A recent Opinion Procedure Release from the Department of Justice (the “Department”) provides some intriguing insight into the question of who is a “foreign official” under the Foreign Corrupt Practices Act (“FCPA”). According to Opinion Release No. 12-01, membership in a royal family does not per se equate to status as a “foreign official” under the FCPA. In other words, royal family members’ FCPA classification may depend less on who they are than on what they do.
The Opinion Release involved the following scenario: A lobbying and business development firm (the “Lobbying Firm”), wishing to represent a foreign embassy, engaged a third-party consultant to make the requisite introductions and support its efforts. One of the consultant’s three partners was a member of the foreign country’s royal family. The questions considered by the Department were: (1) whether the consultant was a foreign official for FCPA purposes, and, (2) whether a payment to the consultant would result in any enforcement action by the Department.
The Department found that the royal family member would not be considered a foreign official for FCPA purposes, and that no enforcement action would result. Its Opinion considered the following three factors in assessing whether the person was a foreign official:
- The person’s degree of control or influence over a foreign government’s levers of governmental power;
- Whether the foreign government considers the person to have governmental power; and
- The person’s ability to act on behalf of, or to bind, his government.
This inquiry, the Department explained, is “fact-intensive and no single factor is dispositive.” The Department applied this inquiry to the royal family member in question, noting that:
- The person was a royal family member through “custom and tradition,” not blood relation;
- The person had no official benefits or privileges from his status;
- The person had only held one governmental position, in the late 1990s, for less than 12 months overseeing a government construction project;
- The person had never acted on the foreign country’s behalf;
- The person’s royal status did not place him in line to ascend to any government post; and
- The person had no decision-making power in the government, and no relationship to the decision-makers who would be awarding the work the Lobbying Firm sought.
The Department additionally cited as a factor in its decision not to pursue an enforcement action steps the Lobbying Firm and the consultant took to comply with the FCPA and other antibribery laws.
While the Opinion Release’s somewhat surprising result may embolden some with its relatively narrow perspective on what constitutes a “foreign official,” it is important not to be lulled into any sort of false sense of security. First, the Opinion Release is — as with any such Release — highly fact-dependent, and it will not be binding in other cases. Second, it should of course be kept in mind that even if a person does not qualify as a foreign official for purposes of the antibribery provision of the FCPA, an improper payment overseas to that person may still violate a variety of other U.S. and foreign laws, including the books and records provisions of the FCPA, the money laundering statutes, the Travel Act, other countries’ overseas anticorruption regimes, and local law.