therefore reverse the district court's dismissal of the indictment and remand for further consistent proceedings.

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