The government has brought lots of anti-bribery cases under the Foreign Corrupt Practices Act, but there are still some crucial aspects of the law that remain unsettled. For instance, what constitutes a “foreign official” under the FCPA? In a couple of prosecutions, defense attorneys have tried unsuccessfully to limit the definition to exclude employees at state-run enterprises. In the Lindsey Manufacturing prosecution, for example, Los Angeles federal district judge Howard Matz ruled in April 2011 that state-owned companies could be instrumentalities of the government. Santa Ana, Calif. federal district judge James Selna made a similar ruling against former executives of Control Components Inc. in May 2011, although he added that a lot depended on the facts.

The issue has never been heard on appeal, but that’s about to change. On Wednesday two former executives of Terra Telecommunications who were convicted last August of bribing officials at Haiti Teleco, a state-owned telecom company in Haiti, raised the question in briefs filed with the U.S. Court of Appeals for the Eleventh Circuit. (hat tip: The FCPA Professor.)

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 Martinez–the longest sentence in FCPA history, while Carlos Rodriguez, Terra’s former vice-president, got seven years.

In his appellate brief, Esquenazi and his lawyers at Perkins Coie maintain that an “instrumentality” of the government must be construed to exclude state-owned businesses that do not perform governmental functions, as well as their employees. The FCPA deals with foreign governments only, and treating employees of all state-owned businesses as foreign officials “would lead to absurd results,” they maintain.

Rodriguez and his lawyers at Foley & Lardner argue in their brief that the statute is ambiguous, and cite legislative history for the proposition that the act doesn’t support an expansive interpretation of “instrumentality.” Citing Michael Koehler of the FCPA Professor blog, Rodriguez argues that Congress intended to limit the scope of the statute to “traditional government officials, not employees of state-owned enterprises.” (Koehler is providing advice to both defendants’ legal teams.)

Complicating matters is a letter turned over by prosecutors after the verdict. The letter was sent by Haiti’s Prime Minister, Jean Max Bellerive, maintaining that Haiti Teleco has always been a private company and did not file the necessary paperwork to become a state enterprise. According to both briefs, the letter was dated ten days before the verdict. Both convicted officials asked Martinez for a new trial or a hearing to determine whether the government knew about the letter before the verdict and breached its Brady obligations, but were turned down. The government maintains it didn’t know about the letter until the verdict was in.

Koehler told The Litigation Daily that it’s possible that the appellate court could find there was a Brady violation without deciding the definition of a foreign official. Still, he expects the court to clarify this issue. “Given the importance of the issue, since it’s a case of first impression, I think the appellate court would rule on the foreign officials issue,” said Koehler.