Foreign Corrupt Practices Act appeals are not as rare as Halley’s Comet, but nevertheless rare. Thus, when an FCPA appeal occurs and an appellate court is presented with the opportunity to construe the law, almost be definition, it is a big deal.
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.”
Thereafter, Seng was sentenced to 48 months in prison and three years of supervised release. In addition, Seng was ordered to pay a $1 million fine, $302,977 in restitution to the United Nations and the judge also ordered a forfeiture money judgment of $1.5 million.
Recent filings by Seng and the DOJ in connection with Seng’s bail application (which was denied by the court) provide a glimpse of the issues that will likely be before the Second Circuit. (Speaking of the Second Circuit and FCPA appeals, the Hoskins matter is still before the Second Circuit and despite oral arguments occurring over 16 months ago there is no decision).
Seng’s bail motion stated:
“This appeal arises out of an extraordinary and unprecedented invocation of U.S. anti-corruption statutes to prosecute a foreign national for allegedly bribing foreign ambassadors to the United Nations, in an effort to persuade them to support his plans to build the UN a new convention center for free. According to the government, these actions violated the prohibition on bribing agents of an “organization” that receives federal funds, 18 U.S.C. §666, and the Foreign Corrupt Practices Act (FCPA), 15 U.S.C. §§78dd-2, 78dd-3, and served as the predicate for money laundering violations as well, 18 U.S.C. §1956. Unsurprisingly, there are substantial questions as to whether this novel prosecution can be squared with the statutes, governing Supreme Court precedent, and the strong constitutional avoidance concerns this case presents.
First, there is a substantial question whether §666 applies to the UN. On its face, the statute specifies the government organizations to which it applies—namely, “State, local or Indian tribal government[s].” Particularly given the obligation to interpret statutes to avoid unreasonable interference with the sovereign authority of other nations, §666 should not be read to reach foreign and international government agents and agencies, which raise wholly different considerations and sensitivities.
Second, there is a substantial question whether the government proved, or the jury found, that any payments were made in exchange for an “official act.” The Supreme Court considerably narrowed the concept of “official acts” in McDonnell v. United States, 136 S. Ct. 2355 (2016), in large part because of constitutional concerns that apply with full force here. Indeed, if anything, concerns about fair notice, arbitrary enforcement, chilling of political discourse, and undue interference with other sovereigns apply with even greater force to this case, as it is far from clear what actions by the UN or its ambassadors even qualify as “official acts,” or what kinds of payments are impermissible in this unique context. Yet the government repeatedly urged the jury to treat as “official acts” things that plainly do not qualify under McDonnell—actions as innocuous as attending a meeting in an “official” capacity and circulating to the UN a letter on “official” UN letterhead.
Third, there is a substantial question whether the FCPA, a statute enacted to penalize bribing foreign officials to obtain or retain business, applies to the unusual allegations of this case. Ng was not accused of paying bribes to obtain a UN contract, or to secure a permit, license, or other UN prerequisite to doing business with a third party. He was accused of bribing UN ambassadors to support his effort to build the UN a convention center for free. The FCPA was never intended to reach actions of foreign governments or international organizations that do not award or directly impact “business.”
As to the FCPA specific issue, the motion stated:
“The government’s reliance on the pro bono agreement raises the additional substantial question whether the FCPA even reaches the conduct alleged here. The FCPA prohibits payments made to foreign officials for the purpose of “obtaining or retaining business for or with, or directing business to, any person.” 15 U.S.C. §78dd-2(a)(1); 15 U.S.C. §78dd-3(a)(1). That limitation was deliberate; in enacting the FCPA, Congress specifically chose to criminalize only “commercial bribery,” and rejected a competing House proposal that “contained no limiting ‘business nexus’ element.” United States v. Kay, 359 F.3d 738, 746-47 (5th Cir. 2004).
The government never sought to prove that the purported bribes were intended to obtain any paying government contract or other commercial business from the UN. Nor did the government allege that they were paid to obtain a permit, license, or other prerequisite from the UN to doing commercial business with a third party. Instead, the government asserted an exceedingly tenuous relation to commercial business: that Ng paid the alleged bribes because if the UN agreed to support the convention center that Ng hoped to build at no cost to the UN, and to hold its annual exposition there at no cost to the UN, then Ng might obtain business from third parties for as-yet unbuilt shops, restaurants, and apartments that would be located around the center. That chain of inferences stretches far beyond what the FCPA was enacted to prohibit. Even if such a remote connection to commercial business could suffice, moreover, the jury was not instructed—over Ng’s objection—that any connection to commercial business was required. The jury thus had no way to know whether “business” referred to commercial business, or what kind of nexus to commercial business the statute requires.”
As to the FCPA specific issue, the DOJ’s opposition brief stated:
“Ng claims that he warrants bail pending appeal because he intends to argue that there is insufficient evidence that he paid bribes with the intent to “obtain or retain business,” as required under the FCPA. This claim, which only concerns two counts, was not presented by Ng in seeking bail pending appeal before the District Court. This Court could therefore choose to remand this portion of Ng’s motion. But there is no need to do so. A jury verdict must be upheld if “any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” The jury here was presented with overwhelming evidence that the bribes Ng paid were intended to advance his business interests. This evidence included, among other things, a promotional video for the Macau Conference Center that highlighted that the project would be developed by Ng’s for-profit real estate company, and would include a hotel, a shopping center, residences, and a marina. And rather than bring Ashe, Lorenzo, and others from the UN to a project that might deemed “philanthropic”, when they came to Macau, Ng took them to another for-profit, luxury project developed by his company, with marble floors, gold statues, and a clubhouse with a cigar lounge and wine storage.
Ng suggests that while the evidence might otherwise have been sufficient, the District Court erred by not instructing the jury that “business” means “commercial business.” This suggestion should be rejected out of hand. The District Court’s instruction was taken directly from the statute. Ng does not explain on what basis this Court should conclude that a jury does not know what a commonsense term like “business” means, and there is no likelihood whatsoever that it would have made any difference had the District Court said “commercial business” rather than “business,” in a case where the only business discussed by anyone, including Ng, as the beneficiary of Ng’s bribes was his for-profit real estate development company.”
Seng’s reply brief stated:
“The only connection between the charged conduct and commercial business that the government asserts in its opposition is the same attenuated theory it asserted at trial: that if the UN supported the convention center that Ng planned to build the UN for free, then Ng might someday obtain additional business from third parties for future shops, restaurants, and apartments in the area. The government cites not one case holding that this build-it-for-free-and-others-will-come-and-pay theory is enough to satisfy the FCPA, and there is a substantial question as to whether it should be. See United States v. Kay, 359 F.3d 738, 746-47 (5th Cir. 2004) (explaining that FCPA criminalizes only “commercial bribery”).
The government downplays the district court’s refusal to instruct the jury that “business” under the FCPA means “commercial business.” But that error easily could have misled the jury, as the court repeatedly used “business” elsewhere in its instructions to refer more broadly to either commercial or noncommercial transactions. And the point was critical since Ng’s defense turned heavily on his philanthropic motives.”
In denying Seng’s bail request, the court did expedite the appeal.
Seng is represented by Kirkland & Ellis attorneys Paul Clement, Viet Dinh, Erin Murphy and Harker Rhodes.
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