The U.S. Department of Justice's Expansive Interpretation of “Instrumentality” under the FCPA Prevails Following Supreme Court's Denial of Certiorari

October 8, 2014

On October 6, 2014, the U.S. Supreme Court denied a petition for certiorari from two former executives who had been convicted under the Foreign Corrupt Practices Act (FCPA) for bribing officials at a Haitian state-owned telecom company. One of the executives, Mr. Esquenazi, faces 15 years in jail—the longest sentence ever imposed under the FCPA.

The executives’ cert petition focused on the definition of foreign official under the FCPA. While the FCPA defines “foreign official” to include “any officer or employee of a foreign government or any department, agency, or instrumentality thereof …” (15 USCS § 78dd-2), it does not define the term “instrumentality” of a foreign government. The petition sought Supreme Court review of the May 2014 ruling of the U.S. Court of Appeals for the Eleventh Circuit in United States v. Esquenazi, 752 F.3d 912 (11th Cir. 2014). In that case, the Eleventh Circuit agreed with the U.S. Department of Justice’s (DOJ) position that the term “instrumentality” includes state-owned companies. In so ruling, the Eleventh Circuit applied its own definition of instrumentality—an entity controlled by the government of a foreign country that performs a function the controlling government treats as its own—and found that the Haitian owed telecom company qualified as such. The Eleventh Circuit is the only U.S. Court of Appeals to have decided this question.

In their petition, the executives asked the Supreme Court to answer the questions of whether the Eleventh Circuit’s definition of “instrumentality”: (1) failed to give the constitutionally-required notice of what specific conduct violates the FCPA, and (2) was incorrectly based on an treaty unrelated to the FCPA. The Supreme Court’s decision not to hear the case means that the Eleventh Circuit’s expansive definition remains the controlling standard. The DOJ will likely continue its aggressive stance by bringing prosecutions under the FCPA against both individuals and companies. Companies should ensure that their policies are FCPA-compliant and that their officers and employees take steps to do business abroad in accordance with the FCPA.

For more information, please contact the co-authors of this alert, Jonathan Feld at 312-627-5680 (Chicago) or 202-906-8716 (Washington D.C.), or Kara Murphy at 312-627-5658, or any of the attorneys listed to the left. 

As part of our service to you, we regularly compile short reports on new and interesting developments and the issues the developments raise. Please recognize that these reports do not constitute legal advice and that we do not attempt to cover all such developments. Rules of certain state supreme courts may consider this advertising and require us to advise you of such designation. Your comments are always welcome. © 2021 Dykema Gossett PLLC.