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It’s Official: “Foreign Officials” under the FCPA May Include Officers of Foreign State-Owned Utilities
A federal judge in Los Angeles has ruled that the definition of “foreign officials” in the Foreign Corrupt Practices Act (FCPA) could extend to officers of state-owned utilities (United States v. Lindsey Manufacturing Co.). The ruling clears the path to a criminal trial.
The case concerns a Mexican firm, Grupo Internacional de Asesores S.A., that Lindsey Manufacturing Co. retained to negotiate contracts with Mexico’s state-owned utilities company, Comisión Federal de Electricidad (“CFE”). Prosecutors alleged that Grupo used Lindsey-acquired funds to pay CFE officials bribes to induce them into contracting with Lindsey.
Lindsey argued that Congress did not intend to include officers of foreign state-owned utilities in the FCPA’s definition of “foreign officials” and that doing so would render the FCPA overly broad. But the judge found that the inclusion of such officials was a matter of statutory construction and that an analysis of legislative intent was therefore unnecessary.
The FCPA outlaws corrupt payments to “any officer or employee of a foreign government or any department, agency, or instrumentality thereof...” In siding with the government, the judge reasoned that CFE was an “instrumentality” of the Mexican government because –
- CFC was considered a public entity under Mexican law;
- Supplying electricity was designated as a government function under the Mexican constitution; and
- CFC’s governing board consisted of government officials.
Companies found criminally liable under the FCPA may be fined up to $2 million, and individuals may be fined up to $100,000 and imprisoned. Any company involved in international business transactions should closely monitor the activities of its foreign consultants and ensure that everyone involved has sufficient FCPA training, as well as global anti-corruption training that covers the requirements of the new UK Bribery Act.
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Posted by Ken Grosserode on May 2, 2011 Ken Grosserode, a Managing Legal Editor at WeComply, writes and edits the content for e-learning courseware and related compliance training resources. Earlier in his career, Ken worked for the U.S. Department of Justice after being accepted into the Attorney General's Honors Program. He later practiced law as an associate attorney at Berry, Appleman & Leiden LLP in San Francisco. Ken holds a J.D. from the University of San Francisco School of Law. |
Tags: fcpa, uk bribery act
