Source: https://www.mmlawus.com/newsitem/news/putting-the-fcpa-guidance-to-work-adding-a-new-layer-to-anti-corruption-risk-assessments/
Timestamp: 2019-04-24 03:48:50+00:00

Document:
Over the past few years, the US government has taken an expansive view of who qualifies as a “Foreign Official” under the FCPA. A recent DOJ advisory opinion took the position that a member of a royal family did not qualify as a Foreign Official for FCPA purposes, leading to speculation that the government had relaxed its standards of who qualifies under the term.1 However, as the new FCPA Guidance2 demonstrates, companies should not assume that the DOJ or the SEC have narrowed their view. Companies should still make good use of the FCPA Guidance by incorporating a complete Foreign Official analysis into their risk assessments going forward.
The FCPA defines Foreign Official as “any officer or employee of a foreign government or any department, agency, or instrumentality thereof . . ..”3 Much of the recent discussion regarding the definition of Foreign Official centers on what constitutes an “instrumentality” of the government.
The DOJ advisory opinion excluding a royal family member from the definition of foreign official did not address the “instrumentality of the government” question. Unlike recent cases involving the definition of foreign official, the royal family member in question had held only “one governmental position in the Foreign Country” in the late 1990s, and had “never had any role in any public organization.”7 There was no need to analyze the status of any organization connected to the individual as a potential instrumentality of the government, because no such organization existed. The “instrumentality of the government” question did not arise.
Of all these factors, the most significant factor is the degree of state ownership of the entity. The FCPA Guidance states that entities with only a minority of government ownership are unlikely to be considered instrumentalities of the government.9 Although unlikely, it is still possible that entities with only a minority of government ownership could be considered instrumentalities of a foreign government. For those entities, the key element appears to be the extent of control the government can exert over the entity.
An examination of any financial support provided to the entity by a foreign government.
Should a company’s risk assessment identify customers or other partners who exhibit any of the characteristics of an instrumentality of a foreign government, the company should (i) evaluate whether the characteristics are sufficient for the partner’s employees to be considered Foreign Officials; (ii) ensure existing policies and procedures regarding foreign officials are applied to any interactions with the entity, and (iii) conduct appropriate training and communication with employees, agents, and other third parties having dealings with the entity to ensure that the company’s anti-corruption guidelines are applied and followed.
1 Foreign Corrupt Practices Act Review, U.S. Department of Justice, Criminal Division, Opinion Procedure Release No. 12-01 (Sept. 18, 2012).
2 FCPA: A Resource Guide to the U.S. Foreign Corrupt Practices Act, Criminal Division of the U.S. Department of Justice and the Enforcement Division of the U.S. Securities and Exchange Commission (Nov. 14, 2012).
3 Foreign Corrupt Practices Act of 1977 (FCPA), 15 U.S.C. § 78dd-1(f)(1)(A).
4 United States v. Carson, No. 09-00077, 2011 WL 5101701, at *3 (C.D. Cal. 2011).
5 Complaint at 4, S.E.C. v. Comverse Technology, Inc., No. 11-1704 (E.D.N.Y. Apr. 7, 2011), ECF No. 1; Indictment at 3, United States v. Esquenazi, No. 09-21010 (S.D. Fla. Dec. 4, 2009), ECF No. 3.
6 Complaint at 4, S.E.C. v. Pfizer Inc., No. 12-01303 (D.D.C. Aug. 7, 2012), ECF No. 1.
7 U.S. Department of Justice, Criminal Division, supra note 1, at 2.
8 Criminal Division of the U.S. Department of Justice and the Enforcement Division of the U.S. Securities and Exchange Commission, supra note 2, at 20.
10 Id. (citing Criminal Information, US. v. Alcatel-Lucent France, S.A., No. 10-cr-20906 (S.D. Fla. Dec. 27, 2010), ECF No. 1).

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