On October 6, 2014, the U.S. Supreme Court denied a writ of certiorari in the Foreign Corrupt Practices Act (FCPA) bribery case United States v. Esquenazi, 752 F.3d 912 (11th Cir. 2014). The defendants/appellants in that case were seeking Supreme Court review of the 11th Circuit Court of Appeals’ determination of the question of just who is, and is not, a “foreign official” for FCPA purposes – bribery of whom triggers liability under the Act. As evidenced by numerous amicus briefs, the range of those so categorized by U.S. prosecutors and investigators is unpredictably broad (anyone from the obvious procurement or Customs officials to, in at least one recent case, the nephew of a co-investor in a state-invested enterprise).
The FCPA, enacted in 1977, prohibits giving anything of value to a foreign official to win or keep business, or to gain an improper advantage.
Jorge Esquenazi and Carlos Rodriguez, currently serving 15 years and 7 years in jail, respectively (the former is the longest jail sentence yet imposed under the Act), were executives of Terra Telecommunications Corp. convicted by a Miami jury of bribing officials at Haiti’s state-owned telecommunications company, as well as various money-laundering offenses. Having appealed their convictions unsuccessfully to the 11th Circuit, they sought to have the Supreme Court review that Circuit’s application of the “instrumentality” test to determine whether the Haiti Telco was state-run and its officers thus “foreign officials.”
While the Court does not explain cert. denials, the declination in this case very likely is due to the absence of any actual conflict in the Circuits on the point. That, in turn, may stem partly from the high proportion of settlements and other alternative resolutions in these actions; very few such cases get appealed, and in fact the Court’s denial means that as of yet, no FCPA case has ever reached the Supreme Court.
The result of this announcement is that there is still no standard definition, and the “foreign official” characterization – the very threshold of exposure under the Act – remains left largely to the prosecutorial discretion of the Department of Justice and U.S. Securities and Exchange Commission. Compliance officers and in-house counsel are thus well-advised to implement internal controls to very closely monitor foreign sales and business development efforts and expenditures where government sales, approvals or licenses of any sort are involved, and especially in countries where the government is invested or involved in commercial enterprises.