Question

what evidence is needed to prove an FCPA case?

Answer 1

The Foreign Corrupt Practices Act (“FCPA”) was
adopted in 1977 in the wake of revelations of
bribery of foreign officials by United States
companies. Those triggering events concerned
allegations or admissions of companies making
questionable payments directly or indirectly to
traditional foreign government officials – Prime
Minister, Prince, President, among others – or
foreign political parties. From the FCPA’s passage in
1977 until roughly 2000, enforcement remained
relatively dormant. Then, in the early 2000’s, the
Department of Justice (“DOJ”) dusted off the statute
and embarked on a campaign to root out
international corruption, commencing a trend of
increasing FCPA prosecutions. Around 2008, the
DOJ began targeting the individual actors who
allegedly authorized and/or paid the bribes. As the
DOJ’s chief FCPA prosecutor reflected in September
2008, “The number of individual prosecutions has
risen – and that’s not an accident. That is quite
intentional on the part of the Department. It is our
view that to have a credible deterrent effect, people
have to go to jail. People have to be prosecuted
where appropriate. This is a federal crime. This is
not fun and games.”2
Unlike corporate defendants that resolved FCPA
investigations pre‐indictment, individual defendants
were not as willing to accept the government’s
aggressive pre‐indictment demands or its broad
interpretation of the statute, which the defense bar
considered vague and untested. What ensued from
the indictments that followed were a number of
defense upsets:
 The “Africa sting” operation that
produced charges against 22
individuals in early 2010 resulted in
lengthy trials of two different groups of
defendants in September 2011 and
January 2012, and produced not a
single conviction.3
 In December 2011, a federal judge in
Los Angeles, California vacated the
FCPA conviction of Keith Lindsey, Steve
K. Lee and Lindsey Manufacturing Co.,
the first company convicted under the
FCPA, and offered an unflattering
assessment of the DOJ’s handling of the
case.4
 In January 2012, a federal judge in
Houston, Texas granted defendant John
O’Shea’s Rule 29 motion to dismiss 12
FCPA counts and one conspiracy count,
finding that the government could not
meet its burden of proof due to a lack of
critical witnesses and evidence.
These and other cases presented the
opportunity for meaningful challenges to the scope
and intent of the FCPA statute. The resulting case
law finally provides some guidance on critical
elements of the statute: what is a government
instrumentality, who is a foreign official and what
does a defendant need to know about the purported
foreign official in order to be convicted?
I. Defining “Instrumentality”
and “Foreign Official”
The FCPA’s anti‐bribery provisions prohibit
corrupt payments to “foreign official[s]” for the
purpose of obtaining or retaining business. Under
the FCPA a “foreign official” is defined as an “officer
or employee of a foreign government or any

department, agency or instrumentality thereof .”5
But the statute does not define “instrumentality.”
Nor does the legislative history offer any guidance.
When the government focused its attention on
uncontroversial government figures, this ambiguity
did not matter. For example, the first FCPA case in
1979, U.S v. Kenny International Corp., involved an
alleged promise to pay money to the Cook Islands
Party through an official of the political party.6 In
the seminal case of United States. v. Kay, the
defendants were convicted for paying bribes to
Haitian customs officials. 7 More recently, the
defendants in United States v. Green were tried and
convicted for bribing the governor of the Tourism
Authority of Thailand.8
However, when the government’s interpretation
of instrumentality broadened to include commercial
enterprises because they were state‐owned or
controlled, without regard to the nature or extent of
government involvement, the battleground was set.
In 2009, Assistant Attorney General Breuer made
clear the government’s broad interpretation of
“foreign official” under the FCPA:
. . . consider the possible range of
‘foreign officials’ who are covered by the
FCPA. Some are obvious, like health
ministry and customs officials of other
countries. But some others may not be, such
as the doctors, pharmacists, lab technicians
and other health professionals who are
employed by state‐owned facilities. Indeed,
it is entirely possible, under certain
circumstances and in certain countries, that
nearly every aspect of the approval,
manufacture, import, export, pricing, sale
and marketing of a drug product in a foreign
country will involve a ‘foreign official’
within the meaning of the FCPA.9
The government’s focus on state‐owned
enterprises (SOEs) crystallized the question of what
makes an entity a government instrumentality and
are all employees of a government instrumentality
necessarily government officials. Until recently,
SOEs were typically found in developing countries
where a nationalist approach to the economy
resulted in the centralization of business through
state‐owned or controlled companies. Many of
those planned economies have since taken steps
toward a market economy and in this context are
transitioning SOEs into competitive vehicles acting
largely independent from government direction
regardless of the existence of government
ownership or funding. In China, for example, a SOE
has the right to “choose the suppliers for itself and
purchase from them materials needed for
production, to negotiate and sign contracts with
foreign parties, to budget and use its retained funds
subject to state regulations,to determine such forms
of wages and methods of bonus distribution as
appropriate to its specific conditions, to employ or
dismiss its staff members and workers subject to
labour regulations, to engage in joint operations
with other enterprises or institutions or to invest or
hold shares in other enterprises, and to issue bonds
subject to the approval of the State Council.”10 Like
purely private corporations, a SOE makes it own
managerial decisions, takes full responsibility for its
profits and losses and practices independent
accounting, and may be subject to civil liability for
mismanagement of its assets.11 In China, the idea
that an SOE employee is a government official is
incongruous. Thus, it was only a matter of time
before a defendant charged with purportedly
bribing an SOE employee asked the obvious
question: How can the U.S. government prosecute
someone for paying a bribe to a so‐called
government official when the alleged bribe recipient
would not be considered a government official in the
foreign country in which he worked.
Set out below is a discussion of the recent cases
where the meaning of “foreign official” has been
litigated. While these were not the first cases to
attack the scope of the definition, they were the first
to draw out judicial analysis on the issue.12
Nonetheless, as the jury instructions make clear,
other than solidifying that there is a clear factual
question presented, the guidance has been
inconsistent.