For some time, certain people have been confused, perplexed etc. as to why the meaning of “foreign official” in the FCPA’s anti-bribery provisions matters.
In connection with the June 2011 Foreign Corrupt Practices Act reform hearing in the House of Representatives, a variety of civil society organizations asked – why is greater clarity needed as “foreign official” – “greater certainty of what? Greater certainty of who [companies] are permitted to bribe and who [companies] are not permitted to bribe.”
In the immediate aftermath of the May 2014 “foreign official” in U.S. v. Esquenazi, a commentator stated:
“If your are trying to figure out whether a company is a private company or an “instrumentality” of a foreign government under the Foreign Corrupt Practices Act you are already in trouble. To reach that point in the FCPA analysis you’ve already paid a bribe, or are thinking of paying a bribe. (If you’re just thinking about it; Don’t do it.) Otherwise you’ll end up in the position of Joel Esquenazi and Carlos Rodriguez.”
Such comments were, and still are, entirely off-base and not the main reason why the meaning of “foreign official” matters. To be sure, the meaning of “foreign official” mattered to Esquenazi and Rodriguez in the narrow context of their case and more broadly for the obvious rule of law reasons implicated in criminal law enforcement.
Stating that the meaning of “foreign official” matters only to those intent on engaging in bribery is like saying the drinking laws matter only to those intent on drunk driving. Sure, the drinking laws can certainly capture those engaged in drunk driving, yet the reality is the underlying activity – drinking – is legal and socially acceptable in most other situations.
The same is true when it comes to the meaning of “foreign official.” The FCPA’s anti-bribery provisions are generally implicated when anything of value is offered or provided to a “foreign official” in connection with a business purpose.
Some will still maintain that the above is all fine and dandy, but a company still shouldn’t “bribe.”
However, as recent enforcement activity has highlighted, FCPA enforcement actions are increasingly based on allegations concerning internships (BNY Mellon), sports tickets (BHP Billiton), travel and entertainment (FLIR Systems and several other enforcement actions) and other inconsequential things of value such as flowers, cigarettes, and visits to karaoke bars (Eli Lilly and several other enforcement actions).
In other words, the underlying activity is legal and socially acceptable in most situations. In fact, it is often called effective sales and marketing, wining and dining the customer, or maintaining good will. Yet when such activity is focused, directly or indirectly, on a “foreign official” the U.S. government is inclined to call it bribery.
In short, the meaning of “foreign official” determines whether a criminal law applies to an interaction in the global marketplace. The Esquenazi decision expanded regulation of business interactions with a “well-defined group of persons” (as correctly noted by the 5th Circuit in U.S. v. Castle) to an ill-defined, practically boundless category of persons.
The proper scope and meaning of the “foreign official” is an issue of extraordinary practical significance to businesses and individuals subject to the FCPA. Not because business organizations want to bribe, but because business organizations competing in good faith in the global marketplace want to engage in conduct that is legal and socially acceptable in most other situations.
Do you now understand why the meaning of “foreign official” matters?
