A “foreign official.”
Without one, there can be no FCPA anti-bribery violation (civil or criminal). Who were the alleged “foreign officials” of 2016?
This post highlights the alleged “foreign officials” from 2016 corporate DOJ and SEC FCPA enforcement actions.
There were 27 core corporate enforcement actions in 2016. Of the 27 enforcement actions 21 (78%) involved, in whole or in part, employees of alleged state-owned or state-controlled entities (“SOEs) with 7 of the 21 (26%) actions involving, in whole or in part, individuals associated with foreign health care systems.
By way of comparison:
- in 2015, 55% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here );
- in 2014 60% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here );
- in 2013, 77% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here );
- in 2012, 42% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here  at pages 348-353);
- in 2011, 81% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here  at pages 29-41);
- in 2010, 60% of corporate FCPA enforcement actions involved, in whole or in part, employees of alleged SOEs (see here at pages 108-119); and
- in 2009, 66% of corporate FCPA enforcement actions involved, in whole or in part, employees of alleged SOEs (see here  at pages 410-44).
In 2014, in an issue of first impression for an appellate court, the 11th Circuit  set forth a control and function test for whether an alleged SOE can be “instrumentality” under the FCPA such that its employees are “foreign officials” under the FCPA. As highlighted here  and more extensively in my Supreme Court amicus brief  supporting the cert petition, there were many flaws in the 11th Circuit’s reasoning. The Supreme Court declined  to hear the case. As to whether Congress intended employees of SOEs to be “foreign officials” under the FCPA, see here  for my “foreign official” declaration.
The remainder of this post describes (as per DOJ/SEC allegations) the “foreign officials” of 2016. As is apparent from the descriptions below, in certain instances the enforcement agencies describe the “foreign official” with reasonable specificity; in other instances with virtually no specificity.
[Note: certain of the enforcement actions below technically only involved FCPA books and records and internal control charges or findings. As most readers know, actual charges in many FCPA enforcement actions hinge on voluntary disclosure, cooperation, collateral consequences, and other non-legal issues. Thus, even if an FCPA enforcement action is resolved without FCPA anti-bribery charges, most such actions remain very much about the “foreign officials” involved – a fact evident when reading the actual enforcement action. Moreover, in 2016 there appeared to be two “pure” FCPA books and records and internal controls provisions cases (LAN Airlines and Las Vegas Sands) in which it was unclear whether the enforcement agencies believed the recipients were “foreign officials”]
“Panamanian government officials that had significant influence in the Panamanian government’s award of contracts to purchase software”
“healthcare professionals (“HCPs”) who were employed by state-owned hospitals in China”
Employees of “Chinese state-owned entities (“SOEs”) that were controlled by the government of China and performed functions that the Chinese government treated as its own”
Same as above
“An Uzbek government official and a close relative of a high-ranking Uzbek government official. Foreign Official had influence over decisions made by UzACI (the Uzbek Agency for Communications and Information)”
Same as above
“highranking employees of [Chinese] state owned enterprises (“SOEs”) and [Chinese] government agencies”
Healthcare professionals in Brazil, Bolivia, Colombia, Argentina, Mexico, and Costa Rica
“Russian government officials to obtain approval for TheraSphere” (the company’s liver cancer treatment product)
Chinese healthcare professionals
Las Vegas Sands
Officials with “the Chinese Basketball Association (“CBA”), which falls under the PRC State General Administration of Sports (which in turn is organized directly under the State Council of the PRC)”
References to a “property manager affiliated with (a Chinese) SOE”
Generic references to “ferry company that was partially-owned by an older, Chinese state-owned ferry company
“local Chinese officials in order to receive preferential treatment, relaxed regulatory oversight, and/or reduced customs duties, taxes, and fees”
“employees of three end customers, two of which were Chinese state owned entities”
Individuals at “hospitals or other medical facilities that were controlled by the government of Russia”
Same as above as well as additional generic findings regarding relationships with distributors in Ghana, Israel, Kazakhstan, Ukraine, and Vietnam
“employees of [Chinese] government-owned shipyards as well as ship-owners”
Reference is made to Argentine labor union officials, unclear however whether the DOJ believed that such officials were “foreign officials”
Reference is made to Argentine labor union officials, unclear however whether the SEC believed that such officials were “foreign officials”
Key Energy Services
“a contract employee at Petróleos Mexicanos (“Pemex”), the Mexican state-owned oil company”
“Health care providers, at state-owned and state-controlled entities in China and Russia”
“a high-ranking Chinese Communist party official” who was previously in a supervising position to “the provincial head of the AIC” (Administration of Industry and Commerce)
Individual(s) at the Andhra Pradesh Beverages Corporation Limited (“APBCL”), an instrumentality of the government of Andhra Pradesh which purchases beer directly from brewers and sells beer directly to private retailers.
Individual(s) at the Tamil Nadu State Marketing Corporation (“TASMAC”), an instrumentality of the government of Tamil Nadu which controls both wholesale and retail beer sales, purchasing beer from brewers and selling to consumers through TASMAC retail outlets.
Findings regarding connections to the son-in-law of the Andhra Pradesh Excise Minister
DRC Official 1 “a senior official in the DRC who had the ability to take official action and exert official influence over mining matters in the DRC”
DRC Official 2 “a senior official in the DRC and close advisor to DRC Official 1” who since at least 2004 “was an Ambassador-at-Large for the DRC government and also a national parliamentarian. DRC Official 2 had the ability to take official action and exert official influence over mining matters in the DRC.”
Libyan Official 1 “was a close relative of a high-ranking official in the Libyan government. Libyan Official 1 did not hold a formal position within the Libyan government, but possessed and used a Libyan diplomatic passport and conducted high profile foreign and domestic affairs on behalf of the Libyan government. Libyan Official 1 made administrative and investment decisions for the LIA, including through proxies like Libyan Official 3.” [The SEC’s order describes this individual as “one of the sons of Colonel Muammar Gaddafi, Libya’s ruler at the time.”]
Libyan Official 2 “was a high-ranking official in the Libyan government who could influence commercial matters in Libya. Libyan Official 2 could also influence the granting of visas and landing permits for foreign visitors to Libya.
Libyan Official 3 “was a high-ranking official at the LIA who could influence investment decisions.”
Same as above – additional allegations about high ranking government officials in Chad and Niger.
Individual(s) at Petroleos de Venezuela, S.A. (“PDVSA”), Venezuela’s state-owned and state-controlled energy company
Individual(s) at various Chinese state-owned enterprises
Individual(s) at China’s state-owned and state-controlled enterprises
Healthcare professionals in China
The Dominican Official is described as “an official in a high-level decision-making position in the government of the Dominican Republic.” According to the information, the official “had influence over decisions made by the Fuerza Aerea de Republica Dominiciana (FAD), which was the Dominican Republic’s Air Force.
Saudi Arabia Official [described as “an official in a high-level decision-making position in a state-owned and controlled company in Saudi Arabia that performed a government function]
Mozambique Official [described as an official in a high-level decision-making position in the government of Mozambique who had influence over decisions made by LAM][described as the state-owned commercial airline in Mozambique that performed a government function]
Same as above – “government officials in the Dominican Republic, Saudi Arabia, and Mozambique”
“many of JPMorgan-APAC’s clients in China were state-owned enterprises (SOEs) which were owned or controlled by the government of China and performed a function that the government treated as its own, and thus were each an ‘instrumentality’ within the meaning of the FCPA.”
“JPMorgan-APAC bankers set up and used a program (the “Client Referral Program”) to hire referred candidates specifically for the purpose of influencing senior officials at clients to award business to the Company”
“the Deputy Minister of a Chinese government agency”
Same as above – “Many of JPMorgan’s clients were state-owned entities (“SOEs”), and therefore the client executives requesting employment for their relatives and friends were foreign government officials under the FCPA”
Odebrecht / Braskem
An executive and director of Petrobras; amanager at Petrobras; a high-level state elected official in Brazil; and a high-level officials in the legislative breanch of government in Brazil
a high-level official of an Angolan state-owned and state-controlled company
a high-level official of a Mexican state-owned and state-controlled company
individuals associated with a Venezuelan state-owned and state-controlled company
allegations regarding non-specific government officials in connection with public works projects in the following countries: Argentina, Colombia, Dominican Republic, Ecuador, Guatemala, Mozambique, Panama, and Peru
Same Brazilian officials as above
Russian Official described as a high-ranking government official in the Russian Federation who held official positions on government committees and who had the ability to influence matters related to the purchase of pharmaceutical products by the Russian government, including purchases made during annual auctions held by the Russian Ministry of Health
Ukrainian Official described as a high-ranking official within the Ukrainian Ministry of Health who held official positions at government agencies and on government committees and who could take official action on, and exert official influence over, matters related to the registration and pricing of pharmaceutical products in Ukraine
Physicians and other healthcare providers at state-owned and state-managed hospitals and healthcare facilities in Mexico
Same as above
“officials at Angolan State-Owned Enterprise 1, Angolan State-Owned Enterprise 2, and Angolan State-Owned Enterprise 3”
officials at a state-owned or state-controlled enterprises in Bangladesh
officials at “PLN [Perusahaan Listrik Negara, the Indonesia-state-owned electricity company].”
“state-owned customers in Thailand, including sales to: (i) the Provincial Electricity Authority, a state-owned electricity supplier in Thailand; (ii) the Metropolitan Electricity Authority, a state-owned electricity supplier in Thailand; and (iii) TOT Public Company Limited, a state-owned telecommunications company.”
officials at state-owned or state-controlled enterprises in China
Same as above.
In addition “employees of certain customers or suppliers, some of which were Egyptian SOEs”
Free 90 Minute 2017 FCPA Year In Review Video
A summary of every corporate enforcement action; notable statistics and issues to consider; compliance take-away points; and enforcement agency and related developments. Click below to view the engaging video tutorial.