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The “Foreign Officials” Of 2018

shadows

A “foreign official.”

Without one, there can be no FCPA anti-bribery violation (civil or criminal).  Who were the alleged “foreign officials” of 2018?

This post highlights the alleged “foreign officials” from 2018 corporate DOJ and SEC FCPA enforcement actions.

There were 17 FCPA core corporate enforcement actions in 2018. Of the 17 enforcement actions 9 (53%) involved, in whole or in part, employees of alleged state-owned or state-controlled entities (“SOEs) with an additional 2 actions (12%) involving, in whole or in part, individuals associated with foreign health care systems.

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A Few Observations On The Anticorruption Chapter Of The United States – Mexico – Canada Agreement

USMCA

Recently, the Office of the U.S. Trade Representative released the text of the United States – Mexico – Canada agreement (USMCA). The extensive agreement has a specific chapter (chapter 27) titled anticorruption and this post offers a few observations regarding the agreement compared to the Foreign Corrupt Practices Act specifically as it relates to “foreign official” issues and the express facilitation payments exception.

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Judge Finds The Term Instrumentality “Unclear” And Narrowly Construes “Foreign Official” Element Contrary To The DOJ’s Position

Judicial Decision

There is little substantive Foreign Corrupt Practices Act case law, even fewer judicial decisions of precedent. Nevertheless, in the aftermath of FCPA enforcement actions or merely FCPA scrutiny, plaintiffs counsel (no doubt representing shareholders on a contingent fee basis) frequently file securities fraud class actions hoping some get past the motion to dismiss stage.

In deciding motions to dismiss, federal trial court judges occasionally directly comment upon FCPA issues and this post highlights a recent example in a matter involving Rio Tinto. As discussed below, a federal court judge found the term “instrumentality” in the FCPA’s “foreign official” definition “unclear” and otherwise narrowly construed the term in a way contrary to the DOJ’s current position.

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Congress Knows How To Draft Legislation That Expressly Captures SOEs

Capital Hill

Recently, H.R. 5105 titled “Better Utilization of Investments Leading to Development Act” passed the House of Representatives. The bill has little to do with the Foreign Corrupt Practices Act, however the bill expressly addresses (and defines) state-owned enterprises (SOEs) and once again demonstrates that Congress is fully capable of enacting legislative that expressly captures SOEs (something Congress failed to do in the FCPA).

As highlighted in numerous prior posts and my 2014 amicus brief urging the Supreme Court to hear the Esquenazi “foreign official” challenge, if Congress wanted to include SOE employees in the FCPA’s statutory definition of “foreign official,” it easily could have done so — when enacting the FCPA in 1977, when amending the FCPA in 1998, or on any other occasion.

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Issues To Consider From The Legg Mason Enforcement Action

Issues

This previous post went in-depth into the DOJ’s recent Foreign Corrupt Practices Act enforcement action against Legg Mason. This post continues the analysis by highlighting additional issues to consider.

SEC Enforcement Action Is Forthcoming

Given Legg Mason’s recent disclosure (see here for the prior post), it was a bit of a surprise that this week’s enforcement action included only a DOJ component. FCPA enforcement actions against issuers that involve a DOJ and SEC component are almost always announced on the same day.

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