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The Courts and the FCPA

The FCPA means what it says and says what it means.  At least according to the Justice Department.  Much of the guidance surrounding the FCPA derives from settlements reached by the Justice Department and companies.  Court review of these settlements has been limited.  To some, the courts have abdicated their role.  Practitioners read through the settlement filings to try and figure out where the Justice Department is drawing lines.  That is not a good way to enforce a statute, especially one where businesses want to comply but just need to know the rules and the safe harbors.  That is why businesses welcome the Justice  Department’s recent announcement that it will issue guidance on the FCPA early next year.

This past year the courts have had a greater opportunity to interpret the FCPA.  Numerous individuals have decided to go to trial rather than plead guilty and mount vigorous defenses.  As a result, there have been more opportunities for the courts to decipher the reach of the FCPA. 

1.  “Foreign Official” — two important cases – Carson and Noriega – have construed the term “instrumentality thereof” as part of the definition of “foreign official.”  These decisions failed to clarify the definition of a foreign official when applied to state-owned or controlled enterprises.

In the Carson case, the government has filed proposed jury instructions acknowledging that the government must prove that the defendants knew or had reason to believe that the officials they were bribing were employed by companies that were state-owned enterprises.  Some have claimed that this is significant concession by the government.  I do not agree.  In fact, it logically follows from the statute that the government has to show that a defendant knew or had reason to know that a government official was the intended recipient of the bribe.

2.  Jurisdiction – by definition, the jurisdictional reach of the FCPA is broad.   The Justice Department has aggressively interpreted the reach of the statute as it applies to anyone taking an act in furtherance of a bribe “while in the territory of the United States.”  Judge Leon, in the first Shot Show sting trial rejected the government’s argument and dismissed a charge against a non-US citizen defendant where the only act occurring in the United States territory as the sending of a facsimile from overseas to the United States. 

3. Travel Act – The Justice Department has used the Travel Act to fill in the gap in the FCPA statute to cover bribery schemes which extend to bribery of private entities.  While the Justice Department has never based an entire prosecution on such a theory (not should it), courts have upheld the extraterritorial application of the Travel Act to cover foreign private bribery.  It is not clear how courts would interpret the Travel Act if an entire case was based on that theory.

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