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Checking In On Seng’s Appeal

Seng2

As highlighted in this prior post, in July 2017 (after a long trial) a federal jury convicted Ng Lap Seng of two counts of violating the FCPA, one count of paying bribes and gratuities, one count of money laundering and two counts of conspiracy “for his role in a scheme to bribe United Nations ambassadors to obtain support to build a conference center in Macau that would host, among other events, the annual United Nations Global South-South Development Expo.”

This prior post previewed Seng’s appeal and this prior post highlighted Seng’s opening brief. The FCPA issues on appeal concern the FCPA’s corrupt intent and obtain or retain business elements.

Regarding corrupt intent, Seng’s brief states:

“[T]he government failed to meet its burden of proof on the central requirement under both §666 and the FCPA that the payments in question were paid “corruptly.” As this Court has squarely held, that term requires the government to prove that payments were made to induce a violation of a duty owed to the government or the public at large. Yet the government presented no evidence whatsoever of what duties (if any) a foreign ambassador to the UN owes either to the UN or to the global public. That failure was especially problematic in the distinct international context of this case, as an American jury cannot be expected to have any common understanding of the duties a foreign public official might owe to an international body like the UN. The government’s attempt to simply assume the existence and scope of those duties would eliminate the “corruptly” element from the statute altogether.”

Regarding the obtain or retain business element, Seng’s brief states:

“[T]he FCPA does not criminalize all payments to foreign officials; it applies only to payments intended to obtain or retain business. That requirement was not met under the unusual circumstances of this case: an alleged bribery scheme seeking support for a project to build the UNOSSC a convention center for free. The government’s attempt to link that alleged scheme to some future business, by claiming that the defendant intended to profit from hypothetical future development around the convention center, is far too tenuous to satisfy the FCPA’s “obtaining or retaining business” requirement.”

[…]

The FCPA charges also fail because the government did not prove, and the jury was not required to find, that any payments were made to obtain or retain any business, as the FCPA requires. The FCPA is not a global good-governance act prohibiting all payments to foreign officials; it prohibits only bribes paid for the purpose of “obtaining or retaining business for or with, or directing business to, any person.” That limitation was deliberate. In enacting the FCPA, Congress specifically chose to criminalize only “commercial bribery” of foreign officials, and rejected a competing House proposal that contained no “business nexus” element.  And by its plain terms, the statute requires payments to be made not just for advancing the payer’s broader financial interests, but for the specific purpose of “obtaining or retaining business for or with, or directing business to, any person.”

That statutory limit went by the wayside here. At trial, the government never sought to prove that the purported bribes were intended to obtain any paying government contract or other business from the UN. To the contrary, the government did not dispute—as the pro bono agreement expressly states—that Sun Kian Ip Group planned to build the proposed convention center “at no cost to the UNOSSC” and to provide it for the UNOSSC to use “without any charge.” The government likewise did not claim that the payments at issue were made to secure any license, permit, or other regulatory action that Ng or his companies would need to build the convention center in Macau. Nor did the government even allege the kind of indirect regulatory assistance to the Macau project that the Fifth Circuit considered in United States v. Kay, which reached the highly debatable conclusion that bribes made in exchange for reduced taxes and customs duties could fall within the scope of the FCPA if the defendant sought those tax savings “to assist in obtaining or retaining business.”

Instead, the government claimed that the “business” Ng sought to “obtain or receive” was not the conference center itself, but the “business” of the third parties that he hoped would patronize the as-yet unbuilt shops, restaurants, and apartments that he planned to build around the center. Paying someone to support a non-commercial enterprise, in hopes that its existence might lead to undifferentiated “business” with unidentified third parties at some unknown point in the future, cannot plausibly be understood as paying someone for the purpose of “obtaining or retaining business for or with, or directing business to, any person.” Indeed, if such an exceedingly tangential connection to business were enough to satisfy the statute, then the “obtaining or retaining business” element would be a nullity, as the government could always claim that any bribe had some conceivable relationship to improving the bribe-payer’s economic position.

This case proves the point. As the evidence at trial showed, building the Macau convention center would have required a substantial financial investment, including the cost of reclaiming much of the land on which the center would be built. The government presented no evidence whatsoever of any revenue forecast or other financial analysis showing that Ng had any realistic hope of recouping those costs through any hypothetical future business at the undeveloped properties around the proposed center, or that Ng ever even undertook any such analysis. It is difficult to imagine that a “sophisticated” and “incredibly successful … international businessman,” as the government described Ng could realistically have considered this project a business venture rather than a philanthropic one when the basic premise of the project was to build the UNOSSC a high-end conference center for free. If a jury could infer here that the efforts to obtain support for the Macau project had “a sufficient nexus to garnering business … or to maintaining or increasing business operations,” then that inference could be drawn in any case.

Because any connection between the purported bribes and any hypothetical future business was too tenuous to satisfy the FCPA, Ng’s conviction on those counts must be reversed. But even if such a remote connection to business could suffice, Ng’s conviction on these counts would still have to be vacated because the jury was never instructed that any nexus to identifiable commercial business was required. At trial, the defense proposed an instruction to inform the jury that “business” in the FCPA means “transactions of a commercial nature, for profit or financial gain.” As defense counsel explained in the charge conference, that instruction was “absolutely critical” to ensure the jury understood that the FCPA was limited to commercial bribery. The court rejected that instruction, and gave the jury no definition of “business” in the FCPA context leaving the jury with no way to know whether “business” referred to commercial business or more broadly to any transaction.

That failure to define “business” raised a substantial risk of confusion, as the jury may well have believed that the conference center itself qualified as “business,” even though Ng was not trying to get the UN to pay for that pro bono project or to help him get any third party to do so. Moreover, even the government conceded after trial that Ng may have had “patriotic and/or philanthropic motivations” for supporting the Macau center, further undermining any claim that he was trying to obtain commercial business. By failing to inform the jury that the FCPA requires the intent to obtain or retain commercial business, the instructions allowed the government to invite the jury to convict for something that the FCPA does not criminalize.”

In September 2018, the DOJ filed its response brief. As to corrupt intent, the DOJ states:

“With respect to the FCPA, the District Court instructed:

A person acts corruptly if he or she acts voluntarily and intentionally, with a bad purpose or evil motive of accomplishing either an unlawful result or a lawful result by some unlawful method or means. The term “corruptly” is intended to connote that the offer, payment, and promise was intended to influence the foreign official to misuse his or her official position.

[…]

With respect to the FCPA, this Court has held “that the word ‘corruptly’ in the FCPA signifies, in addition to the element of ‘general intent’ present in most criminal statutes, a bad or wrongful purpose and an intent to influence a foreign official to misuse his official position.” Stichting Ter Behartiging Van de Belangen. Van Oudaandeelhouders v. Schreiber, 327 F.3d 173, 183 (2d Cir. 2003) (footnote omitted). That is what the District Court instructed.

[…]

Ng asserts that his proposed addition—“breach an official duty”—is necessary to avoid “serious vagueness problems”, but he does not cite any case holding that the settled definition of “corruptly” is unconstitutionally vague.

[…]

In any event, assuming the District Court erred in not adding “breach of official duty,” it is apparent that that addition would not have made any difference.”

As to obtain or retain business, the DOJ states:

“The FCPA prohibits offers or payments made with the purpose of “obtaining or retaining business for or with, or directing business to, any person.” 15 U.S.C. §§ 78dd-2(a)(1), 78dd-3(a)(1). The District Court instructed the jury:

The seventh element that the government must prove beyond a reasonable doubt is that the payment was made to assist [in] obtaining or retaining business for, or with, or directing business to, any person. It is not necessary that the government prove that anyone actually obtained or retained any business whatsoever as a result of an unlawful offer, payment, promise, or gift, only that the defendant intended to assist in obtaining or retaining business for or with any person. Moreover, this element is not limited to obtaining or renewal of contracts or other business but also includes the execution or performance of contracts or the carrying out of existing business.

Ng contends this instruction was materially erroneous because the District Court did not insert the word “commercial” before “business.” Ng does not cite any FCPA case in which such an insertion was adopted, and the Government is aware of none. As the District Court explained when it rejected Ng’s request, “the instruction is clear.” A lay juror does not need to be told what “business” means. See United States v. Banki, 733 F. Supp. 2d 404, 417 (S.D.N.Y. 2010) (explaining, with respect to “money transmitting business”: “A business is not a complex or legal concept. No juror needs a judge’s charge of law to comprehend that a ‘business’ is an ongoing enterprise carried out for financial gain; there is no other interpretation of the term ‘business’ the jury could have possibly applied.”), vacated, 685 F.3d 99, 113 (2d Cir. 2012) (stating “we largely agree with the district court that the term ‘business’ is self-explanatory,” but holding the instruction was flawed in other ways). That is particularly true here, when the District Court also instructed (using the words proposed by Ng), that business includes “the execution or performance of contracts or the carrying out of existing business.” In the context of the instruction as a whole, no reasonable juror could have thought that “business” meant anything other than commercial business.”

In October 2018, Seng filed a reply brief which argues in summary fashion:

“The government’s opposition only confirms that this prosecution is a wholly unprecedented and wholly unjustifiable extension of the federal anti-corruption laws. The government has never before sought to charge a foreign national under 18 U.S.C. §666 and the Foreign Corrupt Practices Act (FCPA) for alleged bribery of foreign ambassadors to the United Nations—and certainly not when the purported bribery did not violate any then-extant UN rules or regulations and when its goal was to benefit the UN by building a new convention center for free. The government’s novel attempt to punish this conduct under §666 and the FCPA stretches those statutes past the breaking point and violates both governing Supreme Court precedent and due process.”

[…]

The §666 and FCPA convictions failed to meet the “corruptly” requirement. The government never proved, and the jury was never required to find, that Ng intended either Ashe or Lorenzo to breach their official duties; indeed, the government did not present any evidence whatsoever as to what those official duties might be. In addition, the FCPA convictions do not comport with the statute’s “obtaining or retaining business” element; the government’s attempt to connect UN approval for the pro bono convention center to speculative commercial benefits that might someday follow is too attenuated to provide the business nexus the FCPA requires, and in any event the jury instructions failed to convey that requirement. Because these flaws together undermine all the counts of conviction, the judgment must be reversed or vacated.”

As to corrupt intent, the brief states:

“The §666 and the FCPA convictions are infected with yet another flaw: The government failed to prove that Ng acted “corruptly,” i.e., that he intended to induce a “violation of some duty owed to the government or the public in general.” United States v. Rooney, 37 F.3d 847, 852-53 (2d Cir. 1994); Stichting Ter Behartiging Van de Belangen Van Oudaandeelhouders v. Schreiber, 327 F.3d 173, 182 (2d Cir. 2003).

Like the official acts requirement, this is a core element of bribery offenses, and necessary to distinguish criminal bribery from legitimate paid lobbying protected by the First Amendment. Br.45; cf. United States v. Ferriero, 866 F.3d 107, 125 (3d Cir. 2017) (bribery laws “occupy territory ancillary to the First Amendment rights to associate and to petition the government”). It is likewise necessary to prevent vagueness, since without the clear boundaries provided by the breach-of-duty requirement, “corruptly” is a concept “too vague to provide constitutionally adequate notice.” Poindexter, 951 F.2d at 378-79.

Consistent with its position before trial, the government does not dispute that Rooney and Stichting firmly establish the breach-of-duty requirement as a key element of §666 and the FCPA. The government has no plausible argument that its evidence was sufficient to prove that element here. Despite detailing at length its favorite moments from trial—including many that are obviously irrelevant—the government cites no evidence describing any duties that Ashe or Lorenzo may have owed to the UN or to the public at large, let alone evidence that Ng sought to make them breach those duties. The only even arguably pertinent evidence the government advances, which it describes as showing Ashe’s “role and duties” as President of the General Assembly, provides only a broad outline of how that office functions, and says nothing about any specific fiduciary obligations. And the government cites no evidence of any official duties owed by Lorenzo.

That failure was critical. Given the unique international context of this case, neither the government nor the jury could simply assume that Ashe and Lorenzo owed the same duties to the UN that domestic public officials owe to their constituents. As it has in the past, this Court should reject the government’s blithe attempt to presume the existence of those duties and thereby “read[] out of the statute the requirement of corruptness altogether.” Rooney, 37 F.3d at 853-54.

At a bare minimum, the convictions must be vacated because the jury was never told it had to find that Ng intended to cause some breach of official duty. Again, the government does not dispute that this Court has held that the “corruptly” element under both §666 and the FCPA requires an actual or intended “violation of some duty owed to the government or the public in general,” Rooney, 37 F.3d at 852-53; Stichting, 327 F.3d at 182, and that the jury instructions failed to convey that requirement. See Opp.49.5 The government argues only that the error was harmless because the jury was instructed—on just the FCPA counts—that it had to find the payments at issue were intended to induce Ashe and Lorenzo to “misuse [their] official position[s].” Opp.50 (quoting JA1424). But there is a world of difference between telling the jury that any “misuse” of an official position—which could cover anything a juror might see as tawdry or improper—is enough, and telling the jury that it must find that Ng intended a specific breach of an identifiable duty. That is especially true in this international context, since interactions that “may be reprehensible in the United States … are not necessarily so viewed elsewhere in the world.” H.R. Rep. No. 95-640. Under these circumstances, the government cannot possibly prove beyond a reasonable doubt that a properly instructed jury would have convicted.”

As to obtain or retain business, the brief states:

“The FCPA convictions must also be reversed or vacated in light of the “obtaining or retaining business” element. 15 U.S.C. §§78dd-2(a)(1), 78dd-3(a)(1). The government does not contest that the FCPA criminalizes only “commercial bribery,” meaning payments made in relation to some form of commercial business. United States v. Kay, 359 F.3d 738, 746-47 (5th Cir. 2004). The scheme that the government sought to prove at trial, however, had nothing to do with commercial business.

Ng was not accused of seeking any paid contract from the UN to build the proposed convention center; on the contrary, he wanted to build the center and make it available “at no cost to the UNOSSC.” Nor was Ng charged with paying for some UN license or permit to run his business, or for the kind of indirect regulatory assistance in Kay (the furthest extension of the FCPA). See 359 F.3d at 753, 755-56. Instead, the government relied on an even more tenuous connection to commercial business, claiming that Ng sought UN approval for his center in hopes of obtaining the future business of third parties that would someday use the planned apartments and shops nearby. That strained and exceedingly speculative build-it-for-free-and-others-will-come theory is unprecedented and insufficient to sustain a conviction under the FCPA.

The government makes no serious attempt to grapple with this fatal issue. It cites no case involving an FCPA conviction based on such a feeble connection to commercial business, and it does not try to explain why that connection should suffice. Instead, the government again resorts to recounting its favorite evidence at trial, noting that the planned convention center would be surrounded by shops and residences and that other properties owned by Ng included high-end amenities. But the government has no response to the problem that the only evidence on the issue demonstrated that Ng did not view the proposed convention center as a means of obtaining commercial business; indeed, there is no evidence that he ever even undertook any financial analysis of the project. More important, none of the facts that the government recites can fix the legal problem with its case: A purported scheme to obtain approval for a pro bono project to build the UN a free convention center is not a scheme for “obtaining or retaining business” under the FCPA, even if that center may someday lead to some speculative future commercial benefits. Otherwise, the “obtaining or retaining business” element would be a nullity, because the government could always claim that a bribe has some connection to “business.” Cf. United States v. Lopez, 514 U.S. 549, 580 (1995) (Kennedy, J., concurring) (“In a sense any conduct in this interdependent world of ours has an ultimate commercial origin or consequence ….”).

At the very least, the FCPA convictions must be vacated because the jury was never told that any nexus to commercial business is required. Again, the government cannot show that this error was harmless. While the government notes that “business” alone often means commercial business, the jury had no reason to assume that meaning when the same term was repeatedly used in a broader, non-commercial sense elsewhere in the instructions. Because the court never instructed the jury that commercial business is required under the FCPA, the jury easily could have convicted even if it believed Ng’s ends were purely patriotic or philanthropic. That improper result requires a new trial.”

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