Courts Reject Bright-Line Approach to Defining
Courts Reject Bright-Line Approach to Defining "Foreign Official" in Favor of Fact-Based Approach, Creating Greater Uncertainty for Business

Courts Reject Bright-Line Approach to Defining "Foreign Official" in Favor of Fact-Based Approach, Creating Greater Uncertainty for Business

Highlights

(1) The Department of Justice (DOJ) and Securities Exchange Commission (SEC) broadly interpret the terms "foreign official" and "instrumentality" under the Foreign Corrupt Practices Act (FCPA).
(2) Several federal judges have recently ruled that whether a state-owned or state-controlled entity qualifies as an "instrumentality" of a foreign government under the FCPA is a case-by-case fact-intensive inquiry based on a set of non-exhaustive factors.
(3) While providing some guidance, this emerging consensus in favor of a fact-based approach is less clear and predictable than the bright-line approaches often urged by defense counsel, resulting in considerable uncertainty for business.

 

On February 16, 2012, Judge Selna of the Central District of California issued an order in United States v. Carson regarding jury instructions pertaining to the terms "foreign official" and "instrumentality" of the government under the FCPA.[1] Judge Selna's order rejected defendant's proposal for a bright-line approach[2] in favor of a "fact-based finding in light of the totality of the circumstances."[3] This ruling is a recent example of a federal judge finding that whether a state-owned or state-controlled entity qualifies as an instrumentality of a foreign government under the FCPA and, accordingly, whether employees of the entity qualify as "foreign officials" under the statute, is a fact-based question for the jury.

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[1] Order re Select Jury Instructions, United States v. Carson, No. 09-cr-00077-JVS (C.D. Cal. Feb. 16, 2012).
[2] Id. at 4.
[3] Order Denying Defendants' Mot. to Dismiss Counts 1 though [sic] 10 of the Indictment, at 3, United States v. Carson, No. 09-cr-00077-JVS (C.D. Cal. May 18, 2011).

 

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