In a surprise move, on 10-6-14, the U.S. Supreme Court decided to not decide one of the most anticipated cases of the year.  No, not the much ballyhooed same sex marriage cases the Supreme Court declined to decide.

The other surprise move by the Supreme Court that same day; little noted by the media; is that the Supreme Court also passed up a chance to rule in what is probably the most important Foreign Corrupt Practices Act (“FCPA”) case of the last 10 years.  Esquenazi, et al. v. USA, Case No. 14-189.

The FCPA is one of the most important laws about which many business people have never heard. Even among those U.S.-based businesses who have heard of the FCPA, a surprising number continue to labor under the mistaken belief that the FCPA does not affect them. In reality, if your company, no matter how big or small, buys any goods or services, or sells any goods or services, to parties in other countries, then the FCPA is aimed at you, which means you have a stake in the legal issue just ducked by the Supreme Court.

The FCPA, passed in 1977, is large and complex.  But, most importantly to most U.S. business people, the FCPA makes it a crime for U.S. citizens and U.S. based companies, and their overseas agents and representatives, to give anything of value to any foreign “government official” (or his/her family, friends or designated third-party) to gain any business advantage or benefit. The “things of value” can be anything, from entertainment to travel to jewelry to that old stand-by, cash. And, as is widely known, there are many parts of the world where it can be a challenge to avoid people seeking such “things of value” when trying to do business.

Potentially crippling fines and even jail await those companies and businesspersons found to have violated the FCPA. The federal government has been engaged in an unprecedented massive crackdown on FCPA violations by U.S. companies and citizens for the last decade, and their efforts are only growing more aggressive.  That effort has led to investigations and civil and criminal cases that have resulted in enormous costs and penalties to hundreds of U.S. businesses of all sizes. Many of these investigations and penalties do not make the news, as the parties settle short of trial and the businesses involved have little incentive to spread the word.

The FCPA question the Esquenazi case raises, and which the Supreme Court has now chosen to leave unanswered, is the crucial one of exactly of who constitutes a foreign “government official.”  The FCPA provides a very broad definition of foreign “government official” and, not surprisingly, the U.S. Department of Justice and the Securities and Exchange Commission; who share enforcement responsibility for the FCPA; embrace an expansive reading of the term to include any person who works for any entity “performing a function the controlling government treats as its own.”  This means that anyone working for an entity in which a foreign government chooses to become involved; i.e., “treats as its own”; is transformed into a “government official.” In the many countries around the world; including China, India and others; where the government plays a direct role in many aspects of the local economy, such a definition can encompass thousands of people who, in the United States we would never consider “government officials”, including ostensibly private persons involved in medical services, agriculture, pharmaceuticals, utilities, natural resources and many other business activities that in the U.S. would be private. The foreign hospital administrator, mining company representative or salesman you presume to be a private citizen may well be considered a “government official” under the FCPA, at least by the federal authorities. Without further guidance from the Supreme Court, U.S. based businesses and their personnel will remain dangerously unsure of which overseas business interactions might trigger the wrath of the FCPA.

While the question of exactly who constitutes a foreign “government official” for purposes of the FCPA will, apparently, remain unsettled for the foreseeable future, the Esquenazi case does serve the very useful function of reminding all U.S. businesspersons operating in international commerce; which today includes the vast majority of U.S. businesses; that the FCPA remains an ever-present and important fact of life that they ignore at their great peril.