A “foreign official.”
Without one, there can be no FCPA anti-bribery violation (civil or criminal). Who were the alleged “foreign officials” of 2020?
This post highlights the alleged “foreign officials” from 2020 corporate DOJ and SEC FCPA enforcement actions.
There were 12 core FCPA enforcement actions in 2020. Of the 12 actions, 100 (83%) involved, in whole or in part, employees of alleged state-owned or state-controlled entities (“SOEs).
By way of comparison:
- In 2019, 57% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here)
- in 2018, 53% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here).
- in 2017, 54% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here)
- in 2016, 78% of corporate enforcement actions involved, in whole or in part, employees of alleged SOEs (see here);
- 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 2020. As is apparent from the descriptions below, in certain instances the enforcement agencies describe the “foreign official” with reasonable specificity. In other instances there is virtually no specificity as to the alleged “foreign officials.”
[Note: as in prior years, certain of the enforcement actions below technically only involved FCPA books and records and/or internal control charges or findings. In fact, of the 8 corporate FCPA enforcement actions brought by the SEC in 2019, 6 (Cardinal Health, Eni, Novartis, Alexion, Herbalife, and J&F,) “merely” found violations of the FCPA’s books and records and internal controls provisions. As most readers know, actual charges in many FCPA enforcement actions hinge on voluntary disclosure, cooperation, collateral consequences, and other non-legal element 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.
Airbus
DOJ
Officials employed by departments of the Chinese government that approved certain business with Airbus; executives from certain Chinese state-owned and state-controlled airlines.
Cardinal Health
SEC
Healthcare professionals in China who provided marketing services to the company and to other employees of state-owned retail entities who had influence over purchasing decisions related to the company’s products.
ENI
SEC
Algerian government officials (or their designees) associated with the country’s state-owned oil company.
Novartis
DOJ / SEC
Employees of state-owned and state-controlled hospitals and clinics in Greece (“Greek State HCPs”) and other HCPs in Greece; Employees of state-owned and state-controlled hospitals and clinics in Vietnam; HCPs in South Korea.
Alexion
SEC
Healthcare professionals (HCPs) employed at state-owned healthcare institutions in Turkey and Turkish Ministry of Health officials; HCPs employed at state-owned healthcare institutions in Russia.
World Acceptance
SEC
Mexican government officials (e.g., the secretary of health or education for a particular state government) and union officials.
Herbalife
DOJ / SEC
Officials of Chinese Government Agencies 1 [described as being responsible for issuing licenses required for companies to conduct direct selling in China] and 2 [described as being responsible for enforcing compliance with Chinese laws applicable to direct selling companies and having the authority to conduct investigations into direct selling companies and to pursue and impose fines and other penalties against direct selling companies that it deemed non-compliant with applicable laws] and State-Owned Media Outlet [described as a media company that published articles about business and other issues in China].
Sargeant Marine
DOJ
Petrobras Official #1 [a high-ranking executive], Petrobras Official #2 [an executive with responsibility over asphalt contracts], Brazilian Politician #1 [a member of the Brazilian Congress], Brazilian Politician #2 [a minister in the Brazilian government], PDVSA Official #1 [an individual with responsibility over asphalt contracts], PDVSA Official #2 [a supervisor of PDVSA Official #1], PDVSA Official #3 [an analyst who was involved in asphalt contracts], PDVSA Official #4 [an employee wo was involved in asphalt contracts] and Petroecuador Official #1 [a senior manager].
J&F
DOJ / SEC
Brazilian Official 1 [a high-ranking executive at BNDES (a Brazilian state-owned and state-controlled bank) and a high-ranking official in the executive branch of the Brazilian government], Brazilian Official 2 [a high-ranking official in the executive branch of the Brazilian government], Brazilian Official 3 [a high-ranking official in the executive branch of the Brazilian government, Brazilian Official 4 [a high-ranking executive of Petros (a Brazilian state-controlled pension fund)] and Brazilian Official 5 [a high-ranking official in the legislative branch of the Brazilian government].
Goldman
DOJ / SEC
Various Malaysian and Abu Dhabi officials in connection with 1Malaysia Development Berhad (1MDB), Malaysia’s state-owned and state-controlled investment development company.
Beam
DOJ
Foreign Official 1 [described as a senior government official in a state Excise Ministry in India].
Vitol
DOJ
Brazilian Official 1 [described as a fuel oil trader for Petrobras] and at least three other officials at Petrobras; Ecuadorian Official 1 [a senior manager at Petroecuador] and Ecuadorian Official 2 [an individual who held various positions in the Ecuadorian Ministry of Hydrocarbons]; a Mexican official at a wholly-owned PEMEX subsidiary.
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