The jurisdiction elements of the Foreign Corrupt Practices Act are like a thicket.
It is easy to get snarled and snagged (and thus confused) as to the law’s jurisdiction elements.
Hopefully this post can clear things up a bit.
Jurisdiction under the FCPA’s anti-bribery provisions depends on the type of business organization or person subject to the FCPA.
- As to U.S. “issuers” and “domestic concerns,” the FCPA contains both territorial jurisdiction and nationality jurisdiction. Territorial jurisdiction refers to “use of the mails or any means or instrumentality of interstate commerce” in furtherance of an improper payment. Nationality jurisdiction, added to the FCPA in the 1998 amendments, means that an improper payment scheme is prohibited by the FCPA’s anti-bribery provisions “irrespective of whether [the U.S. person] makes use of the mails or any means or instrumentality of interstate commerce in furtherance” of an improper payment. Thus, as to U.S. “issuers” and “domestic concerns,” the FCPA’s anti-bribery provisions have extraterritorial jurisdiction meaning that the FCPA can be violated even if an improper payment scheme is devised and executed entirely outside of the U.S.
- As to foreign “issuers,” the FCPA’s anti-bribery provisions apply only to the extent there is territorial jurisdiction, in other words, “use of the mails or any means of instrumentality of interstate commerce” in furtherance of an improper payment scheme. (The alternative nationality jurisdiction prong added to 78dd-1 in 1998 only applies to U.S. issuers).
- As to “persons” other than an “issuer” or “domestic concerns,” the FCPA’s anti-bribery provisions apply to the extent that, “while in the territory of the U.S.,” the person “makes use of the mails or any means or instrumentality of interstate commerce” or engages in “any other act in furtherance” of an improper payment scheme.
This recent post highlighted the judicial benchslapping the DOJ received in a foreign bribery case involving foreign nationals (U.S. v. Vassilieve et al.). The prior post noted that the alleged conduct was in the same general sphere of the FCPA, but that DOJ’s indictment did not contain any U.S. jurisdictional allegations, and likely because of this, the bribery scheme was not charged as an FCPA offense.
An informed and astute reader correctly notes however that the FBI Agent Affidavit in Support of the Criminal Complaint specifically refers to “at least thirty … e-mail exchanges relevant to the bribery scheme … [that] passed through the Google server “mx.google.com” which is located in the Northern District of California.” As stated in the affidavit, “accordingly, a significant number of e-mail communications that facilitated the commission of the crimes described herein traveled to and through the Northern District of California.”
Would such e-mail communications have provided the necessary jurisdictional hook for the DOJ to charge the foreign national defendants with FCPA anti-bribery violations?
Informed readers no doubt recall SEC v. Straub (see here for the prior post), a case of first impression concerning the jurisdictional parameters of 78dd-1 as it relates to foreign national defendants. In Straub, a decision by the S.D. of N.Y. on a motion to dismiss (the case is still pending), the SEC alleged that the foreign national defendants were subject to the FCPA’s anti-bribery provisions because e-mails in furtherance of the bribery scheme – while sent from locations outside of the U.S. – were routed through and/or stored on network services located within the U.S.
Judge Sullivan found the jurisdictional element of 78dd-1 (use of the “mails or any means or instrumentality of interstate commerce”) to be ambiguous and he thus consulted legislative history. In reviewing the legislative history, Judge Sullivan concluded that the corrupt intent element of the FCPA did not apply to the jurisdictional component of the FCPA. Accordingly, Judge Sullivan concluded that e-mails routed through and/or stored on network servers located within the U.S. are sufficient to plead the jurisdictional element of an FCPA anti-bribery violation even if the defendant did not personally know where his e-mails would be routed and/or stored.
The foreign national defendants in U.S. v. Vassilieve were not associated with an issuer (as in Straub). Thus, to the extent the foreign national defendants could have been charged with FCPA anti-bribery violations, it would have been under the 78dd-3 prong of the FCPA.
As noted above however, the 78dd-3 prong of the FCPA has a more stringent jurisdictional element compared to the 78dd-1 prong relevant to foreign nationals. The jurisdictional prong of 78dd-3 is as follows: “while in the territory of the U.S.,” the person “makes use of the mails or any means or instrumentality of interstate commerce” or engages in “any other act in furtherance” of an improper payment scheme.
The only judicial scrutiny of this prong of the FCPA occurred in the Africa Sting case during which Judge Richard Leon (D.D.C.) dismissed substantive FCPA charges against Pankesh Patel (a U.K. national) that were premised on him sending a DHL package in furtherance of the alleged (and manufactured) bribery scheme from the U.K. to the U.S.
As highlighted in this June 2011 post, Judge Leon benchslapped the DOJ on this jurisdictional theory.
In short, the jurisdiction elements of the FCPA’s anti-bribery provisions are a thicket and subtle differences exist in 78dd-1 and 78dd-3 in regards to FCPA exposure of foreign national defendants.