This post highlighted the recent ruling in U.S. v. Aguilar that employees of Pemex Procurement International Inc. (PPI) – a wholly-owned affiliate of PEMEX – are not “public servants” for purposes of the relevant Mexican law.
After the ruling, Aguilar’s counsel (Quinn Emanuel) moved “for a partial judgment of acquittal on the money laundering conspiracy count, insofar as it asserts that Mr. Aguilar conspired to launder money in connection with (1) violations of Mexican antibribery law and (2) violations of the Foreign Corrupt Practices Act (FCPA) involving alleged payments to PPI employees.
In pertinent part, the letter brief to the court stated (certain internal citations omitted):
“In light of the Court’s ruling that “[PPI] employees are not ‘public servants’ under Article 212 . . . , as required for Article 222(II), Mexico’s criminal bribery provision,” it is clear that no rational, properly instructed jury could convict him of conspiring to launder money in connection with violations of Mexican antibribery law. The Court therefore should issue a judgment of acquittal on Count Three insofar as it concerns that specified unlawful activity. […] The Court’s Proposed Final Jury Instructions reflect that the jury will not be instructed on this specified unlawful activity, but an order memorializing the judgment of acquittal on that prong of Count Three nevertheless is appropriate.
Mr. Aguilar further respectfully submits that the Court’s ruling on Mexican antibribery law also compels his acquittal on the Mexico-related FCPA specified unlawful activity in Count Three. As explained below, the statutory text of the FCPA compels that result.
The FCPA provides an “affirmative defense” where, as here, “the payment, gift, offer, or promise of anything of value that was made, was lawful under the written laws and regulations of the foreign official’s . . . country.” 15 U.S.C. §§ 78dd-2(c)(1), 78dd-3(c)(1). Because the FCPA does not define “lawful,” courts should “give the term its ordinary meaning” set out in established dictionaries. Both general and legal dictionaries define “lawful” as “not contrary to law.” Consistent with the term’s plain meaning, the Supreme Court has held that conduct is “lawful” under written law when it is “not covered by” written law.
Accordingly, to satisfy this affirmative defense, a defendant need show only that a foreign country’s written laws do not proscribe his conduct. The FCPA thus does not require a defendant to show that a foreign country’s written laws affirmatively permit his conduct. The statute’s text does not say that. Congress easily could have used language to that effect but chose not to. See, e.g., 15 U.S.C. § 78mm(c) (“expressly authorized”); 33 U.S.C. § 403 (“affirmatively authorized”). Nor did Congress use other statutory signals like “permitted by the written laws” of the foreign country, which would have required a defendant to show an affirmative authorization. […] Courts “generally presume[] that Congress acts intentionally and purposefully in the disparate inclusion or exclusion” of statutory terms.
The FCPA’s legislative history confirms that Congress made this textual choice deliberately: Congress rejected a House version of the bill that would have required defendants to show payments were “expressly permitted” under foreign law in favor of the statute’s current language, “lawful under the written laws and regulations” of the foreign nation. H.R. Rep. No. 100-576, at 921–22. Congress’s “specific[] reject[ion]” of that stricter language “is of course an extremely significant factor in determining what [] Congress’ intention [was] with respect to the matters in issue.”
[…]
This Court’s ruling on Mexican law establishes that Mr. Aguilar’s alleged conduct concerning PPI and its employees was “lawful” under (that is, “not contrary to”) Mexico’s written criminal law, and thus that the FCPA’s affirmative statutory defense applies. (“[PPI] employees are not ‘public servants’ under Article 212 . . . , as required for Article 222(II), Mexico’s criminal bribery provision.”). Nor is this Court alone in holding that Mexican criminal laws applicable to “public servants” do not proscribe conduct in connection with private entities like PPI. A lower court in Mexico recently held that Mexico’s bribery laws did not apply to employees of an entity similarly situated to PPI. And just last week, Mexico’s Supreme Court held—as a constitutional matter—that criminal statutes that apply to “public servants” cannot extend to persons who work for private entities like PPI.
A judgment of acquittal under the FCPA’s affirmative defense is necessary because the Court’s ruling resolves any potential question of fact that the jury could be asked to determine regarding that defense. The statutory text is clear: “It shall be an affirmative defense . . . that . . . the payment, gift, offer, or promise of anything of value that was made, was lawful under the written laws and regulations of the foreign . . . country.” 15 U.S.C. §§ 78dd-2(c)(1), 78dd-3(c)(1). The Court’s holding that employees of PPI are not “public servants” under Mexico’s Penal Code and therefore are not subject to Mexico’s criminal bribery provisions conclusively establishes that Mr. Aguilar’s alleged conduct “was lawful under the written laws” of Mexico. Because there is nothing for the jury to decide, the Court should issue a judgment of acquittal.
[…]
The conclusions reached by other courts within the Second Circuit regarding the FCPA’s affirmative defense are not to the contrary. In United States v. Kozeny, the defense did not apply because the foreign country’s written criminal laws prohibited the payments at issue, while merely “reliev[ing] the payer of a bribe from criminal liability if the bribe [was] properly reported.” 582 F. Supp. 2d 535, 539 (S.D.N.Y. 2008). And in United States v. Ng Lap Seng, the court rejected this defense in a brief oral ruling where the defendant did not point the court to any foreign authority that showed his conduct was lawful. See No. 15 Cr. 706 (VSB) (S.D.N.Y. July 6, 2017) (ECF No. 584, Tr. 716:8–15). In neither case did the defendant establish what Mr. Aguilar has shown here: that a foreign country’s criminal laws expressly do not prohibit the payments at issue, both by their terms and under foreign and domestic judicial interpretations of those laws.
A judgment of acquittal also is warranted under the Second Circuit’s decision in United States v. Johnson, 968 F.2d 208 (1992), which considered the “lawful conduct” affirmative defense to witness tampering set out in 18 U.S.C. § 1512(e). The Court of Appeals first held that “lawful” meant “allowed or permitted by law.” 968 F.2d at 212 (emphasis added). The Court of Appeals then affirmed the decision of the Honorable Pierre N. Leval, agreeing that a defendant need not “prove that his conduct violated none of the panoply of . . . laws that might apply to his situation”; rather, given “the burdensome nature of proving such a negative,” a defendant need show only that he did not violate the statutes the government had identified as applying to his conduct. Id. (original emphasis). Mr. Aguilar finds himself in the same circumstances here.
For these reasons, Mr. Aguilar respectfully requests that the Court enter a judgment of acquittal on both Mexico-related specified unlawful activities underlying the charged money-laundering conspiracy. The Court’s ruling on Mexican law requires an acquittal on the Mexican law specified unlawful activity. And that same ruling also compels an acquittal on the Mexico-related FCPA specified unlawful activity because Mr. Aguilar has satisfied the requirements of an affirmative statutory defense.
If the Court determines not to enter a judgment of acquittal on the Mexico-related FCPA specified unlawful activity, then, in the alternative, Mr. Aguilar respectfully submits that he has met the minimal threshold showing needed to warrant a jury instruction on the FCPA’s “foreign law” affirmative defense. […] Thus, if the Court does not enter a judgment of acquittal on that specified unlawful activity, Mr. Aguilar respectfully requests that the Court provide the instruction contained in the enclosed Appendix.”
The proposed instruction stated:
“Under the FCPA, it is an affirmative defense that the payment, gift, offer, or promise of anything of value that was made, was lawful under the written laws and regulations of the alleged foreign official’s country. This means that if a payment or promise of payment is lawful under the laws of that foreign country, then you cannot find that the defendant violated the FCPA.
Because this is an affirmative defense, the defendant bears the burden to prove it by a preponderance of the evidence. To prove something by a preponderance of the evidence means to prove only that it is more likely true than not true, considering all the evidence. As I have explained, this burden is lower than the government’s burden to prove a thing beyond a reasonable doubt.
I have instructed you as a matter of law that the employees of PPI are not “public servants” under Mexican bribery law and therefore are not subject to Mexico’s criminal bribery provisions. As such, it is not a violation of Mexican bribery law to make a payment, gift, offer, or promise of anything of value to a PPI employee. I further instruct you that, as a matter of law, the Mexican Constitution deems lawful any conduct not expressly deemed unlawful through clear and definite terms by an established law.
If you find by a preponderance of the evidence that the defendant’s payments to PPI employees were lawful under the laws of Mexico, then you must find that the defendant’s payments to PPI employees did not violate the FCPA and, accordingly, you must find the defendant not guilty of conspiring to launder money in connection with violations of the FCPA involving Mexico or PPI for Count Three.”
In response the DOJ filed a letter brief which stated in pertinent part (certain internal citations omitted):
“The affirmative defense the defendant invokes is available only where a payment “was lawful under the written laws and regulations of the foreign official’s country.” 15 U.S.C. § 78dd-2(c)(1). Thus, the defendant is raising an affirmative defense that concerns not just Article 222(II) of the Federal Criminal Code, but the entire corpus of Mexican criminal, administrative and constitutional law, and he is doing so for the first time after the close of evidence. For that reason alone, the defense is untimely and should barred.
[…]
In addition to being untimely, the defendant has provided no evidence or other authority that it was legal under Mexico’s “written laws” to pay bribes to help Vitol win the contracts in question. Notably, despite the defendant’s extensive reliance on the declaration of a Mexican law expert in support of his other legal arguments, the defendant has not supplied the Court with any similar support for the proposition that the written laws of Mexico permitted him to bribe PPI officials.
[…]
The defendant relies on this Court’s recent decision, but it does not provide a sufficient basis for the affirmative defense. This Court ruled only that the defendant did not violate Article 222(II) of the Federal Criminal Code, but the affirmative defense is available only where a payment “was lawful under the written laws” of the country in question (civil or criminal), 15 U.S.C. § 78dd-2(c)(1) (emphasis added), not just where it is not an offense under one of the country’s criminal laws.
[…]
[T]o invoke this defense, a defendant must affirmatively show that written law permits the payment in question, which, again, the defendant has made no effort to do, beyond citing this Court’s ruling on one criminal law. The conference report on the 1988 bill that added this defense to the FCPA expressly stated that the “Conferees wish to make clear that the absence of written laws in a foreign official’s country would not by itself be sufficient to satisfy this defense.” H.R. Conf. Rep. 100-576, 922, 1988 U.S.C.C.A.N. 1547, 1955. The defendant suggests that the Court should disregard the conference report because the conferees agreed to delete provisions of the draft House bill that required the payments to be “expressly permitted under a[] law or regulation.” This Court should not follow that suggestion. First, as a general matter, a “conference report is . . . the most reliable evidence in legislative history . . . because it represents the final statement of the terms agreed to by both houses.” Slayton v. Am. Exp. Co., 604 F.3d 758, 771 (2d Cir. 2010); see RJR Nabisco, Inc. v. United States, 955 F.2d 1457, 1462-63 (11th Cir. 1992) (collecting authorities). Moreover, the conference report here is particularly persuasive because the drafting decision on which the defendant relies was made by the conferees and they explained it: as they said in the report, they were rejecting the House’s proposed language, but doing so with the express understanding that a mere absence of written laws would still not satisfy the defense under the final language they were adopting.
Contrary to the defense’s apparent suggestion, the conferees were not acting irrationally: the “absence of written laws,” standing alone, may be (and is) insufficient to invoke the affirmative defense, even if the defense does not go so far as to require that written laws and regulations “expressly permit” a payment (as would have been required under the House bill). For example, short of pointing to a written law expressly permitting the payment, a defendant should still be required to provide court decisions, treatises, academic authorities, or statements of government authorities affirmatively opining that the payments in question are lawful under the country’s laws. The defendant makes no effort to provide such authorities, and he should not be permitted to do so now for the first time after the close of evidence in the case and on the eve of summations. Instead, he relies only on this Court’s ruling as to one criminal law and his eleventh hour claim that there are no other written laws in all of Mexico that prohibit the conduct at issue in this case (in spite of his prior claims that such laws do, in fact, exist). He therefore is not entitled to an instruction on the defense.
What is more, defendant’s logic would require the government to prove in every FCPA prosecution not only a violation of the FCPA, but also a violation of foreign law. That result would be untenable and inconsistent with the purpose of the FCPA. It is for that reason that the court in Ng Lap Seng rejected a request for a similar instruction as “impractical” and “inconsistent with the plain meaning” of the FCPA. See Ng Lap Seng, S5 15 Cr. 706 (VSB) (S.D.N.Y.). This Court should do the same here.”
Recently, the court’s docket stated:
“ORDER. The defendant’s request for a jury instruction on the affirmative defense under the FCPA is denied. The Court’s decision at 313 that Aguilar could not be held criminally liable under Article 222(II) of Mexico’s Federal Penal Code does not necessitate a conclusion that he is entitled to the FCPA’s affirmative defense that the “payment, gift, offer, or promise of anything of value that was made, was lawful under the written laws and regulations of the” foreign country. 15 U.S.C. § 78dd-2(c)(1). Put simply, the Court’s determination as to Aguilar’s liability as a payer under one section of Mexico’s penal code is insufficient to satisfy the defendant’s burden to show that the payments at issue were lawful under Mexico’s written laws and regulations. See United States v. Kozeny, 582 F. Supp. 2d 535, 539 (S.D.N.Y. 2008) (“For purposes of the FCPA’s affirmative defense, the focus is on the payment, not the payer.” (emphasis in original)). Beyond the Court’s conclusion as to Article 222, the defendant points to no other written law or regulation in Mexico that makes lawful the payments at issue. A contrary conclusion would, in effect, add to the FCPA an element for the government to prove that the statute does not require. See United States v. Ng Lap Seng, No. 15-cr-706 (S.D.N.Y.), Trial Tr. 715-16. The defense has an exception. Both sides may supplement the record if they so desire. Ordered by Judge Eric N. Vitaliano on 2/20/2024. (CC) (Entered: 02/20/2024).”
