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“Foreign Official” Cert Petition Filed In Supreme Court

As highlighted in this previous post, in May the 11th Circuit affirmed the FCPA (and related) convictions of Joel Esquenazi and Carlos Rodriguez.  Numerous previous posts have analyzed the 11th Circuit’s “foreign official” decision (see here for the key language of the decision; here for “foreign official” – the current landscape; here for a “foreign official roundup; here for the 193 different meanings of foreign official; and here for why the meaning of “foreign official” matters).

Perhaps most importantly, this previous post highlighted the 11th Circuit’s flawed reasoning.

Yesterday, Esquenazi and Rodriguez (through their counsel Markus Funk of Perkins Coie and David Simon of Foley & Lardner and others) filed this petition for certiorari in the Supreme Court.

The cert petition is believed to be the first substantive FCPA cert petition in FCPA history.  (As noted in this prior post, the Frederic Bourke FCPA enforcement action did result in a cert petition to the Supreme Court.  However, the issues presented were not FCPA specific. The Supreme Court denied cert.  Prior to Bourke’s cert petition, David Kay and Douglas Murphy filed a cert petition in the Supreme Court.  Again, the issues presented were not FCPA specific.  The Supreme Court denied cert.)  

The Supreme Court, which decides its own docket, has never substantively addressed any FCPA issue.

The petition states, in pertinent part, as follows.

“Few, if any, laws match the FCPA when it comes to the chasm between its profitability for the Government and the near-universal confusion concerning how far the statute actually reaches. The Eleventh Circuit’s ruling below only amplified the problem by providing a  purported “definition” of key FCPA provisions that differs from all provided previously and deepens the confusion over the term “foreign official.”

Under the heading, “Reasons for Granting the Petition” the petition states, in full, as follows.

The FCPA leaves open the pivotal question of who qualifies as a “foreign official” by not defining what “instrumentality [of a foreign government]” means.  Without a clear definition of “instrumentality,” the scope of the term “foreign official” cannot be understood. So it comes as no surprise that, though the statute was enacted in 1977, persistent questions about the correct interpretations of these terms have plagued it in this case and others.

Based on long-standing and straight-forward principles of statutory interpretation, Petitioners argued that instrumentalities should either be an actual part of the foreign government, or, at a bare minimum, perform core traditional governmental functions. The Government has lobbied for, and received from the Eleventh Circuit, an unacceptably broad interpretation of the term “instrumentality” that expands the reach of the statute to include partially state-owned or state-controlled enterprises that are not a part of any foreign  government, but whose employees could be considered “foreign officials” under the FCPA if they somehow fall into one or more of the court’s open-ended definitional options. Demonstrating the illogic of the Eleventh Circuit’s approach, consider that under its statutory construction, a janitor working for U.S. Government subsidized General Motors could qualify as a “foreign official” if General Motors were located overseas.

Prosecutorial discretion is one thing, but permitting the Government to take a “we-know-it-when-we-see it” approach to FCPA enforcement violates basic constitutional protections. In fact, the scope of the Government’s enforcement efforts have broadened to the point that even former Assistant Attorney General Breuer conceded the uncertainty—and the breadth of the Government’s interpretation—of who is a “foreign official” under the FCPA:

[C]onsider the possible range of ‘foreign officials’ who are covered by the FCPA: Some are obvious, like health ministry and customs officials of other countries. But some others may not be, such as the doctors, pharmacists, lab technicians and other health professionals who are employed by state-owned facilities. Indeed, it is entirely possible, under certain circumstances and in certain countries, that nearly every aspect of the approval, manufacture, import, export, pricing, sale and marketing of a drug product in a foreign country  will involve a ‘foreign official’ within the meaning of the FCPA.

The Government’s excessively broad (and now judicially sanctioned) interpretation of who is considered to be a “foreign official” stands in direct contrast to the stated purpose of the FCPA, namely, to prohibit payments to a “narrow recipient category of traditional government officials performing official or public functions.” Decl. of Professor Michael J. Koehler In Support of Defendants’ Motion to Dismiss Counts One Through Ten of the Indictment in United States v. Carson, No. 8:09-cr-00077, ¶ 16(b) (C.D. Cal. Feb. 21, 2011).

Recognizing this untenable state of affairs, there has been widespread commentary and concern about the Government’s pursuit of “an increasingly expansive view of what makes an enterprise an ‘instrumentality’ of a foreign government, and, therefore, what makes employees of such enterprises ‘foreign officials.’” […]  Professor Koehler, for his part, has noted that no FCPA element “is more urgently in need of judicial scrutiny than the FCPA’s ‘foreign official’ element.” Michael J. Koehler, The Façade of FCPA Enforcement, 41 Geo. J. Int’l L. 907, 916 (2010).”

Elsewhere, the petition states, in pertinent part, as follows.

“In light of the Government’s recent increased enforcement action, and the span of time it has taken for just one federal appellate court to interpret this core statutory term, the time is now ripe for this Court to settle the meaning of instrumentality under the FCPA. This Court should not defer answering the question presented in this Petition until additional federal appellate courts reach conflicting decisions regarding whether state-owned enterprises are instrumentalities under the FCPA. By that time, the Government will have brought many more prosecutions or enforcement actions involving payments made, or benefits provided, to individuals who are not traditional government officials. Individuals and companies around the globe will be left to wonder whether the Government will unilaterally declare their conduct criminal. This Court should, therefore, settle the question of the meaning of “instrumentality” to clarify which of those enforcement actions Congress intended to sanction under the FCPA, and which it did not.

What is more, an acceptable answer to the definitional challenge lies near at hand. Congress is certainly capable of enacting language that applies to state-owned or state-controlled enterprises when it intends to do so. When Congress enacted the Foreign Sovereign Immunities Act (FSIA), for example, it specifically included within the definition of “agency or instrumentality of a foreign state” entities a “majority of whose shares or other ownership interest is owned by a foreign state or political subdivisions.” 28 U.S.C. § 1603(b). The presence of such an explicit definition in FSIA indicates that Congress knew how to include such language in the FCPA, but chose not to include it.


That absence is significant here and warrants construing “instrumentality” as excluding state-owned or state-controlled enterprises that are not political subdivisions and that do not perform core, traditional governmental functions. See Dole Food Co. v. Patrickson, 538 U.S. 468, 475-76 (2003) (contrasting the absence of language in FSIA with that used in other statutes and concluding that the absence of language was instructive). With regard to the FCPA, “[i]f Congress desires to go further . . . it must speak more clearly than it has.”


A previously disclosed, I have provided pro bono expert services to pro bono defense counsel in this case.

11th Circuit Affirms Esquenazi / Rodriguez Convictions – Defines “Instrumentality”

Numerous prior posts (see here for instance) have highlighted the historic appeal in U.S. v. Joel Esquenazi and Carlos Rodriguez.

Although there were several issues on appeal, the appeal is best known as the first time in FCPA history in which an appellate court has the opportunity to weigh in on the prominent enforcement theory that employees of alleged state-owned or state-controlled entities are “foreign officials” under the FCPA.  (The defense relied, in part, on my foreign official declaration and, as previously disclosed, I served as a pro-bono expert to the defense in this case).

In an opinion released today, the 11th Circuit affirmed the defendants’ convictions and in doing so defined the term “instrumentality” in the FCPA.

Future posts will analyze the 11th Circuit’s opinion, but for now, this post extracts the relevant portions of the 11th Circuit’s opinion. (Internal citations have been omitted except where relevant to add context.  Footnotes have been added where they appear in the opinion).

“Messrs. Esquenazi and Rodriguez co-owned Terra Telecommunications Corp. (Terra), a Florida company that purchased phone time from foreign vendors and resold the minutes to customers in the United States. Mr. Esquenazi, Terra’s  majority owner, served as President and Chief Executive Officer. Mr. Rodriguez, the company’s minority owner, served as Executive Vice President of Operations.  James Dickey served as Terra’s general counsel and Antonio Perez as the  company’s comptroller.

One of Terra’s main vendors was Telecommunications D’Haiti, S.A.M. (Teleco). Because the relationship of Teleco to the Haitian government was, and remains, at issue in this case, the government presented evidence of Teleco’s ties to Haiti. Former Teleco Director of International Relations Robert Antoine testified that Teleco was owned by Haiti. An insurance broker, John Marsha, testified that, when Messrs. Rodriguez and Esquenazi were involved in previous contract negotiations with Teleco, they sought political-risk insurance, a type of coverage that applies only when a foreign government is party to an agreement. In emails with Mr. Marsha copied to Messrs. Esquenazi and Rodríguez, Mr. Dickey called Teleco an “instrumentality” of the Haitian government.

An expert witness, Luis Gary Lissade, testified regarding Teleco’s history. At Teleco’s formation in 1968, the Haitian government gave the company a monopoly on telecommunication services. Teleco had significant tax advantages and, at its inception, the government appointed two members of Teleco’s board of directors. Haiti’s President appointed Teleco’s Director General, its top position, by an executive order that was also signed by the Haitian Prime Minister, the minister of public works, and the minister of economy and finance. In the early 1970s, the National Bank of Haiti gained 97 percent ownership of Teleco. From that time forward, the Haitian President appointed all of Teleco’s board members. Sometime later, the National Bank of Haiti split into two separate entities, one of which was the Banque de la Republique d‘Haiti (BRH). BRH, the central bank of Haiti, is roughly equivalent to the United States Federal Reserve. BRH retained ownership of Teleco. In Mr. Lissade’s expert opinion, for the years relevant to this case, Teleco belonged “totally to the state” and “was considered . . . a public entity.”

Mr. Lissade also testified that Teleco’s business entity suffix, S.A.M., indicates “associate anonymous mixed,” which means the “Government put money in the corporation.” Teleco’s suffix was attached not by statute, but “de facto” because “the government consider[ed] Teleco as its . . . entity.” In 1996, Haiti passed a “modernization” law, seeking to privatize many public institutions. As a result, Haiti privatized Teleco sometime between 2009 and 2010. Ultimately, Mr. Lissade opined that, during the years relevant to this case, “Teleco was part of the public administration.” He explained: “There was no specific law that . . . decided that at the beginning that Teleco is a public entity but government, officials, everyone consider[ed] Teleco as a public administration.” And, he said, “if there was a doubt whatsoever, the [anti-corruption] law [that] came in 2008 vanish[ed] completely this doubt . . . by citing Teleco as a public administration” and by requiring its agents – whom Mr. Lissade said were public agents – to declare all assets to avoid secret bribes.”


During the Internal Revenue Service’s investigation of the case, Mr. Esquenazi admitted he had bribed Mr. Duperval and other Teleco officials. He and Mr. Rodriguez nonetheless pleaded not guilty, proceeded to trial, and were found guilty on all counts.


This appeal is brought by Messrs. Esquenazi and Rodriguez.

The FCPA prohibits “any domestic concern” from “mak[ing] use of the mails or any means . . . of interstate commerce corruptly in furtherance of” a bribe to “any foreign official,” or to “any person, while knowing that all or a portion of such money or thing of value will be offered, given, or promised, directly or indirectly, to any foreign official,” for the purpose of “influencing any act or decision of such foreign official . . . in order to assist such domestic concern in obtaining or retaining business for or with, or directing business to, any person.” A “foreign official” is “any officer or employee of a foreign government or any department, agency, or instrumentality thereof.” The central question before us, and the principal source of disagreement between the parties, is what “instrumentality” means (and whether Teleco qualifies as one).

The FCPA does not define the term “instrumentality,” and this Court has not either. For that matter, we know of no other court of appeals who has. The definition matters in this case, in light of the challenges to the district court’s jury instructions on “instrumentality”; to the sufficiency of the evidence that Teleco qualified as an instrumentality of the Haitian government; and to Mr. Esquenazi’s contention that the statute is unconstitutionally vague. Before we address these challenges, however, we must define “instrumentality” for purposes of the FCPA.

We begin, as we always do when construing statutory text, with the plain meaning of the word at issue.  According to Black’s Law Dictionary, an instrumentality is “[a] means or agency through which a function of another entity is accomplished, such as a branch of a governing body.” Webster’s Third New International Dictionary says the word means “something that serves as an intermediary or agent through which one or more functions of a controlling force are carried out: a part, organ, or subsidiary branch esp. of a governing body.” These dictionary definitions foreclose Mr. Rodriguez’s contention that only an actual part of the government would qualify as an instrumentality — that contention is too cramped and would impede the “wide net over foreign bribery” Congress sought to cast in enacting the FCPA. Beyond that argument, the parties do not quibble over the phrasing of these definitions, and they agree an instrumentality must perform a government function at the government’s behest.  The parties also agree, however, and we have noted in other cases interpreting similar provisions, that the dictionary definitions get us only part of the way there. Thus, we turn to other tools to decide what “instrumentality” means in the FCPA.

[In a footnote the opinion states: “both defendants urge us to apply the rule of lenity to cabin the definition of ‘instrumentality.’  That rule applies, however, only when there is a ‘grevious ambiguity’ in the meaning of the statutory text.]

To interpret “instrumentality” as used in the Americans with Disabilities Act, we relied upon what the Supreme Court has called the “commonsense cannon of noscitur a sociis,” — that is, “‘a word is known by the company it keeps.’”

[In a footnote the opinion states:  “The defendants rely heavily upon our decision in Edison, arguing it dictates the definition of “instrumentality” they advocate. In that case, we held the word “instrumentality” under the ADA meant “governmental units or created by one.” Although we recognize that decision should inform our construction of instrumentality in this case, it ultimately is of little help. First, Edison construed a different statute with a far different purpose.  Second, Edison recognized that “instrumentality” had to be “constrained by the plain meaning of the statutory language in the context of the entire statute, as assisted by the canons of statutory construction.”  Although the meaning of the word “instrumentality,” which the Edison court recognized was not entirely clear, might in isolation vary little if at all in this case, the context is vastly different. The ADA defines “public entity” to include “any department, agency, special purpose district, or other instrumentality of a State.” The word “other” preceding “instrumentality” in the ADA is a critical difference – “other” indicates that, in the ADA, instrumentality is intended as a general catchall for things very much like the preceding words. In Edison, we noted that the canon ejusdem generis produced the same result as noscitur a sociis. In the FCPA, by contrast, the word preceding “instrumentality” is “any,” not “other.” Thus, “instrumentality” is not a generalized catchall in the FCPA as it is in the ADA, but instead a distinct class of entities.  The Supreme Court has explained that the ejusdem generis canon does not apply where, as here, the term at issue “is not a general or collective term following a list of specific items to which a particular statutory command is applicable (e.g., ‘fishing rods, nets, hooks, bobbers, sinkers, and other equipment’).”  Just like in that example, the word “other” is critically important to construing the word “instrumentality” based on its context. In that vein, “[t]he United States Supreme Court and this Court have recognized on many occasions that the word ‘any,’” which modifies “instrumentality” in the FCPA, “is a powerful and broad word, and that it does not mean ‘some’ or ‘all but a few,’ but instead means ‘all.’”  Finally, Edison actually decided that “a private corporation is not a public entity merely because it contracts with a public entity to provide some service.” Our interpretation of “instrumentality” under the FCPA here is, in this respect, fully consonant with Edison. It, too, would exclude a private contractor not controlled or created by the state that provided a service to the public.]

In the FCPA,  the company “instrumentality” keeps is “agency” and “department,” entities through which the government performs its functions and that are controlled by the government. We therefore glean from that context that an entity must be under the control or dominion of the government to qualify as an “instrumentality” within the FCPA’s meaning. And we can also surmise from the other words in the series along with “instrumentality” that an instrumentality must be doing the business of the government. What the defendants and the government disagree about, however, is what functions count as the government’s business.

To answer that question, we examine the broader statutory context in which the word is used.  In this respect, we find one other provision of the FCPA and Congress’s relatively recent amendment of the statute particularly illustrative. First, the so-called “grease payment” provision establishes an “exception” to FCPA liability for “any facilitating or expediting payment to a foreign official . . . the purpose of which is to expedite or to secure the performance of a routine governmental action by a foreign official.”  “Routine governmental action” is defined as “an action . . . ordinarily and commonly performed by a foreign official in,” among other things, “providing phone service.” If an entity involved in providing phone service could never be a foreign official so as to fall under the FCPA’s substantive prohibition, there would be no need to provide an express exclusion for payments to such an entity. In other words, if we read “instrumentality,” as the defendants urge, to categorically exclude government-controlled entities that provide telephone service, like Teleco, then we would render meaningless a portion of the definition of “routine governmental action” in section 78dd-2(b). “It is a cardinal rule of statutory construction that significance and effect shall, if possible, be accorded to every word.” Thus, that a government-controlled entity provides a commercial service does not automatically mean it is not an instrumentality. In fact, the statute expressly contemplates that in some instances it would.

Next, we turn to Congress’s 1998 amendment of the FCPA, enacted to ensure the United States was in compliance with its treaty obligations. That year, the United States ratified the Organization for Economic Cooperation and Development’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Convention).  In joining the OECD Convention, the United States agreed to “take such measures as may be necessary to establish that it is a criminal offence under [United States] law for any person intentionally to offer, promise or give . . . directly or through intermediaries, to a foreign public official . . . in order that the official act or refrain from acting in relation to the performance of official duties, in order to obtain or retain business or other improper advantage in the conduct of international business.” “Foreign public official” is defined to include “any person exercising a public function for a foreign country, including for a . . . public enterprise.” The commentaries to the OECD Convention explain that: “A ‘public enterprise’ is any enterprise, regardless of its legal form, over which a government, or governments, may, directly or indirectly, exercise a dominant influence.”  The commentary further explains: “An official of a public enterprise shall be deemed to perform a public function unless the enterprise operates on a normal commercial basis in the relevant market, i.e., on a basis which is substantially equivalent to that of a private enterprise, without preferential subsidies or other privileges.” In addition to this, the OECD Convention also requires signatories make it a crime to pay bribes to agents of any “public international organisation.”

To implement the Convention’s mandates, Congress amended the FCPA in 1998. The only change to the definition of “foreign official” in the FCPA that Congress thought necessary was the addition of “public international organization.” This seems to demonstrate that Congress considered its preexisting definition already to cover a “foreign public official” of an “enterprise . . . over which a government . . . exercise[s] a dominant influence” that performs a “public function” because it does  not “operate[] on a normal commercial basis . . . substantially equivalent to that of . . . private enterprise[s]” in the relevant market “without preferential subsidies or other privileges.” Although we generally are wary of relying too much on later legislative developments to decide a prior Congress’ legislative intent, the circumstances in this case cause us less concern in that regard. This is not an instance in which Congress merely discussed previously enacted legislation and possible changes to it. Rather, Congress did make a change to the FCPA, and it did so specifically to ensure that the FCPA fulfilled the promise the United States made to other nations when it joined the Convention. The FCPA after those amendments is a different law, and we may consider Congress’s intent in passing those amendments as strongly suggestive of the meaning of “instrumentality” as it exists today.

We are not alone in finding instruction from the obligations the United States undertook in the OECD Convention and Congress’s resulting amendment of the FCPA made in order to comply with those obligations. The Fifth Circuit, in United States v. Kay, concluded that, when Congress amended the FCPA to comply with the duties the United States assumed under the OECD Convention and left intact the FCPA’s language outlawing bribery for the purpose of “obtaining or retaining business,” the preexisting language should be construed to cover the Convention’s mandate that signatories prohibit bribery “‘to obtain or retain business or other improper advantage in the conduct of international business.’” “Indeed, given the United States’s ratification and implementation of the Convention without any reservation, understandings or alterations specifically pertaining to its scope,” the Fifth Circuit concluded the defendants’ narrow construction of the FCPA “would likely create a conflict with our international treaty obligations, with which we presume Congress meant to fully comply.”

Indeed, since the beginning of the republic, the Supreme Court has explained that construing federal statutes in such a way to ensure the United States is in compliance with the international obligations it voluntarily has undertaken is of paramount importance. “If the United States is to be able to gain the benefits of international accords and have a role as a trusted partner in multilateral endeavors, its courts should be most cautious before interpreting its domestic legislation in such manner as to violate international agreements.”  We are thus constrained to interpret “instrumentality” under the FCPA so as to reach the types of officials the United States agreed to stop domestic interests from bribing when it ratified the OECD

Based upon this reading, we must also reject the invitation from Messrs. Esquenazi and Rodriguez to limit the term only to entities that perform traditional, core government functions. Nothing in the statute imposes this limitation. And were we to limit “instrumentality” in the FCPA in that way, we would put the United States out of compliance with its international obligations.

The Supreme Court has cautioned that “the concept of a ‘usual’ or a ‘proper’ governmental function changes over time and varies from nation to nation.”  That principle guides our construction of the term “instrumentality.” Specifically, to decide in a given case whether a foreign entity to which a domestic concern makes a payment is an instrumentality of that foreign government, we ought to look to whether that foreign government considers the entity to be performing a governmental function. And the most objective way to make that decision is to examine the foreign sovereign’s actions, namely, whether it treats the function the foreign entity performs as its own. Presumably, governments that mutually agree to quell bribes flowing between nations intend to prevent distortion of the business they conduct on behalf of their people. We ought to respect a foreign sovereign’s definition of what that business is.

[In a footnote the opinion states:  The logic of First National City Bank gives us another reason to reject the notion that “instrumentality” should encompass only entities that perform traditional, core governmental functions. If what constitutes a core function of a foreign government hews to the intent of that government, then the problems with providing adequate notice to businesses about which payments violate the FCPA would be magnified, not eliminated. We think it will be relatively easy to decide what functions a government treats as its own in the present tense by resort to objective factors, like control, exclusivity, governmental authority to hire and fire, subsidization, and whether an entity’s finances are treated as part of the public fisc. Both courts and businesses subject to the FCPA have readily at hand the tools to conduct that inquiry (especially because the statute contains a mechanism by which the Attorney General will render opinions on request about what foreign entities constitute instrumentalities. It would be a much more difficult task — involving divining the subjective intentions of a foreign sovereign, parsing history, and interpreting significant amounts of foreign law — to decide what functions a foreign government considers core and traditional.  Busy district courts and lay juries, not to mention companies in the midst of conducting business, would be ill-equipped to make such sensitive distinctions.]

Thus, for the United States government to hold up its end of the bargain under the OECD Convention, we ought to follow the lead of the foreign government itself in terms of which functions it treats as its own.

Although we believe Teleco would qualify as a Haitian instrumentality under almost any definition we could craft, we are mindful of the needs of both corporations and the government for ex ante direction about what an instrumentality is. With this guidance, we define instrumentality as follows. An “instrumentality” under section 78dd-2(h)(2)(A) of the FCPA is an entity controlled by the government of a foreign country that performs a function the controlling government treats as its own. Certainly, what constitutes control and what constitutes a function the government treats as its own are fact-bound questions. It would be unwise and likely impossible to exhaustively answer them in the abstract. Because we only have this case before us, we do not purport to list all of the factors that might prove relevant to deciding whether an entity is an instrumentality of a foreign government. For today, we provide a list of some factors that may be relevant to deciding the issue.

To decide if the government “controls” an entity, courts and juries should look to the foreign government’s formal designation of that entity; whether the government has a majority interest in the entity; the government’s ability to hire and fire the entity’s principals; the extent to which the entity’s profits, if any, go directly into the governmental fisc, and, by the same token, the extent to which the government funds the entity if it fails to break even; and the length of time these indicia have existed. We do not cut these factors from whole cloth. Rather, they are informed by the commentary to the OECD Convention the United States ratified. See OECD Convention, art. 1.4, cmt. 14 (stating that an entity is “deemed” to be under governmental control “inter alia, when the government or governments hold the majority of the enterprise’s subscribed capital, control the majority of votes attaching to shares issued by the enterprise or can appoint a majority of the members of the enterprise’s administrative or managerial body or supervisory board”). They are also consistent with the approach the Supreme Court has taken to decide if an entity is an agent or instrumentality of the government in analogous contexts. See Lebron v. Nat’l R.R. Passenger Corp. U.S. 374, 394, 397–99, 115 S. Ct. 961, 972–74 (1995) (concluding Amtrak was an “agency or instrumentality of the United States” because, among other things, it was created by federal statute and a majority of its directors were to be appointed by the President); Cherry Cotton Mills, Inc. v. United States, 327 U.S. 536, 539, 66 S. Ct. 729, 730 (1946) (“[Because Reconstruction Finance Corporation’s (RFC)] Directors are appointed by the President and affirmed by the Senate; its activities are all aimed at accomplishing a public purpose; all of its money comes from the Government; its profits, if any, go to the Government; [and] its losses the Government must bear[, t]hat the Congress chose to call it a corporation does not alter its characteristics so as to make it something other than what it actually is, an agency selected by Government to accomplish purely governmental purposes.”); Reconstruction Fin. Corp. v. J.G. Menihan Corp., 312 U.S. 81, 83, 61 S. Ct. 485, 486 (1941) (concluding RFC was a “corporate agency of the government” because the United States was the “sole stockholder” and the entity was “managed by a board of directors appointed by the President,” even though “its transactions [were] akin to those of private enterprises” and nothing in its organic statute indicated it was an instrumentality of the government).

We then turn to the second element relevant to deciding if an entity is an instrumentality of a foreign government under the FCPA — deciding if the entity performs a function the government treats as its own. Courts and juries should examine whether the entity has a monopoly over the function it exists to carry out; whether the government subsidizes the costs associated with the entity providing services; whether the entity provides services to the public at large in the foreign country; and whether the public and the government of that foreign country generally perceive the entity to be performing a governmental function. Just as with the factors indicating control, we draw these in part from the OECD Convention. See OECD Convention art. 1.4, cmt. 15 (“[A] public enterprise shall be deemed to perform a public function,” if it does not “operate[ ] on a normal commercial basis in the relevant market, i.e., on a basis which is substantially equivalent to that of a private enterprise, without preferential subsidies or other privileges.”); see also id. art. 1.4, cmt. 12 (“‘Public function’ includes any activity in the public interest, delegated by a foreign country . . . .”). And we draw them from Supreme Court cases discussing what entities properly can be considered carrying out governmental functions. See Brentwood Acad. v. Tenn. Secondary Sch. Athletic Ass’n, 531 U.S. 288, 295–97, 121 S. Ct. 924, 930–31 (2001) (describing situations in which the Court has held “seemingly private behavior may be fairly treated as that of the State itself,” recognizing that decision as “a matter of normative judgment [whose] criteria lack rigid simplicity,” and including among the relevant factors whether “the State provides significant encouragement, either overt or covert” and if the entity “serve[s a] public purpose [such as] providing community recreation” (internal quotation marks omitted)). Compare Reconstruction Fin. Corp., 312 U.S. at 83, 61 S. Ct. at 486 (recognizing that the RFC’s function to make loans and investments to aid state and local governments, banks, railroads, mortgage companies, and other businesses were “transactions . . . akin to those of private enterprises”), with Cherry Cotton Mills, Inc., 327 U.S. at 539, 66 S. Ct. at 730 (stating that the RFC was “an agency selected by the Government to accomplish purely governmental purposes” (emphasis added)).

We now turn to Esquenazi’s and Rodriguez’s specific challenges to their  convictions under the FCPA.

The district court’s “instrumentality” instruction

With the definition of “instrumentality” in mind, we now examine what Messrs. Esquenazi and Rodriguez assert was the district court’s chief error with respect to whether Teleco was an instrumentality of the Haitian government — the jury instructions. Notably, the list of factors we identified, although a bit more detailed, is not so different from what the district court laid out in its instructions to the jury here. We review de novo the district court’s instructions to determine  whether they misstated the law or prejudicially misled the jury.  The district court instructed the jury:

An instrumentality of a foreign government is a means or agency through which a function of the foreign government is accomplished. State-owned or state-controlled companies that provide services to the public may meet this definition.

To decide whether Telecommunications D’Haiti or Teleco is an instrumentality of the government of Haiti, you may consider factors including, but not limited to:

One, whether it provides services to the citizens and inhabitants of Haiti.

Two, whether its key officers and directors are government officials or are appointed by government officials.

Three, the extent of Haiti’s ownership of Teleco, including whether the Haitian government owns a majority of Teleco’s shares or
provides financial support such as subsidies, special tax treatment, loans or revenue from government mandated fees.

Four, Teleco’s obligations and privileges under Haitian law, including whether Teleco exercises exclusive or controlling power to
administer its designated functions.

And five, whether Teleco is widely perceived and understood to be performing official or governmental functions.

Both Mr. Esquenazi and Mr. Rodriguez contend these instructions caused the jury to convict them based only on the fact that Teleco was a government-owned entity that performed a service, without any determination that the service it performed was a governmental function.  We cannot agree.  Read in context, the district court’s instructions make plain that provision of a service by a government owned or controlled entity is not by itself sufficient.  The district court explained only than an entity that provides a public service ‘may’ meet the definition of ‘instrumentality,’ thus indicating that providing a service is not categorically  excluded from “a function of the foreign government.” But the sentence just before explained with no equivocation that only “a means or agency [that performs] a function of the foreign government” would qualify as an instrumentality. Although, read in isolation, the portions of the instruction addressing the provision of services could sweep too broadly, when constrained by the actual definition of “instrumentality” the district court gave and the other guiding factors the district court outlined, we find no error in these instructions.  Indeed, they substantially cover the factors we previously outlined.

[In a footnote the opinion states: The only two factors we provide today that the court’s instructions did not include were the length of the government’s control over Teleco and whether Teleco was formally designated a government owned entity. As we have said, however, the factors we provide here are intended merely as a helpful, non-exhaustive list. We observe that the facts relevant to these factors would be neutral at best in this case. For, although Haiti never specifically designated Teleco a government entity, the company had an entity suffix indicating that it was funded with government money because “the government consider[ed] Teleco as its . . . entity,” and Haiti later passed a law expressly designating its officials as subject to a public anti-corruption law. . And Teleco came into being based upon a contract created by the government. Indeed, the Haitian government has owned almost all equity in the company and has appointed all board members and the chief officer for nearly 40 years, since shortly after it was created. . Ultimately, district courts have “wide discretion” in crafting jury instructions and we cannot say that omission of those two factors leave us “with a substantial and ineradicable doubt as to whether the jury was properly guided in its deliberations.”]

The instructions, we conclude, neither misstated the law nor prejudicially misled the jury regarding the definition of “instrumentality.”

Sufficiency of the evidence Teleco was a Haitian instrumentality

In addition to challenging the “instrumentality” jury instruction, Messrs. Esquenazi and Rodriguez also argue the evidence was insufficient to demonstrate that Teleco was an instrumentality of the Haitian government. We review the sufficiency of the evidence de novo, “viewing the evidence and taking all reasonable inferences in favor of the jury’s verdict.”  In light of our construction of the term, we have little difficulty concluding sufficient evidence supported the jury’s necessary finding that Teleco was a Haitian instrumentality.

From Teleco’s creation, Haiti granted the company a monopoly over telecommunications service and gave it various tax advantages. Beginning in early 1970s, and through the years Messrs. Esquenazi and Rodriguez were involved, Haiti’s national bank owned 97 percent of Teleco. The company’s Director General was chosen by the Haitian President with the consent of the Haitian Prime Minister and the ministers of public works and economic finance. And the Haitian President appointed all of Teleco’s board members. The government’s expert testified that Teleco belonged “totally to the state” and “was considered . . . a public entity.” Although the expert also testified that “[t]here was no specific law that . . . decided that at the beginning that Teleco is a public entity,” he maintained that “government, officials, everyone consider[ed] Teleco as a public administration.” Construed in the light most favorable to the jury’s verdict, that evidence was sufficient to show Teleco was controlled by the Haitian government and performed a function Haiti treated as its own, namely, nationalized telecommunication services.

Mr. Esquenazi’s vagueness challenge

Mr. Esquenazi alone challenges the FCPA as unconstitutionally vague as applied to him.  Mr. Esquenazi’s only contention, however, is that the statute would be vague if we interpreted ‘instrumentality’ to include state-owned enterprises that do not perform a governmental function.  But we have not.  Our definition of ‘instrumentality’ requires that the entity perform a function the government treats as its own.  Although we recognize there may be entities near the definitional line for ‘instrumentality’ that may raise a vagueness concern, non-speech vagueness challenges are only cognizable as applied. Because the entity to which Mr. Esquenazi funneled bribes was overwhelmingly majority-owned by the state, had no fisc independent of the state, had a state-sanctioned monopoly for its activities, and was controlled by a board filled exclusively with government-appointed individuals, the FCPA is not vague as applied to his conduct.

Whether Mr. Esquenazi and Mr. Rodriguez possessed the requisite knowledge

Messrs. Esquenazi and Rodriguez also aim challenges at the knowledge element of the FCPA. Both challenge the district court’s jury instructions on the element. And Mr. Rodriguez challenges the district court’s decision to give the jury a deliberate-ignorance instruction as well as the sufficiency of the evidence that he knew Teleco was a Haitian instrumentality. We address these in turn.

The district court’s “knowledge” instructions

In its instructions, the district court told the jury that knowledge was an essential element of each FCPA charge, and that, to convict on the FCPA charges, the jury had to find each bribe payment was “made to any person while knowing that all or a portion of such money or thing of value will be offered, given or promised directly or indirectly to any foreign official.” The district court explained that “knowing” meant actual knowledge or a firm belief of the existence of a particular circumstance or result. Messrs. Esquenazi and Rodriguez contend this instruction was erroneous because it misled the jury to believe it could convict if either knew their intermediary (namely, Grandison at TCSC) would make a payment to a person who just “happened” to be a foreign official without their prior knowledge. In other words, they argue, the instruction failed to make clear that they must have known the recipient of the bribe payment would be a foreign official. Messrs. Esquenazi and Rodriguez failed to timely raise this argument before the district court, so we review only for plain error.  To surmount this standard of review, the challenger must show “instruction was an incorrect statement of the law and [that] it was probably responsible for an incorrect verdict, leading to substantial injustice.” We conclude there was no error here, plain or otherwise. The court’s instructions, read in their entirety, make clear the jury had to find Messrs. Esquenazi and Rodriguez knew or believed the bribes would ultimately reach the hands of a foreign official. The court listed as one of the essential elements of the FCPA charges “that the payment or gift was to a foreign official or to any person while the defendant knew that all or a portion of the payment or gift would be offered, given or promised, directly or indirectly to a foreign official.” This statement, as well as the court’s definition of “knowing,” directly tracked the FCPA’s language. The instruction was a correct legal statement, was clearly delivered, and nothing in its language was misleading to the jury.


Sufficiency of the evidence that Mr. Rodriguez had the requisite knowledge

Mr. Rodriguez challenges the sufficiency of the evidence that he had knowledge the recipient of the payments he made was a foreign official. We review de novo his sufficiency challenge.

Mr. Rodriguez asserts there was no evidence that he had actual knowledge of the ways Teleco was connected to the Haitian government making it an “instrumentality,” or of the fact that Teleco employees were foreign officials. Although he presents these as distinct elements, they are the same. Provided Mr. Rodriguez knew (or believed) Teleco was a Haitian instrumentality, he knew any Teleco employee was a foreign official.  Mr. Rodriguez concedes, based on Terra’s previous political-risk insurance application for a Teleco contract, that he knew Teleco was government-owned. But he says this shows nothing more than that he knew Teleco employees worked for a state-owned enterprise. He says this is neither in dispute nor dispositive of whether he knew Teleco was a Haitian instrumentality and, therefore, its employees were foreign officials.

As we pointed out above, Mr. Rodriguez’s conception of “instrumentality” — and thus, what the government had to prove he knew — is too narrow. Actually, the government bore the burden of proving Teleco was controlled by the Haitian government and performed a function the government treated as its own. Our review of the record shows sufficient evidence of Mr. Rodriguez’s knowledge of Teleco’s status as an instrumentality (and thus Messrs. Antoine and Duperval’s statuses as foreign officials) supports the jury’s finding of guilt. For example, insurance broker John Marsha testified extensively at trial about the political-risk insurance policy Terra tried to obtain on a Teleco contract that ultimately fell through. According to Mr. Marsha, the type of policy Terra sought is only available when contracting with a foreign government. Mr. Marsha testified that he received a phone call from Messrs. Esquenazi, Rodriguez, and Dickey, who said they wanted to insure contracts with “foreign governments.” After Mr. Marsha sent an application for political-risk insurance, Mr. Dickey emailed Marsha (copying Messrs. Rodriguez and Esquenazi) with an attached insurance application listing Teleco as a “government-owned entity.” Later, when the insurer had doubts about what recourse it might have against the Haitian government if the proposed Teleco/Terra contract was breached, Mr. Dickey (again copying Messrs. Rodriguez and Esquenazi) emailed Mr. Marsha and said: “With respect to Haiti, we may be able to get a letter from the TELECO President to the effect that TELECO is an instrumentality of the Haitian government. Would this help expedite matters?” And, when the insurer became concerned the policy’s force majeure clause might permit “the Haitian government” to cancel the contract with Terra, Messrs. Dickey, Rodriguez, and Esquenazi discussed this possibility at length with Mr. Marsha.  Also based on his status as a Terra executive directly involved in deals with Teleco, the jury reasonably could infer Mr. Rodriguez knew the company had a state-sanctioned monopoly over telecommunications in Haiti. That evidence was sufficient to support a jury finding that Mr. Rodriguez knew Teleco was an instrumentality of the Haitian government. And because it is undisputed that he knew Messrs. Antoine and Duperval were Teleco employees, that evidence supports a finding that he knew they qualified as foreign officials under the FCPA.”


After careful consideration, and for all of these reasons, we conclude the convictions and sentences of both Messrs. Esquenazi and Rodriguez are due to be affirmed.”

Haiti Teleco “Foreign Official” Says He Was Not A “Foreign Official” – Files Appeal On This And Other Issues

Some background is necessary to place in context an interesting development that is likewise relevant to the pending Eleventh Circuit “foreign official” appeal by Joel Esquenazi and Carlos Rodriguez (see here for the prior post linking to the full briefing in the case).

In terms of the number of individual criminal defendants (9), the Haiti Teleco enforcement actions are the largest in FCPA history (minus the manufactured Africa Sting case).  The FCPA charges in the enforcement actions were based on the theory that Haiti Teleco was a “instrumentality ” of the Haitian government, such that Haiti Teleco employees were “foreign officials” under the FCPA.  Seven of the defendants pleaded guilty and two of the defendants, Esquenazi and Rodriguez, exercised their constitutional right to a jury trial and were found guilty of FCPA and related charges.  As noted above, both defendants have appealed their convictions to the Eleventh Circuit.  [Disclosure – I am providing pro bono expert services to defendants’ counsel, including my former law firm Foley & Lardner, relevant to the “foreign official” issue].

In addition to the FCPA (and related) charges brought against the above category of defendants, the DOJ also criminally charged three “foreign officials” in connection with the matter (see this prior post titled “Haiti Teleco Roundup” for additional details).  Two of the individuals pleaded guilty to non-FCPA offenses, and one “foreign official,” Jean Rene Duperval, was found guilty by a jury on various money laundering charges.

In short, 12 individuals were criminally charged, pleaded guilty, and/or were found guilty based, in whole or in part, on the theory that Haiti Teleco was an “instrumentality” of the Haitian government.

This prosecution theory of course is a main focus of the Esquenazi and Rodriguez appeal in the Eleventh Circuit.  As noted in this prior post, shortly after their convictions and before their current appeal, a stunning development occurred in the case as the Haitian Prime Minister (Jean Max Bellerive) authored a declaration, on behalf of the Haitian Ministry of Justice, concerning the “Legal Status of Teleco.”  (See here for the declaration).   The declaration asserted, among other things, that “Teleco has never been and until now is not a state enterprise.”  The declaration was dated ten days before the jury reached its verdict in the Esquenazi and Rodriguez trial and subsequent filings in the cases suggest that the origins of the declaration was in response to a letter sent by Paul Calli (Carlton Fields – then an attorney for Patrick Joseph (one of the “foreign officials” who pleaded guilty in the case)) inquiring about the status of Haiti Teleco and whether it was a private company or a government owned company.

In a further stunning development, and as noted in this prior post, after the Bellerive declaration surfaced, the DOJ contacted the Prime Minister and he filed a revised declaration (here), in which he backtracked from many of his prior declaration statements, and stated that he did not know his original declaration  “was going to be used in criminal legal proceedings in the United States or that it was going to be used in support of the argument that […] Teleco was not part of the Public Administration of Haiti.”

The trial court judge in the Esquenazi and Rodriguez case denied defendants’ request for a new trial and this denial is among the issues on appeal in the Eleventh Circuit.

And now for the interesting and notable recent development alluded to in this Main Justice story.

Duperval, the key “foreign official” at the center of the Haiti Teleco prosecutions, filed an appeal (here) in the Eleventh Circuit earlier this week challenging his convictions.  One issue on appeal is stated as follows.  “The evidence was insufficient to prove beyond a reasonable doubt that Haiti Teleco was a government instrumentality and that Jean Rene Duperval was a foreign official as required to prove that a violation of the Foreign Corrupt Practices Act generated proceeds of a specified unlawful activity – a necessary predicate for the convictions on the money laundering conspiracy and substantive money laundering charges.”

Separately, Duperval’s brief discusses the Bellerive declarations in connection with his due process challenges.  Among other things, the brief notes that the DOJ’s “explanation and Bellerive’s statements in his second declaration, are nothing short of disingenuous, border on the nonsensical, and are expressly contradicted by the previous correspondence, which established that Bellerive signed the first declaration in response to an inquiry from an attorney representing Patrick Joseph …”.    The brief then asserts that “but for the government’s unjustified interference with Prime Minister Bellerive, Mr. Duperval could have availed himself of a favorable witness to demonstrate quite simply that Teleco was not a government instrumentality and he was not a foreign official.”

Duperval’s brief also challenges the sufficiency of the trial court evidence regarding “foreign official” and whether Duperval was a “foreign official as required to prove a charge of money laundering related to the proceeds of a violation of the FCPA.”  The substantive arguments on this issue largely mirror previous defense arguments in the Lindsey Manufacturing and Carson “foreign official” challenges as well as Esquenazi’s and Rodriguez’s arguments on appeal.  Duperval’s argument includes discussion and several citations to my “foreign official” declaration (see here).

Another interesting aspect of Duperval’s appeal is his challenge that the “trial court erred in not charging the jury in accordance with Duperval’s proffered theory of defense instruction.”  Specifically, Duperval argues that the trial court denied Duperval’s FCPA facilitation payments exception instruction.  The brief asserts that the “language in the instruction was extracted verbatim” from the FCPA and that there was “ample evidence in the record to support the giving of the instruction.”

In this regard, it is interesting to note that in Judge Keith Ellison’s (S.D. Tex.) December 2012 Jackson / Ruehlen decision (see here for the prior post regarding the SEC enforcement action) he concluded, in what is believed to be an issue of first impression, that the SEC must bear the burden of negating the facilitation payments exception.

Friday Roundup

Briefing complete,  an isn’t it ironic follow-up, and going for the gold.  It’s all here in the Friday roundup.

Briefing Complete In Historic “Foreign Official” Challenge

This previous post highlighted the appeal of Carlos Rodriguez and Joel Esquenazi to the 11th Circuit on a host of issues, including whether the trial court erred as a matter of law in its jury instruction regarding what constitutes an “instrumentality” of a foreign government – and thus who are “foreign officials” under the FCPA.  As noted in the post, this is a historic appeal, the first time in the FCPA’s history that “foreign official” will be squarely before an appellate court.  This previous post highlighted the DOJ’s response brief.

Yesterday lawyers for Rodriguez and Esquenazi filed reply briefs here and here.

Among other things, Rodriguez’s brief argues as follows.  “This Court should reject the Government’s assertion that the OECD Anti-Bribery Convention requires that this Court affirm the jury instruction incorporating the government function interpretation.  […] Before the United States adopted the OECD 1997 Convention on Combating Bribery in 1998, the United States had no obligation to prohibit foreign bribery.  Thus, the law of nations sheds no light on what Congress intended when it adopted the relevant definition of foreign official in 1977.   In 1998, when Congress amended the FCPA in light of the OECD’s Convention, Congress did not add “public enterprise” to the definition of foreign official.  This Court should not apply terms from the Convention that Congress chose not to adopt into the FCPA.”

Among other things, Esquenazi’s brief argues that the “government’s untethered definition of instrumentality cannot stand,” “the government engages in a selective and misleading reading of the FCPA’s legislative history,” and that the “government’s vehemence proves too much.”  As to the later point, the brief states as follows.  “The Government spends a significant part of its brief arguing that its broad (and fatally flawed) definition of “instrumentality” is crystal clear.  First, few statutory terms have received such extensive governmental resuscitation efforts. Second, there is a difficult-to-ignore, growing consensus among observers (including two former United States Attorneys General) that the Government is misreading “instrumentality.”

Regarding my “foreign official” declaration (here) that the DOJ is seeking to exclude from the record, the brief states as follows.  “The Government protests Esquenazi’s citation to Professor Michael J. Koehler’s declaration addressing the legislative history of the FCPA, which was filed in United States v. Carson.  Aside from the analysis contained in the Koehler declaration, the substance of the declaration is the legislative history of the FCPA. The Court can surely take notice of legislative history, and evaluate the utility and accuracy of Professor Koehler’s declaration for itself. But the Government’s claim that the declaration of a professor filed in another criminal proceeding and under penalty of perjury is somehow of lower status than a law review article reviewed by law students strains credulity.”

David Simon (Foley & Lardner – here) leads the appellate team for Rodriguez.  Markus Funk (Perkins Coie – here) leads the appellate team for Esquenazi.

Isn’t It Ironic Follow-Up

In this prior post, I asked isn’t it ironic, don’t you think, that while the U.S. is bringing enforcement actions against companies for conduct that includes providing $600 bottles of wine, Cartier watches, cameras, kitchen appliances, business suits, and executive education classes to individuals deemed “foreign officials,” the U.S. has legitimized corporate influence over government in this country?   I noted that this uncomfortable truth will be clear on display as the elections unfold.

Sure enough, earlier this week, the Wall Street Journal had a page one article “Movie Mogul’s Starring Role in Raising Funds for Obama” (here) detailing Jeffrey Katzenberg’s extensive political contributions and close ties to President Obama.  Hosting a dinner that raised $15 million for President Obama.  Check.  Writing a $2 million check to jump start a super PAC supporting President Obama.  Check.  A planned $40,000 per person dinner with President Obama.  Check.

The WSJ article notes that “Mr. Katzenberg’s fundraising prowess has earned him access and a role as the informal liaison between Hollywood and the White House, as the industry continues seeking government help against online piracy” among other issues.

If President Obama was a foreign official and expensive wine was served at the dinner, such allegations might very well find their way into an FCPA enforcement action … and have already.  If the super PAC was a charitable donation and President Obama a foreign official, such allegations might very well find their way into an FCPA enforcement action … and have already.

Isn’t it ironic don’t you think?

But the irony does not stop there.

As noted in the article, among the access that Katzenberg had was attending a State Department lunch during the recent U.S. visit of China’s presumed future leader Xi Jinping.  The lunch occurred in the context of Hollywood’s eagerness to tap into the lucrative Chinese market.

As noted in this previous post, it was widely reported this past spring that the SEC has sent letters of inquiry to several Hollywood studios, including Katzenberg’s DreamWorks Animation, seeking information about potential inappropriate payments and how the companies interact with certain government officials in China.

Isn’t it ironic don’t you think?

Going for the Gold

It’s interesting to witness the lengths FCPA Inc. will go to market its compliance services.  After dozens of London Olympic, Bribery Act, FCPA, are you prepared type pieces, up next is the Winter Olympics in Sochi, Russia, and with that a marketing opportunity.   This recent law firm piece states as follows.  “With the conclusion of the 2012 Summer Olympics in London, the world’s eyes will soon turn to Sochi, the Black Sea resort city in Russia, which will host the 2014 Winter Olympics. In addition to serving as the backdrop for the usual feats of athletic prowess and national pride, the Sochi games may also be fertile ground for prosecutions under the United States’ Foreign Corrupt Practices Act (FCPA). The U.S. government’s actions in this setting will serve as a signal to any company doing business abroad that it must be proactive in ensuring compliance with the FCPA.”

As Above the Law recently observed here, the FCPA “freak-out session is entertaining to watch.”


A good weekend to all.

DOJ Files Response Brief In Historic 11th Circuit “Foreign Official” Appeal

This previous post detailed the appeal of Carlos Rodriguez and Joel Esquenazi to the 11th Circuit on a host of issues, including whether the trial court erred as a matter of law in its jury instruction regarding what constitutes an “instrumentality” of a foreign government – and thus who are “foreign officials” under the FCPA.  As noted in the post, this is a historic appeal, the first time in the FCPA’s history that “foreign official” will be squarely before an appellate court.  Certain of the appellant’s arguments are based on my “foreign official” declaration – see here.

Earlier today, the DOJ filed its response brief – here.

In summary, the DOJ states as follows as directly relevant to “foreign official.”

“The district court’s instructions on the meaning of ‘instrumentality of a foreign government’ were correct. The instructions stated that an instrumentality must perform a governmental function and provided a nonexhaustive list of relevant factors for the jury to consider in deciding whether Teleco was an instrumentality of the government of Haiti. Courts have used similar tests to determine whether an entity is an instrumentality in other contexts and relied on many of the same factors.   The evidence sufficiently established that Teleco was an instrumentality of Haiti during the relevant time period. The government, through its national bank, owned 97% of Teleco’s shares, and, if Teleco had been profitable, those profits would have accrued to the government and the national bank. Because it was not, the national bank subsidized Teleco. Haiti’s president and high-level ministers controlled Teleco through their appointment of Teleco’s board of directors and general director. Teleco’s status as a government instrumentality is also reflected in Haitian law that subjected Teleco officials to its prohibitions against official corruption. Defendants’ narrow construction of the term ‘instrumentality’ is inconsistent with the terms of the FCPA and Congressional intent. The prohibitions in the FCPA are expressed broadly and reflect Congress’s purpose to combat the problem of pervasive foreign bribery. Defendants’ interpretation of the statute is also inconsistent with the provisions of an international treaty and with Congress’s explicitly-stated intent, when amending the FCPA, to conform the statute to the treaty. The term ‘instrumentality’ is also not unconstitutionally vague. It provided fair notice that defendants’ bribery scheme, which involved intentional conduct and had no innocent explanation, was illegal. Moreover, defendants cannot complain that they were left guessing about the legality of their actions when they could have requested an opinion on that question from the Attorney General but did not do so.”

“The instructions on the knowledge element of the FCPA were not plainly erroneous. The government was not required to prove that defendants knew that the recipients of the bribes were “foreign officials” under the statute’s legal definition, and the instructions, when viewed as a whole and in the context of the entire trial, made clear that the jury had to find that defendants believed they were bribing an employee of a foreign government instrumentality.  Overwhelming evidence supported the jury’s finding on that element. Defendants applied for political risk insurance, which was needed only because a foreign government was a party to the Terra-Teleco contract, and they repeatedly referred to Teleco as a government-owned entity during the application process. Esquenazi also testified that Teleco was government-owned at a deposition. The court did not err in giving a deliberate ignorance instruction. It was appropriate as to the FCPA counts without a showing that defendants purposely avoided learning all the facts because the statute explicitly equates knowledge of a circumstance with awareness “of a high probability” that the circumstance exists.  […] The evidence also supported the instruction. Despite the highly suspicious circumstances surrounding the payments that Rodriguez authorized to the third-party intermediaries, he claimed that, although he was in charge of Terra’s finances, he did not know their true purpose. Even if the court erred in giving the instruction, any error was harmless because the evidence also established that Rodriguez knew that the payments to the intermediaries were bribes.”

As to my “foreign official” declaration, the DOJ states as follows.

“Defendants rely on a 144-page declaration by Professor Michael J. Koehler that was filed on behalf of the defendants in Carson […]. That declaration is not part of the record in this case, and this Court should not consider it. Although defendants suggest that this Court may take judicial notice of the declaration because it relates to legislative history, the declaration selectively reviews the legislative history and draws inferences in support of a defense motion to dismiss the indictment. As such, it is not necessarily the statement of a disinterested expert, it was not reviewed as a scholarly article, and it was never subject to impeachment in the case below. Even the district court in Carson did not rely on the declaration because it concluded that ‘resort to the legislative history of the FCPA [was] unnecessary.’ […] If the Court is inclined to consider the Koehler affidavit, the government asks the Court to similarly consider the declaration of FBI Special Agent Brian Smith, also filed in Carson, that discusses references to SOEs in the legislative history.”  See here for a copy of Smith’s declaration.

[In Kiobel v. Royal Dutch Shell, the Second Circuit stated as follows concerning reliance of professor expert declarations filed in another case being used in the case – “we fail to see how statements made in an affidavit, under penalty of perjury, are any less reliable than published works whose accuracy is confirmed only by efforts of the student staff of law journals.”]

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