Sovereign Wealth Funds and the FCPA – Are They Really “Foreign Officials?”

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2 Responses

  1. Jim Walker says:

    The Noriega and Carson decisions essentiallly provided a framework to support the expansive interpretation that the DOJ and SEC were already employing of the term “foreign official.” I suspect not only that it is unlikely that there will be meaningful court review of the interpretation of “foreign official” in the near future, but also that the Noriega and Carson decisions will serve to embolden the DOJ and SEC in their efforts to expand the reach of the FCPA.

  2. Howard says:

    Add another layer of complexity. I think there’s really no question that a sovereign wealth fund falls under the FCPA. It’s a government instrumentality—even a plain reading of the statute tells you that. If you bribe a SWF to get them to invest in your company, can you imagine a successful defense centered around the proposition that it’s not?

    The tougher question, in my opinion, is whether the companies that the SWF invests in are transformed into government instrumentalities under the theory that SOEs are instrumentalities.

    For a small, passive investment, the Carson/Noriega test I think says no. But what if the SWF gets a majority of the company? What if they get Board member appointments? What if they start controlling pay and bonuses? There’s an OFAC interpretation, remember, that says having even 1 board member conveys a degree of control.

    Just figuring out the ownership structure is often a daunting task. This would open up a whole new area of issues.