Crime in the Suites: An Analyis of Current Issues in White Collar Defense
Nov 26
2012

New DOJ Guide on FCPA Provides Guidance, Gives Statute a Broad Reading

After much uncertainty and discussion, the U.S. Department of Justice has finally issued official guidance regarding who qualifies as a “foreign official” under the Foreign Corrupt Practices Act (FCPA). This guidance was published on November 14, 2012, in the Resource Guide to the U.S. Foreign Corrupt Practices Act, a broad guide to enforcement and interpretation of the FCPA that the DOJ issued jointly with the Securities and Exchange Commission.

As expected based on the DOJ’s previous interpretations of the term, the Guide provides a broad definition of “foreign official” by stating that the term encompasses “officers or employees of a department, agency, or instrumentality of a foreign government.” This definition imposes few restrictions on whom the Department will consider a “foreign official” and stretches the term far beyond its obvious and limited meaning.

Much of the confusion regarding “foreign official” status arose from government-affiliated entities that fall in the hazy middle ground between government agencies and private entities. Often this uncertainty surrounds services such as telecommunications, banking, and the aerospace industry, in which a government has some degree of ownership in the entity but may not completely own or control it. In those cases, the Guide clarifies that although the DOJ uses a multifactor test to determine whether an entity is a government instrumentality, it is most likely to pursue cases in which a government has a majority ownership stake. However, it acknowledged that there may be rare cases in which a government that owns only a minority stake nevertheless controls the entity through veto power, political appointees, or other means, in which case it will still be considered a government instrumentality.

Even though the very term “official” denotes a certain degree of authority within an organization, the Guide makes clear that the FCPA “covers cor¬rupt payments to low-ranking employees and high-level officials alike” in government departments, agencies, or instrumentalities. Therefore, corrupt payments to anyone within these organizations will bring the case within the FCPA’s bounds, regardless of their status within the organization or their ability to control or influence the instrumentality.

Although the new Guide states that its advice is “non-binding, informal, and summary in nature,” it is the best indication of how the DOJ plans to implement and enforce the FCPA. So while the content of the Guide essentially affirms the stance that the DOJ has assumed in existing cases, it does provide a foundation of guidance for organizations to rely on in their contacts with foreign entities. Unfortunately, this guidance will largely serve to dissuade companies from creating beneficial partnerships for fear that they might accidentally implicate FCPA concerns. As we have discussed previously on this blog, we hope that the courts will weigh in on this issue and find a more reasonable interpretation of what constitutes a “foreign official.”

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About Ifrah Law

Crime in the Suites is authored by the Ifrah Law Firm, a Washington DC-based law firm specializing in the defense of government investigations and litigation. Our client base spans many regulated industries, particularly e-business, e-commerce, government contracts, gaming and healthcare.

Ifrah Law focuses on federal criminal defense, government contract defense and procurement, healthcare, and financial services litigation and fraud defense. Further, the firm's E-Commerce attorneys and internet marketing attorneys are leaders in internet advertising, data privacy, online fraud and abuse law, iGaming law.

The commentary and cases included in this blog are contributed by founding partner Jeff Ifrah, partners Michelle Cohen, David Deitch, and associates Rachel Hirsch, Jeff Hamlin, Steven Eichorn, Sarah Coffey, Nicole Kardell, Casselle Smith, and Griffin Finan. These posts are edited by Jeff Ifrah. We look forward to hearing your thoughts and comments!

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