Top Menu

The FCPA As An Ambiguous Statute And The Importance Of Legislative History

Several FCPA commentators object to the notion that the Foreign Corrupt Practices Act is ambiguous.

Writing recently at Forbes (see here for the article titled “Top 5 Misconceptions About The FCPA”), Howard Sklar set out to “clear up a few misconceptions about the FCPA.”  Number one on his list of misconceptions was that ‘the FCPA is a vague statute.”  Writing on his FCPA Blog, Richard Cassin has long maintained (see here and here for the more recent iteration) that FCPA lawyers say that the law is “complicated, technically challenging, obscure, poorly drafted and badly organized.”  Cassin however warned as follows.  “But don’t believe it. There’s no evidence in the record that judges or juries have any trouble understanding the FCPA.”

The above protestations and observations are just plain wrong.  There is abundant “evidence in the record” that the FCPA is an ambiguous statute.  Don’t take my word, read FCPA case law

In fact, last week Judge Richard Sullivan (S.D.N.Y.) concluded what several other federal court judges before him have previously concluded – that the FCPA is an ambiguous statute.  (See here for the prior post discussing Judge Sullivan’s opinion in SEC v. Straub, including his conclusion that the jurisdictional element of an FCPA anti-bribery violation is ambiguous).

This post summarizes the many instances in which federal court judges have found various provisions of the FCPA to be ambiguous.

In U.S. v. Kay, 200 F.Supp.2d 681 (S.D. Tex. 2002), Judge David Hittner concluded that the FCPA’s “obtain or retain business” element was ambiguous and he thus turned to an analysis of the legislative history.  On appeal, the Fifth Circuit (see 359 F.3d 738 (5th Cir. 2004)) likewise stated as follows prior to an extensive review of the FCPA’s legislative history.

“[T]he district court concluded that the FCPA’s language is ambiguous, and proceeded to review the statute’s legislative history.  We agree with the court’s finding of ambiguity for several reasons. Perhaps our most significant statutory construction problem results from the failure of the language of the FCPA to give a clear indication of the exact scope of the business nexus element; that is, the proximity of the required nexus between, on the one hand, the anticipated results of the foreign official’s bargained-for action or inaction, and, on the other hand, the assistance provided by or expected from those results in helping the briber to obtain or retain business. Stated differently, how attenuated can the linkage be between the effects of that which is sought from the foreign official in consideration of a bribe (here, tax minimization) and the briber’s goal of finding assistance or obtaining or retaining foreign business with or for some person, and still satisfy the business nexus element of the FCPA?”

In Stichting v. Schreiber, 327 F.3d 173 (2d Cir. 2003), the Court stated as follows.  “It is difficult to determine the meaning of the word “corruptly” simply by reading it in context. We therefore look outside the text of the statute to determine its intended meaning. […]  (“Legislative history and other tools of interpretation may be relied upon only if the terms of the statute are ambiguous.”

In U.S. v. Bodmer, 342 F.Supp.2d 176 (S.D.N.Y. 2004), Judge Shira Scheindlin addressed the question “whether prior to the 1998 amendments, foreign nationals who acted as agents of domestic concerns, and who were not residents of the United States, could be criminally prosecuted under the FCPA.”  Judge Scheindlin concluded that the FCPA’s language, as it existed prior to the 1998 amendments, was ambiguous and she thus resorted to legislative history.  Judge Scheindlin further commented in dismissing the FCPA charges against Bodmer as follows.  “After consideration of the statutory language, legislative history, and judicial interpretations of the FCPA, the jurisdictional scope of the statute’s criminal penalties is still unclear.”

In U.S. v. Kozeny, 493 F.Supp.2d 693 (S.D.N.Y. 2007), Judge Scheindlin stated as follows concerning the statute of limitations applicable to FCPA criminal violations.  “I find that [18 U.S.C. § 3282] is ambiguous, and turn to its legislative history for guidance on its proper interpretation.”

In U.S. v. Jensen, 532 F.Supp.2d 1187 (N.D. Cal. 2008), Judge Charles Breyer stated as follows regarding  § 78m(b)(5) which makes “knowing” violations of the FCPA books and records and internal control provisions a crime.  “Because the plain language of § 78m(b)(5) is not unambiguous, the Court turns to legislative history.”

In all of the above examples, given the ambiguity in the FCPA, courts resorted to legislative history to construe the statute.  This is why the FCPA’s legislative history remains vital and important. (See here for my article “The Story of the Foreign Corrupt Practices Act” and here for my “foreign official” declaration detailing the FCPA’s legislative history relevant to this element).

In addition to the above examples, FCPA legislative history was also consulted in construing statutory terms in the following cases.

U.S. v. Blondek (N.D. Tex – June 1990) (Judge Sanders consulting legislative history in concluding that “foreign officials” can not be charged with conspiracy to violate the FCPA).

SEC v. Jackson (S.D.N.Y. – Dec. 2012) (Judge Keith Ellison consulting legislative history regarding: the need to identify the “foreign official,” the facilitation payments exception, and the corrupt intent element).

U.S. v. Kozeny, 582 F.Supp.2d 535 (S.D.N.Y. 2008), Judge Scheindlin consulting legislative history regarding the local law affirmative defense.

The above referenced Forbes article began as follows.  “Bad information is often worse than no information.  There is a tremendous amount of noise in the discussion around FCPA.  Not only noise, but anti-signal.  That is, not just bad information, but information that is contrary to fact.”


Powered by WordPress. Designed by WooThemes