SuccessofFCPAChallengeWouldChangeImpactofInternalInvestigationsResults.docVIP

Success of FCPA Challenge Would Change Impact of Internal Investigations Results ? 23 February 2011 by James McGrath Top of Form Yesterday, in an article entitled “Challenge Could Break New Ground in FCPA,” author Joe Palazzo of the Wall Street Journal’s Corruption Currents reported on a challenge to the FCPA that some have called long overdue.? A motion to dismiss filed by the defendants in U.S. v. Stuart Carson, et al., Case No. SA CR 09-00077-JVS (U.S District Court for the Central District of California), challenges the government’s expansive reading of the term “foreign official” which includes virtually any employee of a foreign state-owned enterprise for purposes of the statute’s anti-bribery provisions.? If the defense is successful in convincing the court to narrow the definition of a foreign official, it would have critical implications for the work of internal investigations counsel. ?The anti-bribery portion of the FCPA prohibits American companies or foreign companies whose stock is traded here from making corrupt payments to foreign officials to obtain or retain business.? ?A “foreign official” is defined as an “officer or employee of a foreign government or any department, agency, or instrumentality thereof.”? The problem is that the act does not define what an “instrumentality thereof” is, and the DOJ and SEC have consistently applied that label very liberally.? The government’s theory is essentially this: if a foreign government owns a company, then it is a (foreign) government company.? And if it is a (foreign) government company, then all of the employees are (foreign) government employees, and hence, “foreign officials.” While there is a logical thread in this argument, in practicality, it creates a nightmare.? Virtually any payment or promise made to a foreign national in the employ of an SOE brings FCPA exposure.? It is akin to holding in the NFL: able to be called on every play, if only the referee wishes to throw the flag.? But that is not t