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FCPA Compliance Hinges on the Tricky Definition of 'Foreign Official'
When it comes to the Foreign Corrupt Practices Acts prohibition on bribing a foreign official, just who, pray tell, does the U.S. government consider a foreign official? Its a question thats seldom come before the courts, but now, for the first time, is being considered at the appellate levelprompting the U.S. Department of Justice to weigh in on the definition through a response brief filed Tuesday.
Prosecutors had successfully argued that Haiti Teleco was an "instrumentality" of the Haitian government, thereby making its employees "foreign officials." Joel Esquenazi, the former president of Terra, was given a 15-year sentence by Miami federal district judge Jose Martinezthe longest sentence in FCPA history, while Carlos Rodriguez, Terra's former vice-president, got seven years.
In May, both Esquenazi and Rodriquez filed appellate briefs, arguing that the Justice Departments application of instrumentality was too broad, and that employees of certain state-owned enterprises shouldnt be considered foreign officials under the FCPA.
The district courts instructions on the meaning of instrumentality of a foreign government were correct. The instructions stated that an instrumentality must perform a governmental function and provided a nonexhaustive list of relevant factors for the jury to consider in deciding whether Teleco was an instrumentality of the government of Haiti. Courts have used similar tests to determine whether an entity is an instrumentality in other contexts and relied on many of the same factors.
Compliance Weeks breakdown of the brief extracts some nice takeaways on how Justice views an instrumentality, including these factors:
Clearly, though, its an issue Koehler believes deserves its day in court. Many people view the foreign official issue as being already decided, because three trial court judges at the motion-to-dismiss stage have issued rulings, he says, adding that, you now have a situation where Esquenazi and Rodriquez, for the first time in the 35 year history of the FCPA, are bringing this issue to the attention of a circuit court.