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You Gotta Be Kidding Me

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Reading some Foreign Corrupt Practices Act “commentary” sometimes leaves me scratching my head and thinking to myself “you gotta be kidding me.”

Case in point, Michael Volkov recently wrote in this post on his Corruption, Crime & Compliance blog as follows:

“A lot has been written on the vagueness or lack of clarity surrounding the FCPA. Those opinions are not very persuasive and ignore common sense, legal concepts and good faith. […] Drawing the lines around FCPA behavior is not as hard as many claim. Those that make such baseless claims are only justifying their own existence or engaging in a transparent marketing ploy.”

At the risk of making baseless claims, justifying my own existence or engaging in a transparent marketing ploy, let me share with you a long list of judicial decisions in which federal court judges have found various provisions of the FCPA to be vague or lacking in clarity.

For starters, a well-recognized canon of statutory construction is that a court should only consult legislative history to the extent a statutory term is ambiguous or lacking in clarity.

Set forth below are several instances in which federal court judges have found various provisions of the FCPA to be ambiguous and/or have consulted the FCPA’s legislative history. (When reviewing this list, keep in mind that FCPA enforcement actions are rarely subjected to judicial scrutiny).

In U.S. v. Hoskins, 2015 WL 4874921 (D. Conn. 2015), Judge Janet Bond Arterton consulted the FCPA’s legislative history and what it revealed about Congress’s intent in capturing a certain category of defendant in trimming the DOJ’s FCPA enforcement action against Lawrence Hoskins by granting in part his motion to dismiss and denying a DOJ motion in limine. (See here for the prior post).

In U.S. v. Esquenazi, 752 F.3d 912 (11th Circ. 2014) although the 11th Circuit completely bungled its analysis of the FCPA’s legislative history relevant to the “foreign official” element (see this article at pgs. 24-42 for a detailed analysis), the opinion nevertheless contained much discussion of the FCPA’s legislative history.

In SEC v. Straub,  921 F.Supp.2d 244 (S.D.N.Y. 2013) Judge Richard Sullivan (see here for the prior post) found the FCPA’s jurisdictional element ambiguous and thus consulted the FCPA’s legislative history.

In SEC v. Jackson, 908 F.Supp.2d 834 (S.D.Tex. 2012)Judge Keith Ellison consulted the FCPA’s legislative history regarding: the need to identify the “foreign official,” the facilitation payments exception, and the corrupt intent element. As highlighted in this prior post, Judge Ellison speaking stated: “I have such trouble understanding the facilitating payment exception.”

In U.S. v. Jensen, 532 F.Supp.2d 1187 (N.D. Cal. 2008), Judge Charles Breyer stated as follows regarding  § 78m(b)(5) which makes “knowing” violations of the FCPA books and records and internal control provisions a crime.  “Because the plain language of § 78m(b)(5) is not unambiguous, the Court turns to legislative history.”

In U.S. v. Kozeny, 582 F.Supp.2d 535 (S.D.N.Y. 2008), Judge Shira Scheindlin consulted the FCPA’s legislative history in a decision concerning the FCPA’s local law affirmative defense.

In U.S. v. Kozeny, 493 F.Supp.2d 693 (S.D.N.Y. 2007), Judge Scheindlin stated as follows concerning the statute of limitations applicable to FCPA criminal violations.  “I find that [18 U.S.C. § 3282] is ambiguous, and turn to its legislative history for guidance on its proper interpretation.”

In U.S. v. Bodmer, 342 F.Supp.2d 176 (S.D.N.Y. 2004), Judge Scheindlin addressed the question “whether prior to the 1998 amendments, foreign nationals who acted as agents of domestic concerns, and who were not residents of the United States, could be criminally prosecuted under the FCPA.”  Judge Scheindlin concluded that the FCPA’s language, as it existed prior to the 1998 amendments, was ambiguous and she thus resorted to legislative history.  Judge Scheindlin further commented in dismissing the FCPA charges against Bodmer as follows.  “After consideration of the statutory language, legislative history, and judicial interpretations of the FCPA, the jurisdictional scope of the statute’s criminal penalties is still unclear.”

In Stichting v. Schreiber, 327 F.3d 173 (2d Cir. 2003), the Court stated as follows.  “It is difficult to determine the meaning of the word “corruptly” simply by reading it in context. We therefore look outside the text of the statute to determine its intended meaning. […]  (“Legislative history and other tools of interpretation may be relied upon only if the terms of the statute are ambiguous.”)

In U.S. v. Kay, 200 F.Supp.2d 681 (S.D. Tex. 2002), Judge David Hittner concluded that the FCPA’s key “obtain or retain business” element was ambiguous and thus turned to an analysis of the legislative history.  On appeal, the Fifth Circuit (see 359 F.3d 738 (5th Cir. 2004)) likewise stated as follows prior to an extensive review of the FCPA’s legislative history.

“[T]he district court concluded that the FCPA’s language is ambiguous, and proceeded to review the statute’s legislative history.  We agree with the court’s finding of ambiguity for several reasons. Perhaps our most significant statutory construction problem results from the failure of the language of the FCPA to give a clear indication of the exact scope of the business nexus element; that is, the proximity of the required nexus between, on the one hand, the anticipated results of the foreign official’s bargained-for action or inaction, and, on the other hand, the assistance provided by or expected from those results in helping the briber to obtain or retain business. Stated differently, how attenuated can the linkage be between the effects of that which is sought from the foreign official in consideration of a bribe (here, tax minimization) and the briber’s goal of finding assistance or obtaining or retaining foreign business with or for some person, and still satisfy the business nexus element of the FCPA?”

In U.S. v. Blondek, 741 F.Supp. 116 (N.D.Tex 1990), Judge Harold Sanders consulted the FCPA’s legislative history in concluding that “foreign officials” can not be charged with conspiracy to violate the FCPA.

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