The FCPA Report

The definitive source of actionable intelligence covering the Foreign Corrupt Practices Act

Articles By Topic

By Topic: Foreign Officials

  • From Vol. 5 No.17 (Aug. 31, 2016)

    Regional Risk Spotlight: Livia Zamfiropol of DLA Piper Discusses Recent Trends in Romania’s Anti-Corruption Enforcement

    While the countries that make up the E.U. are often treated as a uniform block, the U.K.’s recent decision to exit from the Union underscores that each European country has its own culture and laws that can lead to unique political outcomes. Thus, it is important for companies operating in Europe to understand each nation’s anti-corruption laws and the related enforcement environment. In this installment of The FCPA Report’s Regional Risk Spotlight, we speak with Livia Zamfiropol, a partner in DLA Piper’s office in Bucharest, about an increase in corruption prosecutions in Romania and what companies need to know to stay ahead of the curve. See “Regional Risk Spotlight: What Companies Need to Know About Internal Investigations in South Africa” (Jul. 27, 2016).

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  • From Vol. 5 No.16 (Aug. 10, 2016)

    Swiss Court Acquits Four in Gazprom Case but New Law May Have Led to a Different Outcome

    After about seven years of investigation into the Gazprom corruption case, the Swiss Federal Criminal Court recently acquitted four individuals of corruption charges related to the construction of a gas pipeline because it determined that the Gazprom executives involved were not foreign officials. In a guest article, Shelby R. du Pasquier and Miguel Oural, partners at Swiss firm Lenz & Staehelin, discuss the implications of the acquittals. The heart of the case, they explain, lies in a series of payments totaling $7 million, made by Siemens Industrial Turbomachinery, a company acquired by Siemens in 2003, to senior executives of Gazprom. SIT entered into a settlement with Swiss authorities in 2013, a questionable decision in light of these recent acquittals. Meanwhile, new Swiss legislation criminalizing certain instances of commercial bribery could lead to drastically different outcomes for companies and defendants in similar situations going forward. See “Siemens’ Debarment Highlights the Crux of the Brazilian Business Challenge: Corruption Is Clear, But Anti-Corruption Law Is Ambiguous” (Mar. 19, 2014).

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  • From Vol. 5 No.6 (Mar. 23, 2016)

    U.S. District Court Addresses Definition of “Public International Organization”

    Adding to a scant body of FCPA case law, the U.S. District Court for the Eastern District of Pennsylvania sheds light on the term “public international organization" and consequently the definition of foreign official. The defendant was charged with violating the FCPA, the Travel Act and money laundering laws by funneling bribes to an official of the European Bank for Reconstruction and Development by making payments to the official’s sister. The Court upheld every count of the fourteen-count indictment in its pre-trial ruling. We summarize the facts of the case and the Court’s key findings. See also “What the Eleventh Circuit’s ‘Instrumentality’ Decision Means for FCPA Practitioners” (May 28, 2014).

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  • From Vol. 4 No.25 (Dec. 2, 2015)

    Top FCPA Enforcers Discuss Evolving and Diverging Enforcement Approaches and the Defense Bar Responds

    International cooperation and whistleblowers are changing the government’s investigations and resolutions according to top FCPA enforcers.  Due to these changes – and the ever-increasing sophistication of both the SEC and DOJ – the agencies’ goals, strategies and tactics continue to evolve and diverge based on their statutory remits.  At this year’s ACI FCPA conference, Kara Brockmeyer, Chief of the FCPA Unit of the Division of Enforcement of the SEC, and Patrick Stokes, Deputy Chief of the Fraud Section of the Criminal Division of the DOJ, distilled the government’s enforcement priorities in their “Year in Review” discussion, and The FCPA Report spoke to several anti-corruption defense experts for their reactions.  Stokes and Brockmeyer also discussed what they expect from compliance programs as well as the incentives they offer companies to self-report, cooperate and remediate, which will be discussed at length, with input from the FCPA bar, in our next issue.  For coverage of last year’s panel see “Top FCPA Enforcers Tout Voluntary Disclosure and Warn About International Cooperation; The Defense Bar Responds,” The FCPA Report, Vol. 3, No. 24 (Dec. 3, 2014) and “Top FCPA Officials Talk Compliance Tips and the Defense Bar Weighs In,” The FCPA Report, Vol. 3, No. 25 (Dec. 17, 2014).

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  • From Vol. 4 No.16 (Aug. 5, 2015)

    Mitigating Corruption Risk in the Middle East (Part Two of Two)

    Business is booming in the Middle East, with many foreign investors seeking to take advantage of these rapidly expanding markets.  Doing so, while avoiding entanglement with anti-corruption regulators, requires careful risk assessment and planning.  The first article in this two-part series discussed the high incidence of corruption throughout the region, highlighting which countries and industries are the riskiest, and the legal and cultural diversity that can complicate a company’s assessment of corruption risk.  This, the second article of our two-part series, looks at three specific attributes of doing business in the Middle East that pose their own unique risks:  (1) the dominance over many economic sectors by state-owned entities and royal families; (2) the prevalence of third parties in business transactions in the region; and (3) the culture of gift-giving in Middle Eastern countries.  We draw from the knowledge of a panel of experts, organized by Strafford Publications and including Tom Best, a partner at Steptoe & Johnson in Washington, D.C.; Marc Alain Bohn, counsel at Miller & Chevalier in D.C.; John Vincent Lonsberg, a partner with Baker Botts based in Dubai, U.A.E.; and Daniel P. Chung, of counsel with Gibson Dunn in D.C.

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  • From Vol. 4 No.11 (May 27, 2015)

    Former Prosecutor Daniel Fetterman Speaks Out About Princelings Investigations

    The government continues to scrutinize hiring practices at banks, looking for evidence that banks are hiring the relatives of foreign officials in exchange for business advantages.  Banks are pushing back against these “princeling” investigations, reportedly lobbying the government and accusing the regulators of overreaching.   The FCPA Report spoke with Daniel Fetterman, a partner at Kasowitz, Benson, Torres & Friedman, about when the hiring of princelings crosses the line; best practices for hiring; and his views on the government’s investigation and its effect on other industries.  See “Friendly Relations? When Nepotism May Violate the FCPA,” The FCPA Report, Vol. 1, No. 10 (Oct. 17, 2012).

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  • From Vol. 3 No.17 (Aug. 20, 2014)

    Supreme Court Asked to Review Landmark “Foreign Official” Decision

    After years of public debate on the topic, the definition of “foreign official” in the FCPA statute may be considered by the Supreme Court of the United States.  Joel Esquenazi and Carlos Rodriguez, sentenced to 15 and 7 years, respectively, for bribing employees of Haiti’s telecommunications company, have petitioned the high court to review the Eleventh Circuit’s decision on the meaning of an “instrumentality” of a foreign government, employees of which are deemed “foreign officials” under the FCPA.  See “What the Eleventh Circuit’s ‘Instrumentality’ Decision Means for FCPA Practitioners,” The FCPA Report, Vol. 3, No. 11 (May 28, 2014).  The FCPA Report discussed the case with Michael A. Sink, counsel for Joel Esquenazi.

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  • From Vol. 3 No.11 (May 28, 2014)

    What the Eleventh Circuit’s “Instrumentality” Decision Means for FCPA Practitioners

    In the first appellate court decision on the issue, the U.S. Court of Appeals for the Eleventh Circuit has ruled that an “instrumentality of the government” is “an entity controlled by the government of a foreign country that performs a function the controlling government treats as its own,” providing a non-exhaustive list of factors to consider when determining functionality and control.  The landmark decision that largely confirms the government’s interpretation of the term “foreign official” (an interpretation criticized by some as being overbroad), follows the imposition of some of the longest FCPA sentences to date.  The defendants, Joel Esquenazi and Carlos Rodriguez, had argued that the DOJ had not proved that the entity at issue, Telecommunications D’Haiti, met the FCPA’s definition of an “instrumentality” of the Haitian government such that its employees were foreign officials.  This article examines the impact of the case, the Court’s reasoning, the specific factors to consider when determining whether an entity is an instrumentality, and the practical applications of the Court’s newly-announced two-pronged test to the defendants.  For a discussion of the oral argument of the appeal, see “A Hot Bench Hears Oral Arguments in Historic Challenge to the Definition of ‘Foreign Official’,” The FCPA Report, Vol. 2, No. 21 (Oct. 23, 2013).

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  • From Vol. 2 No.21 (Oct. 23, 2013)

    A Hot Bench Hears Oral Arguments in Historic Challenge to the Definition of “Foreign Official”

    The FCPA clearly prohibits bribes to employees of instrumentalities of foreign governments, but for many in the business world, it is by no means clear what an “instrumentality of a foreign government” is.  Is a state-owned or state-controlled hospital an instrumentality?  A telecommunications company with some government involvement?  A non-utility company in which the government has a minority but controlling interest?  By some estimates, two-thirds of recent FCPA enforcement actions have relied on the idea that an employee of a state-owned entity is a “foreign official.”  Lawyers, compliance professionals and businesspeople currently have a range of resources to turn to in understanding what constitutes an instrumentality, but none is conclusive or determinative – especially for international salespeople on the front lines of potential FCPA violations.  In a historic appeal, the Eleventh Circuit is poised to construe the meaning of “instrumentality” under the FCPA with a level of authority heretofore absent from anti-corruption jurisprudence.  The court heard oral arguments earlier this month and The FCPA Report spoke with the attorneys for defendants Joel Esquenazi and Carlos Rodriguez.  This article includes their insights on the positions of the parties and the importance of the case.  This article also discusses lower court decisions and other relevant authority on this crucial issue.

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  • From Vol. 2 No.18 (Sep. 11, 2013)

    Who Is a Foreign Official?

    The FCPA’s broad definition, and the government’s broad interpretation, of the term “foreign official” have caused many companies operating internationally serious consternation.  The definition of “foreign official” for FCPA purposes – which arguably includes any employee of an institution that has some degree of state ownership or control, based on a list of considerations – does not match up with the more narrow way the term is used in common parlance.  This disconnect and the lack of perceived clarity on the issue under U.S. law and that of other countries causes companies to struggle with identifying potential risk areas and implementing effective compliance programs.  During a recent program, leading FCPA practitioners provided valuable insight into how the government defines the critical terms and how companies should structure their policies in response to the government’s interpretations.  The panelists included James G. Tillen, a Member of Miller & Chevalier Chartered; Matteson Ellis, a Special Counsel at that firm; and Mark Gough, Deputy Head for Compliance Investigations at Siemens.   See also “The Expanding Definition of ‘Foreign Official’ and its FCPA Implications,” The FCPA Report, Vol. 2, No. 11 (May 29, 2013).

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  • From Vol. 2 No.11 (May 29, 2013)

    The Expanding Definition of “Foreign Official” and its FCPA Compliance Implications

    The shrinking global village has made international deals and dealings a daily occurrence.  Yet, a much-debated ambiguity in American law can put at risk any person or company who bestows a benefit on a foreign individual without stopping, first, to consider the definition of “foreign official” under the FCPA.  In a guest article, Ronald E. Wood and Jennifer L. Roche, partner and associate, respectively, at Proskauer Rose LLP, explore why the contours of the FCPA’s anti-bribery provision remain fuzzy 36 years after it was enacted, giving the government a hammer it has wielded with increased frequency over the past decade.  The article also offers guidance on how to avoid having the twin threats of investigation or prosecution make an unwelcome house call.  See also “U.S. Government Counters Foreign Official Challenge in the Eleventh Circuit,” The FCPA Report, Vol. 1, No. 7 (Sep. 5, 2012).

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  • From Vol. 2 No.7 (Apr. 3, 2013)

    A Guide to Anti-Bribery Issue Spotting in China: Enforcement Trends, Third-Party Risks, Gift Giving, Travel Expenses, Foreign Officials and Due Diligence

    Recent news reports, such as the downfall of Bo Xilai, as well as reports of watchdog groups such as Transparency International, emphasize the heightened corruption risk that companies doing business in China face.  Not only does the Chinese culture value gift giving and relationship building, but, because of the government structure, a large proportion of employees there are foreign officials.  This increases the range of business activity that may give rise to FCPA liability.  Plus, China’s top leaders have been paying more attention to official corruption and have taken steps to strengthen their own laws against bribery and step up enforcement.  A recent webinar focused on the topic of Chinese corruption risk.  The panelists, partners at Gibson Dunn & Crutcher LLP and Herbert Smith Freehills LLP, discussed: the current state of anti-corruption law and enforcement in China; China-specific anti-corruption issues; FCPA enforcement actions stemming from bribery in China; and ways to mitigate the FCPA risks of doing business there.  This article summarizes the key takeaways from the webinar, focusing in particular on the lessons for companies that do business in China and lawyers that represent such companies.

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  • From Vol. 2 No.5 (Mar. 6, 2013)

    Facilitation Payments, Foreign Officials, Bona Fide Expenditures and More: Actionable Insight from the Authors of “Defending Clients in FCPA Investigations”

    Mark P. Goodman and Bruce E. Yannett, partners at Debevoise & Plimpton LLP, and Daniel J. Fetterman, a partner at Kasowitz, Benson, Torres & Friedman LLP, are the FCPA experts behind “Defending Clients in Foreign Corrupt Practices Investigations,” a chapter in the 2012 treatise “Defending Corporations and Individuals in Government Investigations.”  Their chapter addresses the hot button issues companies are facing today as the SEC and DOJ continue to increase the pressure on global companies to implement and enforce best of breed FCPA compliance programs.  Goodman and Fetterman recently shared their insight on some of these pressing issues with The FCPA Report.  In our interview, they discussed how far the FCPA’s jurisdiction reaches in light of recent case law and the FCPA Guidance, including the jurisdictional implications for aiders, abettors and conspirators; details regarding rewards under the new Dodd-Frank whistleblower provisions; who is a foreign official and whether it matters; how companies should handle facilitation payments; advice on reasonable business expenses after the Guidance; the concept of virtual strict liability in accounting violations of the FCPA; how judicial review will impact settlements; the collateral effects of an FCPA settlement; and when to self-report an FCPA violation.

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  • From Vol. 1 No.14 (Dec. 12, 2012)

    Top Practitioners Analyze the DOJ & SEC FCPA Guidance (Part Two of Two)

    On November 14, 2012, the SEC and DOJ jointly issued long-awaited guidance on the FCPA (Guide or Guidance), spurred in part by the Organisation for Economic Cooperation and Development’s recommendation, and business pressures for more clarity about the FCPA and the government’s enforcement of it.  This article continues our extensive coverage of the Guidance and the practical implications of it, offering concrete suggestions to anti-bribery professionals on avoiding, handling and settling enforcement actions, conducting internal investigations and executing mergers and acquisitions.  This article – the second in a two-part series – uses input from leading FCPA experts to extract practical lessons from the Guide, including what it says about compliance programs and internal controls; whether the Guide sheds any light on what constitutes a facilitation payment and who constitutes a foreign official, and whether those distinctions are important; the Guide’s insight on third-party due diligence, successor liability and statute of limitations issues; and whether the Guide affects the self-reporting calculus.  The first article in this series addressed the backstory of the Guide and why it was issued; how companies and their counsel can use the Guide and the hypotheticals included in it; advice that can be distilled from the Guide on gifts, travel and entertainment; deficiencies in the Guide and which areas of the law remain unclear; and the highlights and lowlights of the Guide’s declination section.  See “Top Practitioners Analyze the DOJ & SEC FCPA Guidance (Part One of Two),” The FCPA Report, Vol. 1, No. 13 (Nov. 28, 2012).

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  • From Vol. 1 No.10 (Oct. 17, 2012)

    DOJ Issues Opinion Release Containing Guidelines on Whether a Royal Is a “Foreign Official” Under the FCPA

    On September 18, 2012, the DOJ issued its first Opinion Procedure Release of 2012 (Release), providing guidelines on whether a royal family member may be deemed a “foreign official” under the FCPA.  The definition of “foreign official” has been the subject of considerable debate and litigation in recent years.  Among the controversial issues is the DOJ’s view that “foreign officials” include employees of state-owned entities, a view that the district courts have generally accepted but that is currently being challenged before the U.S. Court of Appeals for the Eleventh Circuit.  See “Defendants in Haiti Teleco Case Urge the Eleventh Circuit to Limit ‘Instrumentalities’ to Entities that Perform Government Functions,” The FCPA Report, Vol. 1, No. 1 (Jun. 6, 2012); and “U.S. Government Counters Foreign Official Challenge in the Eleventh Circuit,” The FCPA Report, Vol. 1, No. 7 (Sep. 5, 2012).  This article describes the factual background and legal analysis in the Release.

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  • From Vol. 1 No.9 (Oct. 3, 2012)

    Why the Current Regime Is Effective at “Busting Bribery": An Interview with Professor Dan Danielsen, Co-Author of the Open Society Foundations’ Report on Corruption

    The FCPA Report recently had a wide-ranging conversation with Dan Danielsen, a Professor at Northeastern University School of Law and former general counsel of Europe Online Networks, S.A. and partner at Foley Hoag LLP.  Professor Danielsen, along with David Kennedy, Professor at Harvard Law School and Director of the Institute for Global Law and Policy, authored the report “Busting Bribery: Sustaining the Momentum of the Foreign Corrupt Practices Act” (Report).  The Report was commissioned by the Open Society Foundations as a response to the Chamber of Commerce’s report, which argued for amendments to the FCPA.  Danielsen and Kennedy had complete academic freedom as to the content and conclusions drawn in the Report.  In our interview, Professor Danielsen discussed, among other things: why the costs of bribery, given the evolving global scheme, outweigh the benefits; the effectiveness of the DOJ Opinion Procedure; why a good faith compliance defense is inconsistent with the scienter requirement in the statute; how agreements with the government, such as DPAs and NPAs, are creating a regulatory jurisprudence similar to no-action letters in the securities context; companies’ reluctance to go to court and obtain judicial scrutiny; the reasonableness of the current “knowing” standard in the statute; and the need for flexibility in the definition of “foreign official.”

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  • From Vol. 1 No.7 (Sep. 5, 2012)

    U.S. Government Counters Foreign Official Challenge in the Eleventh Circuit

    In the first case to bring the issue of the definition of an “instrumentality of a foreign government” in front of an appellate court, the DOJ has replied to Joel Esquenazi and Carlos Rodriguez’s (Defendants’) opening brief.  The Defendants have argued that Teleco, a firm that provides telephone service to Haiti and that was owned by the Haitian national bank at the time of the alleged bribery, was not an instrumentality of the Haitian government because Teleco did not perform a government function.  Defendants were convicted of bribing employees of Teleco to retain business for their Florida-based communications company.  In its brief filed August 21, 2012, the DOJ says that the Defendants’ argument “contravenes bedrock principles of statutory construction and is unsupported by legislative history.”

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  • From Vol. 1 No.6 (Aug. 22, 2012)

    Compliance Implications of the Current Enforcement Climate: An Interview with Mike Koehler, the FCPA Professor (Part One of Two)

    The FCPA Report recently interviewed Mike Koehler, Assistant Professor at Southern Illinois University School of Law and author of the popular blog the FCPA Professor.  He has testified before Congress and written extensively about FCPA issues.  Professor Koehler previously was Assistant Professor of Business Law in the College of Business at Butler University, and before that was an attorney at Foley & Lardner LLP, where he conducted FCPA investigations on behalf of companies, negotiated resolutions to FCPA enforcement actions with government enforcement agencies and advised clients on FCPA compliance and risk assessment.  In the first part of our interview, which is included in this issue of The FCPA Report, Professor Koehler spoke about the long tail on FCPA violations and the “gray cloud” that hangs over companies once they self-report, and he questioned whether companies should self-report at all.  See also “When and How Should Companies Self-Report FCPA Violations? (Part Two of Two),” The FCPA Report, Vol. 1, No. 2 (Jun. 20, 2012).  He also shared compliance advice in light of recent enforcement trends relating to facilitation payments, the “obtain or retain business” element of the statute and the definition of foreign officials.  In addition, Professor Koehler discussed compliance lessons arising out of the unique way the FCPA is enforced and the relative lack of judicial scrutiny of the statute.

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  • From Vol. 1 No.1 (Jun. 6, 2012)

    Defendants in Haiti Teleco Case Urge the Eleventh Circuit to Limit “Instrumentalities” to Entities that Perform Government Functions

    The elusive definition of a foreign official under the Foreign Corrupt Practices Act may finally get some clarity.  Two defendants have brought the issue squarely in front of the 11th Circuit.  Their appeals, filed May 9, 2012, mark the first time in the history of the FCPA that an appellate court has been asked to define what constitutes an instrumentality of a foreign government.  This article summarizes the background of the case and legal arguments made in the defendants’ briefs, with an emphasis on the arguments surrounding the definition of instrumentality.

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