HoldingtheGovernmenttoitsBurdenofProof
inFCPACases:LitigatingJuryInstructions
KimberlyA.Dunne
SidleyAustin,LLP
LosAngeles,California
AlexisMillerBuese1
SidneyAustin,LLP
LosAngeles,California
TheForeignCorruptPracticesAct(“FCPA”)was
adoptedin1977inthewakeofrevelationsof
briberyofforeignofficialsbyUnitedStates
companies.Thosetriggeringeventsconcerned
allegationsoradmissionsofcompaniesmaking
questionablepaymentsdirectlyorindirectlyto
traditionalforeigngovernmentofficials–Prime
Minister,Prince,President,amongothers–or
foreignpoliticalparties.FromtheFCPA’spassagein
1977untilroughly2000,enforcementremained
relativelydormant.Then,intheearly2000’s,the
DepartmentofJustice(“DOJ”)dustedoffthestatute
andembarkedonacampaigntorootout
internationalcorruption,commencingatrendof
increasingFCPAprosecutions.Around2008,the
DOJbegantargetingtheindividualactorswho
allegedlyauthorizedand/orpaidthebribes.Asthe
DOJ’schiefFCPAprosecutorreflectedinSeptember
2008,“Thenumberofindividualprosecutionshas
risen–andthat’snotanaccident.Thatisquite
intentionalonthepartoftheDepartment.Itisour
viewthattohaveacredibledeterrenteffect,people
havetogotojail.Peoplehavetobeprosecuted
whereappropriate.Thisisafederalcrime.Thisis
notfunandgames.”2
UnlikecorporatedefendantsthatresolvedFCPA
investigationspre‐indictment,individualdefendants
werenotaswillingtoacceptthegovernment’s
aggressivepre‐indictmentdemandsoritsbroad
interpretationofthestatute,whichthedefensebar
consideredvagueanduntested.Whatensuedfrom
theindictmentsthatfollowedwereanumberof
defenseupsets:

The“Africasting”operationthat
producedchargesagainst22
individualsinearly2010resultedin
lengthytrialsoftwodifferentgroupsof
defendantsinSeptember2011and
January2012,andproducednota
singleconviction.3

InDecember2011,afederaljudgein
LosAngeles,Californiavacatedthe
FCPAconvictionofKeithLindsey,Steve
K.LeeandLindseyManufacturingCo.,
thefirstcompanyconvictedunderthe
FCPA,andofferedanunflattering
assessmentoftheDOJ’shandlingofthe
case.4

InJanuary2012,afederaljudgein
Houston,TexasgranteddefendantJohn
O’Shea’sRule29motiontodismiss12
FCPAcountsandoneconspiracycount,
findingthatthegovernmentcouldnot
meetitsburdenofproofduetoalackof
criticalwitnessesandevidence.
Theseandothercasespresentedthe
opportunityformeaningfulchallengestothescope
andintentoftheFCPAstatute.Theresultingcase
lawfinallyprovidessomeguidanceoncritical
elementsofthestatute:whatisagovernment
instrumentality,whoisaforeignofficialandwhat
doesadefendantneedtoknowaboutthepurported
foreignofficialinordertobeconvicted?
I.
Defining“Instrumentality”
and“ForeignOfficial”
TheFCPA’santi‐briberyprovisionsprohibit
corruptpaymentsto“foreignofficial[s]”forthe
purposeofobtainingorretainingbusiness.Under
theFCPAa“foreignofficial”isdefinedasan“officer
oremployeeofaforeigngovernmentorany
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department,agencyorinstrumentalitythereof.”5
Butthestatutedoesnotdefine“instrumentality.”
Nordoesthelegislativehistoryofferanyguidance.
Whenthegovernmentfocuseditsattentionon
uncontroversialgovernmentfigures,thisambiguity
didnotmatter.Forexample,thefirstFCPAcasein
1979,U.Sv.KennyInternationalCorp.,involvedan
allegedpromisetopaymoneytotheCookIslands
Partythroughanofficialofthepoliticalparty.6In
theseminalcaseofUnitedStates.v.Kay,the
defendantswereconvictedforpayingbribesto
Haitiancustomsofficials.7Morerecently,the
defendantsinUnitedStatesv.Greenweretriedand
convictedforbribingthegovernoroftheTourism
AuthorityofThailand.8
However,whenthegovernment’sinterpretation
ofinstrumentalitybroadenedtoincludecommercial
enterprisesbecausetheywerestate‐ownedor
controlled,withoutregardtothenatureorextentof
governmentinvolvement,thebattlegroundwasset.
In2009,AssistantAttorneyGeneralBreuermade
clearthegovernment’sbroadinterpretationof
“foreignofficial”undertheFCPA:
...considerthepossiblerangeof
‘foreignofficials’whoarecoveredbythe
FCPA.Someareobvious,likehealth
ministryandcustomsofficialsofother
countries.Butsomeothersmaynotbe,such
asthedoctors,pharmacists,labtechnicians
andotherhealthprofessionalswhoare
employedbystate‐ownedfacilities.Indeed,
itisentirelypossible,undercertain
circumstancesandincertaincountries,that
nearlyeveryaspectoftheapproval,
manufacture,import,export,pricing,sale
andmarketingofadrugproductinaforeign
countrywillinvolvea‘foreignofficial’
withinthemeaningoftheFCPA.9
Thegovernment’sfocusonstate‐owned
enterprises(SOEs)crystallizedthequestionofwhat
makesanentityagovernmentinstrumentalityand
areallemployeesofagovernmentinstrumentality
necessarilygovernmentofficials.Untilrecently,
SOEsweretypicallyfoundindevelopingcountries
whereanationalistapproachtotheeconomy
resultedinthecentralizationofbusinessthrough
state‐ownedorcontrolledcompanies.Manyof
thoseplannedeconomieshavesincetakensteps
towardamarketeconomyandinthiscontextare
transitioningSOEsintocompetitivevehiclesacting
AmericanBarAssociation
WhiteCollarCrime2013
largelyindependentfromgovernmentdirection
regardlessoftheexistenceofgovernment
ownershiporfunding.InChina,forexample,aSOE
hastherightto“choosethesuppliersforitselfand
purchasefromthemmaterialsneededfor
production,tonegotiateandsigncontractswith
foreignparties,tobudgetanduseitsretainedfunds
subjecttostateregulations,todeterminesuchforms
ofwagesandmethodsofbonusdistributionas
appropriatetoitsspecificconditions,toemployor
dismissitsstaffmembersandworkerssubjectto
labourregulations,toengageinjointoperations
withotherenterprisesorinstitutionsortoinvestor
holdsharesinotherenterprises,andtoissuebonds
subjecttotheapprovaloftheStateCouncil.”10Like
purelyprivatecorporations,aSOEmakesitown
managerialdecisions,takesfullresponsibilityforits
profitsandlossesandpracticesindependent
accounting,andmaybesubjecttocivilliabilityfor
mismanagementofitsassets.11InChina,theidea
thatanSOEemployeeisagovernmentofficialis
incongruous.Thus,itwasonlyamatteroftime
beforeadefendantchargedwithpurportedly
bribinganSOEemployeeaskedtheobvious
question:HowcantheU.S.governmentprosecute
someoneforpayingabribetoaso‐called
governmentofficialwhentheallegedbriberecipient
wouldnotbeconsideredagovernmentofficialinthe
foreigncountryinwhichheworked.
Setoutbelowisadiscussionoftherecentcases
wherethemeaningof“foreignofficial”hasbeen
litigated.Whilethesewerenotthefirstcasesto
attackthescopeofthedefinition,theywerethefirst
todrawoutjudicialanalysisontheissue.12
Nonetheless,asthejuryinstructionsmakeclear,
otherthansolidifyingthatthereisaclearfactual
questionpresented,theguidancehasbeen
inconsistent.
UnitedStatesv.Aguilar–Central
DistrictofCalifornia
TwoCentralDistrictofCaliforniacases–United
Statesv.Aguilar,783F.Supp.2d1108,1109(C.D.
Cal.2011),andUnitedStatesv.Carson,No.09‐cr‐
00077‐JVS,(C.D.Cal.Feb.16,2012),raisedtheissue
ofwhetherastate‐ownedcompanyisan
instrumentalityaboutthesametime.InUnited
Statesv.Aguilar,theIndictmentalleged,among
otherthings,thatthedefendants“agree[d]topay
HoldingtheGovernmenttoitsBurdenofProofinFCPACases:LitigatingJuryInstructions
defendantEnriqueAguilarathirtypercent
commissiononallofthegoodsandservices”that
defendantLindseyManufacturingsoldtoComisión
FederaldeElectricidad(“CFE”)“knowingthatallor
aportionofthatmoneywouldbeusedtopay
Official1andothersatCFEbribesinexchangefor
CFEawardingdefendantLindseyManufacturing
contracts.”13
Thedefendantsdidnotdisputethatthe“the
supplyofelectricityissolelyagovernmentfunction”
andthattheutilitycompanywas“createdand
ownedbytheMexicangovernment.”14Instead,the
defendantsarguedthat,eveniftheallegations
againstthemweretrue,theofficialswerenot
“foreignofficials”“asamatteroflaw,asnostate‐
ownedoperationcouldbeaninstrumentality”ofthe
state.15JudgeA.HowardMatzdenieddefendants’
argumentandidentifieda“non‐exclusivelist”of
“variouscharacteristicsofgovernmentagenciesand
departmentsthatfallwithinthatdescription”of
instrumentality:16
1.
Theentityprovidesaservicetothe
citizens—indeed,inmanycasestoallthe
inhabitants—ofthejurisdiction;
2.
Thekeyofficersanddirectorsoftheentity
are,orareappointedby,government
officials;
3.
Theentityisfinanced,atleastinlarge
measure,throughgovernmental
appropriationsorthroughrevenues
obtainedasaresultofgovernment‐
mandatedtaxes,licenses,feesorroyalties,
suchasentrancefeestoanationalpark;
4.
Theentityisvestedwithandexercises
exclusiveorcontrollingpowerto
administeritsdesignatedfunctions.
5.
Theentityiswidelyperceivedand
understoodtobeperformingofficial(i.e.,
governmental)functions.17
UnitesStatesv.Carson–Central
DistrictofCalifornia
InUnitedStatesv.Carson,severalformer
employeesofControlComponentsInc.(“CCI”)were
chargedwithmakingcorruptpaymentstoofficers
andemployeesofnumerousstate‐ownedpower
companiesaroundtheworld,manyofwhichwere
publicly‐traded.18ThedefendantsfiledaMotionto
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Dismissarguingthatapurelylegalissuewas
presented:whetheremployeesoftheSOEsqualified
as“foreignofficials”undertheFCPA.The
defendantsarguedthattheFCPAasconceivedhad
mainlyaforeign‐policypurpose,andthat
“instrumentality”mustmeansomethingthatisan
integralpartofthegovernmentitself,andnot
merelyanentityinwhichthereisstateownership
orcontrol.19
OnMay18,2011,theHonorableJamesV.Selna
deniedthemotionandconcludedthat“several
factorsbearonthequestionofwhetherabusiness
entityconstitutesagovernmentinstrumentality,”
includingbutnotlimitedtothefollowingsix
factors:20
1.
Theforeignstate’scharacterizationofthe
entityanditsemployees;
2.
Theforeignstate’sdegreeofcontrolover
theentity;
3.
Thepurposeoftheentity’sactivities;
4.
Theentity’sobligationsandprivileges
undertheforeignstate’slaw,including
whethertheentityexercisesexclusiveor
controllingpowertoadministerits
designatedfunctions;
5.
Thecircumstancessurroundingtheentity’s
creation;and
6.
Theforeignstate’sextentofownershipof
theentity,includingtheleveloffinancial
supportbythestate(e.g.,subsidies,special
taxtreatment,andloans).21
Thecourtnotedthatthesefactorswerenot
exclusive,andtheir“chiefutilityissimplytopoint
outthatseveraltypesofevidencearerelevantwhen
determiningwhetherastate‐ownedcompany
constitutesan‘instrumentality’undertheFCPA—
withstateownershipbeingonlyoneofseveral
considerations.”22
Atthehearingonthemotiontodismiss,the
government’sargumentleftopenthequestion
whetheritintendedtoarguethatthedefendantsdid
notneedtoknowthatthebriberecipientwasa
governmentofficial.Assuch,defendantssought
leavetoarguethecriticaljuryinstructionsin
advanceoftrialsothatthepartiesknewthe
government’sburdenattrial.OnFebruary16,2012,
KimberlyA.Dunne|AlexisMillerBuese
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JudgeSelnaorderedanFCPAelementsinstruction
thatexpandedhisearliersix‐factortestintoamore
extensiveeight‐factor,non‐exclusivetestthat
instructedthejurytoconsiderthefollowingwhen
determiningwhetheraparticularSOEqualifiesasa
governmentinstrumentality:
1. Thecircumstancessurroundingtheentity’s
creation;
2. Theforeigngovernment’scharacterization
oftheentity,andwhethertheentityis
widelyperceivedandunderstoodtobe
performingofficial(i.e.,governmental)
functions;
3. Whetherthegovernmentalendorpurpose
soughttobeachievedisexpressedinthe
policiesoftheforeigngovernment;
4. Thedegreeoftheforeigngovernment’s
controlovertheentity,includingtheforeign
government’spowertoappointkey
directorsorofficersoftheentity;
5. Thepurposeoftheentity’sactivities,
includingwhethertheentityprovidesa
servicetothecitizensofthejurisdiction;
6. Theentity’sobligationsandprivileges
undertheforeigncountry’slaw,including
whethertheentityexercisesexclusiveor
controllingpowertoadministerits
designatedfunctions;
7. Thestatusofemployeesundertheforeign
government’slaw,includingwhetherthe
employeesareconsideredpublicemployees
orcivilservants[;and]
8. Theextentoftheforeigngovernment’s
ownershipoftheentity,includingthelevel
offinancialsupportbytheforeign
government(e.g.,subsidies,specialtax
treatment,andloans).23
UnlikeJudgeMatz,JudgeSelnarefusedto
considerthestatute’slegislativehistory,findingthat
the“statutorylanguageoftheFCPAisclear,andthat
thestatutoryschemeiscoherentandconsistent[.]”24
Importantly,however,JudgeSelnaacknowledged
thatgovernmentinvestmentalonemaybe
insufficienttomakeacommercialcompanyintoa
governmentinstrumentality,holdingthat“whena
monetaryinvestmentiscombinedwithadditional
factorsthatobjectivelyindicatetheentityisbeing
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WhiteCollarCrime2013
usedasaninstrumenttocarryoutgovernmental
objective,thatbusinessentitywouldqualifyasa
governmentinstrumentality.”25
UnitedStatesv.O’Shea–SouthernDistrictof
Texas
InUnitedStatesv.O’Shea,intheSouthern
DistrictofTexas,JohnO’Shea,aformerregional
managerataTexas‐basedunitofABBLtd,was
allegedtohavemadecorruptpaymentstoCFE
Officials,thesamestate‐ownedpowercompanyat
thecenterofUnitedStatesv.Aguilar.26Priortothe
Aguilarruling,O’Shea’slawyersfiledaMotionto
Dismissechoingsimilarargumentschallengingthe
government’sdefinitionofwhatconstitutesa
“foreignofficial.”OnJanuary3,2012,JudgeHughes
denieddefendant’smotiontodismissinasingle
sentence,withoutexplanation.27
Infinalizingthejuryinstructions,theCourtheld
anevidentiaryhearingduringwhichheheardthe
testimonyofaproposeddefenseexpert,Professor
HansBaade,alawprofessorattheUniversityof
Texas,whowaspreparedtotestifyaboutthestatus
ofCFEunderMexicanlaw.28Atthishearing,Judge
Hughesquestionedwhetherthegovernment
appreciateditsburdenofproof,notingthattheDOJ
“issupposedtoknowbeforeitbringstheindictment
thatitcanprovethatitisagovernmentalentity…in
factyoushouldhavetoconvincethegrandjuryof
it.”JudgeHughesspecificallyraisedasideconcern,
thoughnotrelevanttothejuryinstructions,“that
theGovernmentdidnotpresentevidenceon
governmentalstatusonwhichareasonablegrand
jurycouldhaverelied.”29
Ultimately,theelementsinstructioninO’Shea
wasgenerallyinaccordwithJudgeMatz’sandJudge
Selna’srulings.TheCourtwaspreparedtotell
jurorsthatwhetheranentityisaninstrumentalityof
aforeigngovernmentsuchthatitsemployeesmay
beforeignofficialsdependsonthecharacteristicsof
theagency.However,unlikeJudgeSelnaandJudge
Matz,JudgeHughes’instructionsalsocommented
specificallyonthelawofMexico:
Mexicanlawexcludesprivatecompaniesfrom
thesaleofelectricitytohouseholds.Ontheother
hand,theCommission—theConstitutionstatutes
andregulationsallowforprivategenerationof
electricityorself‐consumption,cogeneration,export
andsaletotheCommissionforresale,includingto
HoldingtheGovernmenttoitsBurdenofProofinFCPACases:LitigatingJuryInstructions
households.TheMexicanConstitutionforbids
monopolies,butithasreservedhighlevelsof
regulationofownershipinafewareas,likeoiland
electricity.AlthoughtheCommissionreceivesno
protectionastosubsidies,ithastosellpowerfor
householduseataratesetbythegovernment.Ifthe
Commissionlosesmoneyonthosesales,the
Governmentallowsittodeductthoselossesfrom
thechargeitowesfortheuseofMexico’scapital.
TheCommissionmaybesuedundernormalcivil
jurisdictionintheMexicancourts.Itscontractswith
householdcustomersaregovernedbytheMexican
commercialandcivillawandbyMexicanConsumer
ProtectionCommission.TheCommission’sboardof
directorsincludesgovernmentofficersandthree
membersoftheElectriciansUnion.TheCommission
hasnoregulatorypowers.TheElectricalRegulatory
Commission(inSpanishC.R.E.)issueslicensesand
permitsinMexicoforthegeneration,transmission
andsupplyofelectricityinMexico.TheSecretaryof
Energyestablishedtariffsforcategoriesofusers.30
ItisalsonoteworthythatJudgeHughes
cautionedthatofficialsofagovernment‐ownedor
government‐controlledbusinessthatareinvolved
onlywithpartsofthebusinessthatdonotperforma
governmentfunctionshouldnotbeconsidered
foreignofficials.31
However,itisunknownwhatimpactthis
instructionwouldhavehadonthejurors.On
January17,2012,JudgeHughesgrantedamotion
forjudgmentofacquittalfollowingthegovernment’s
case.Inhisbenchruling,JudgeHughesstatedthat
thetestimonyofthe“principalwitness”against
O’Shea“wasabstractandvague,generallyrelating
gossip”andevidencedthathe“knowsalmost
nothing.”32JudgeHughesalsonotedtheDOJ’s
difficultytracingparticularpaymentstoparticular
foreignofficials.OnFebruary9,2012,theCourt
grantedtheDOJ’smotiontodismisstheremaining
countsoftheindictmentwithprejudice,thereby
endingthecriminalprosecutionofO’Shea.33
UnitedStatesv.Esquenazi–Southern
DistrictofFlorida
InUnitedStatesv.Esquenazi,intheSouthern
DistrictofFlorida,telecommunicationscompany
executivesJoelEsquenaziandCarlosRodriguezand
co‐conspiratorswerechargedwith“provid[ing]
bribepaymentstoRobertAntoineandJeanRene
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DupervalofHaitiTeleco,inexchangeforbusiness
advantages[.]”34Thedefendantsmovedtodismiss
theindictment,arguingthatemployeesMr.Antoine
andMr.DupervalofHaitiTelecowerenotforeign
officials;HaitiTelecowasnotaninstrumentalityof
thegovernmentofHaiti;andtheFCPA’sdefinitionof
“foreignofficial”andinstrumentalitywas
unconstitutionallyvague.35Thejudgedeniedthe
defendants’challengeinacursoryopinion,although
thedistrictcourtindicatedthattherewerefactual
issuesthatneededresolution.36
Atthejuryinstructionstage,Esquenazi
requestedjuryinstructionsregardingtheterms
“foreignofficial”and“instrumentality”thatdefined
“aninstrumentalityofaforeigngovernment”as
“partoftheforeigngovernmentitself.”37Instead,
thedistrictcourtadoptedtheGovernment’sposition
andinstructedthejurythatan“instrumentalityofa
foreigngovernmentisa‘meansoragencythrough
whichafunctionoftheforeigngovernmentis
accomplished.’”38Onceagainthedistrictcourt
adoptedalistofnon‐exclusivefactorstoguidethis
determination:
1.
Whetheritprovidesservicestothecitizens
andinhabitantsofHaiti;
2.
Whetheritskeyofficersanddirectorsare
governmentofficialsorareappointedby
governmentofficials;
3.
TheextentofHaiti’sownershipofTeleco,
includingwhethertheHaitiangovernment
ownsamajorityofTeleco’ssharesor
providesfinancialsupportsuchas
subsidies,specialtaxtreatment,loans,or
revenuefromgovernment‐mandatedfees;
4.
Teleco’sobligationsandprivilegesunder
Haitianlaw,includingwhetherTeleco
exercisesexclusiveorcontrollingpowerto
administeritsdesignatedfunctions;and
5.
WhetherTelecoiswidelyperceivedand
understoodtobeperformingofficialor
governmentalfunctions.39
OnAugust4,2011,thejuryreturnedguilty
verdictsagainstthedefendants.Defendantshave
sincechallengedonappealwhethertheFCPAjury
instructionsadequatelyconveyedtherequisite
governmentalfunctionnecessarytoestablishthat
HaitiTelecowasagovernmentinstrumentality.40
KimberlyA.Dunne|AlexisMillerBuese
I‐6
Thedefendantsarguethatthejuryinstructions
failedtorequirethatthejurydeterminewhether
HaitiTelecoeverexercisedagovernmentfunction
akintoadepartmentoragency,andtodefine
“governmentalfunction.”Becausethejurycould
havereacheditsverdictwithoutanyconsideration
ofthefunctionofHaitiTeleco,thedefendantsargue
thatthejuryinstructionsweredeficient.Theappeal
hasbeenfullybriefedandoralargumentremainsto
bescheduled.
RecentGovernmentGuidance
Sincetheserulings,theDOJandSecurities
ExchangeCommission(“SEC”)jointlyreleasedthe
ResourceGuidetotheU.S.ForeignCorruptPractices
Act(the“Guide”)onNovember14,2012.Though
theGuideinmanywaysisanadvocacypiece,it
nonethelessisahelpfulsourceofthegovernment’s
currentthinkingonwhatconstitutesanFCPA
violation.
TheGuidestressesthat“governmentscanbe
organizedinverydifferentways,”sothe
determinationofwhetheraparticularentityisan
“instrumentality”ofthegovernmentrequiresa
“fact‐specificanalysisoftheentity’sownership,
control,status,andfunction.”41TheGuidebolsters
thispositionbypointingtocourts’recentjury
instructions(discussedabove)andincorporatesthe
listofnon‐exhaustivefactors,whichtakeinto
accountthevarietyofwaysinwhichforeign
governmentsorganize,operate,andcontrolentities.
Inanotabledevelopment,consistentwith
recentjurisprudence,theGuidenotesthatasa
practicalmatter,anentityisunlikelytoqualifyasan
instrumentalityifthegovernmentdoesnotownor
controlamajorityofitsshares.However,the
governmentmaintainsthatthereareexceptionsto
thisgeneralrule:“[T]herearecircumstancesin
whichanentitywouldqualifyasaninstrumentality
absent50%orgreaterforeigngovernment
ownership,whichisreflectedinthelimitednumber
ofDOJorSECenforcementactionsbroughtinsuch
situations.”42Bywayofexample,theGuide
discussestherecentconvictionofaFrenchissuer’s
threesubsidiariesforpayingbribestoemployeesof
aMalaysiantelecommunicationscompanythatwas
only43%‐ownedbyMalaysia’sMinistryof
Finance.43Inshort,theGuidehighlightsthatunique
factualconsiderationswillinformtheGovernment’s
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viewoftheapplicabilityoftheFCPAtoanygiven
situation,therebypreservingthegovernment’s
desiredflexibility.
AndtheGuideleavesopenthegovernment’s
flexibilityindeterminingwhichemployeesworking
atanSOEisagovernmentofficial.AstheGuide
notes,“TheFCPAthuscoverscorruptpaymentsto
low‐rankingemployeesandhigh‐levelofficials
alike.”44
Sowheredoesthatleavefuturedefendants
facedwithaprosecutioninvolvingallegedcorrupt
paymentstoanSOEemployee?Atleastthose
defendantsknowthatwhetheranSOEconstitutes
an“instrumentality”isaquestionoffactandthe
“substantialevidentiaryburdentoestablishthata
businessconstitutesagovernmentinstrumentality.
..”isnowplacedsquarelyontheDOJ.45AnSOE
mostlikelyneedstobemorethanmerelycontrolled
orfundedbyaforeignstatetobeagovernment
instrumentality.Andtheviewsoftheforeign
governmentatissuearerelevant.Butitremainsto
beseenwhatwillhappenasjuriesareconfronted
withlistsofnon‐exclusive,unweightedfactors–
noneofwhichisdispositive–andessentiallyfree
reinonthe“instrumentality”question.46
II. IntentandKnowledge
Requirements
Intheabsenceofaclear‐cuttestforwhenan
SOEisagovernmentinstrumentality,reasonable
mindsmightreachdifferentconclusions.Assuch,it
iscriticalthatthegovernmentberequiredtoprove
thatadefendantknewtherecipientofapayment
wasaforeignofficialtoavoidpunishingsomeone
whounwittingly,notwillfully,violatestheFCPA.As
JudgeSelnarecognizedinCarson,theFCPA’s
“scienterrequirement”mustbeconstruedto
amelioratetheriskof“arbitraryordiscriminatory
enforcement”createdbytheopen‐endedterm
instrumentality.47
A.
Corruptly
Tobesubjecttocriminalliabilityunderthe
FCPA,anaturalpersonmust“corruptly”violatethe
FCPAwhichrequires“abadorwrongfulpurpose
andanintenttoinfluenceaforeignofficialtomisuse
hisofficialposition.”48Statedanotherway,anFCPA
defendantcannotact“corruptly”unlessheacts
HoldingtheGovernmenttoitsBurdenofProofinFCPACases:LitigatingJuryInstructions
“knowinglyanddishonestly,withthespecificintent
toachieveanunlawfulresultbyinfluencinga
foreignpublicofficial’sactions….”49Undereitherof
theseformulationsof“corruptly,”adefendant
cannothavea“bad”or“dishonest”purposetocause
anofficialtomisuseapositionorthespecificintent
toinfluenceaforeignofficialtoachieve“anunlawful
result”unlesshefirstknowsthatheisdealingwitha
foreignofficial.50Mostrecentcaseshaveadopteda
juryinstructionthatdefines“corruptly”tomean
“thattheoffer,payment,orpromisewasintendedto
inducetheforeignofficialtomisuseanofficial
position.”51
B.
Willfully
Unlikethedomesticbriberystatute,theFCPA
alsorequiresthegovernmenttoprovethata
defendantchargedwithbribingagovernment
official“willfullyviolate[d]”theFCPA.52Although
theFCPAdoesnotdefinetheterm“willfully,”under
theSupremeCourt’s“willfulness”jurisprudence,the
termgenerallyrequires,ataminimum,“knowledge
ofthefactsthatconstitutetheoffense.”53Thus,the
additional“willfulness”requirementreinforcesthat
adefendantmustknowtherecipientofabribewas
aforeignofficial.
Whiletheelementof“willfulness”doesnot
requireawarenessoftheU.S.lawasapredicatefor
criminalliability,“willfulness”undertheFCPA
encompassesknowledge“thattheactwasinsome
waywrong.”54Theadoptionofthisstandard,theso‐
called“intermediatelevelofcriminalcommonlaw
willfulness”furthersupportsasaprerequisiteto
criminalliabilityknowledgethattherecipientwasa
foreignofficial.55
Knowledge
Beliefvs.ActualKnowledge
InCarson,thegovernmentproposedajury
instructionthattoldthejurytheyneededtofind
thatadefendant“kneworbelieved”thatthebribe
wasintendedforagovernmentofficial:
Thepaymentorgiftatissueinelement4wasto
(a)apersonthedefendantkneworbelievedwasa
foreignofficialor(b)anypersonandthedefendant
knewthatalloraportionofsuchmoneyorthingof
valuewouldbeoffered,given,orpromised(directly
I‐7
orindirectly)toapersonthedefendantknewor
believedtobeaforeignofficial.56
Thislanguagearguablywouldhaveallowedthe
defendantstobeconvictedbecausethey“believed”
thebriberecipientwasaforeignofficial,evenifthat
personwasnotinfactaforeignofficial.
Defendantssubmittedthattheplainand
ordinaryreadingofthephrase“kneworbelieved”is
thateitherknowledgeorbeliefsuffices,regardlessof
whethertherecipientwasinfactaforeignofficial.
Thedefendantsaskedthecourttocurethedefectby
makingclearthegovernment’sburdentoprovethat
thebribetargetorrecipientwasinfacta
governmentofficialbyaddingthewords“toa
foreignofficial”attheendofelementfouras
follows:“[t]hedefendantoffered,paid,promisedto
pay,orauthorizedthepaymentofmoney,oroffered,
gave,promisedtogive,orauthorizedthegivingof
anythingofvaluetoaforeignofficial.”
TheCourtagreedthattheadditionofthephrase
“toaforeignofficial”inelementfour“ishelpfulto
dispelthenotionthatmerebeliefthatanindividual
isaforeignofficialissufficient.”57Indeedthecourt
wentfurtherand“ma[de]thisexplicit”byaddingthe
followingdirectiontothejury:“Beliefthatan
individualwasaforeignofficialdoesnotsatisfythis
elementiftheindividualwasnotinfactaforeign
official.”58AndtheCourtrejectedthegovernment’s
requestforaninstructionthatitwasnotitsburden
toprovethatthedefendantknewthelegaldefinition
of‘foreignofficial’undertheFCPAorknewthatthe
intendedrecipientofthepaymentorgiftfellwithin
thelegaldefinition.”59
WillfulBlindness
Indefining“knowledge”undertheFCPA,
Congressexpresslyincorporatedtheconceptof
willfulblindnessbyprovidingthatadefendantis
deemedtohavetherequisiteknowledgeifhe“hasa
firmbeliefthatsuchcircumstanceexists”60orifhe
“isawareofahighprobabilityoftheexistenceof
suchcircumstance....”61Butthereisnotyetaclear
caselawtrackrecordastowhatthegovernment’s
burdeninprovingwillfulblindnessis.
Recently,theU.S.SupremeCourtsetouta
standardforwillfulblindnessinGlobal‐Tech
Appliances,Inc.v.SEBS.A.,563U.S.___,13,131S.Ct.
2060(2011).ThoughGlobal‐Techisapatent
KimberlyA.Dunne|AlexisMillerBuese
I‐8
infringementcase,theCourtaddressedthescopeof
thewillfulblindnessdoctrineundercriminallawas
well.TheCourtsetforthtwouniversal
requirements:(1)thedefendantmustsubjectively
believethatthereisahighprobabilitythatafact
existsand(2)thedefendantmusttakedeliberate
actiontoavoidlearningofthatfact:
Wethinktheserequirementsgive
willfulblindnessanappropriatelylimited
scopethatsurpassesrecklessnessand
negligence.Underthisformulation,a
willfullyblinddefendantisonewhotakes
deliberateactionstoavoidconfirminga
highprobabilityofwrongdoingandwho
canalmostbesaidtohaveactuallyknown
thecriticalfacts.62
ThedefendantsinCarsonsoughttoapplythis
sametestinthewillfulblindnessjuryinstructionto
begiveninthatcase.Thedefendantsarguedthat
theSupremeCourtreliedonprecedentsdatingback
morethanacenturyrequiringthatadefendantmust
havetakendeliberatestepstoavoidacquiringactual
knowledge.63Assuch,theyarguedthatCongress
mustbepresumedtohavebeenfamiliarwithsuch
settledlawwhenenactingtheFCPAand,thus,to
haveincorporatedintothedefinitionofdeliberate
ignorancetherequirementofconsciousavoidance.64
TheCourtfoundthattheGlobalTechdecisionwas
notinstructiveasitwasapatentcaseandtheFCPA
andastatutorilydefinedscopeforwillful
blindness.65AlthoughthecourtinUnitedStatesv.
Kozenyhadrequiredproofofanaffirmativeeffortto
avoidlearningthefacts,JudgeSelnanotedthathe
didnotbelievethatthegovernmenthadtotakeon
thatburden.
Recently,theNinthCircuitadoptedGlobalTech’s
definitionofwillfulblindnessinacriminalCleanAir
ActcaseinUnitedStatesv.Yi.66Inaffirmingthe
conviction,theNinthCircuitspecificallyaffirmedthe
two‐parttestsetoutinGlobal‐Tech.Butfuture
defendantsmayhavetoseektoimposethisburden
onthegovernmentinfuturecases.
Conclusion
Theevolutionofrecentcaselawhasmadeclear
certainprinciples:WhetheraSOEisan
“instrumentality”andthereforewhetheran
employeeisa“foreignofficial”undertheFCPAare
questionsoffact.Thetesttodateisbasedona
AmericanBarAssociation
WhiteCollarCrime2013
totalityofcircumstancestestwithnosingle
dispositivefactor.Andthefactofthegovernment’s
burdenisnolongerupfordebate:thegovernment
mustprovebeyondareasonabledoubtthat(1)an
SOEisagovernmentinstrumentalityand(2)the
defendantknewhewasbribingaforeignofficial.
Endnotes
1KimberlyDunneisapartnerinSidleyAustin,LLP’s
LosAngelesOfficeandco‐chairoftheFirm’sWhite
Collarpractice.SherepresentedoneoftheinUnited
Statesv.Carson.AlexisMillerBueseisanassociate
inSidleyAustin’sLosAngelesOfficeandwasa
memberoftheCarsontrialteam.Ms.DunneandMs.
BuesewouldliketothankLeahE.Abeles,alsoan
associateintheLosAngelesOffice,forhervaluable
contributionstothisarticle.
2MendelsohnSaysCriminalBriberyProsecutions
Doubledin2007,22CORP.CRIMEREP.36(1)(Sept.16,
2008),availableat
http://www.corporatecrimereporter.com/mendels
ohn091608.htm.
3SeeSecondMistrialinAfricaStingProsecution,
FCPABLOG(Jan.31,2012),
http://www.fcpablog.com/blog/2012/1/31/second
‐mistrial‐in‐africa‐sting‐prosecution.html.
4SeeUnitedStatesv.Aguilar,831F.Supp.2d1180
(C.D.Cal.2011).
515U.S.C.§78dd‐2(h)(2)(A).
6PostageStamps,SirAlbertHenry,FlyingVoters,And
TheFCPA,FCPAPROFESSOR(Aug.24,2011),
http://www.fcpaprofessor.com/postage‐stamps‐sir‐
albert‐henry‐flying‐voters‐and‐the‐fcpa.
7UnitedStates.v.Kay,513F.3d432(5thCir.2007).
8PressRelease,Dept.ofJustice,FilmExecutiveand
SpouseFoundGuiltyofPayingBribestoaSenior
ThaiTourismOfficialtoObtainLucrativeContracts
(Sept.14,2009).
9LannyA.Breuer,Asst.Att’yGen.,PreparedKeynote
Addresstothe10thAnnualPharmaceuticaland
RegulatoryComplianceCongressandBestPractices
Forum(Nov.12,2009),availableat
HoldingtheGovernmenttoitsBurdenofProofinFCPACases:LitigatingJuryInstructions
www.ehcca.com/presentations/pharmacongress10
/breuer_2.pdf.
10GuanghuaYu,TheEmergingFrameworkofChina’s
BusinessOrganizationsLaw,10TRANSNAT'LLAW.39,
68,70‐71(1997).
11Id.at68,70.
I‐9
27SeeManagementOrderat1,UnitedStatesv.
O’Shea,No.09‐cr‐00629(S.D.Tex.Jan.3,2012),ECF
No.142.
28SeeDid‘ForeignOfficial’ImpactTheO’Shea
Acquittal?,FCPAPROFESSOR(July11,2012),
http://www.fcpaprofessor.com/did‐foreign‐official‐
impact‐the‐oshea‐acquittal.
29Seeid.Interestingly,inCarson,thedefendantsdid
12SeeFridayRoundup,FCPAPROFESSOR(Jan.6,
bringamotionfordisclosureofthegrandjury
transcript.Thedefendantsarguedtheyoughttobe
abletoprobewhetherthegovernmentpresented
evidenceofthenatureoftheentitieswhose
employeeswereallegedlybribedsufficientto
determinewhethertheyare“foreignofficials”
withinthemeaningoftheFCPA,andwhetherthe
governmentproperlyinstructedthegrandjury.The
courtdeniedthemotion,statinginlargepart,“the
assertionofshortcomingsintheevidencepresented
tothegrandjuryandintheinstructionsrestson
speculationandhindsightinferences.”Orderre
MotionforProductionorReviewofGrandJury
Transcriptat2,UnitedStatesv.Carson,No.09‐cr‐
00077‐JVS(C.D.Cal.Aug.12,2011),ECFNo.435;see
alsoDefendants’NoticeofMotion&Motionfor
DisclosureofGrandJuryTranscriptor,inthe
Alternative,forinCameraReview;Memorandumof
Points&AuthoritiesinSupportThereof,
UnitedStatesv.Carson,No.09‐cr‐00077‐JVS(C.D.
Cal.June27,2011),ECFNo.379.
30SeeDid‘ForeignOfficial’ImpactTheO’Shea
Acquittal?,supranote29.
2012),http://www.fcpaprofessor.com/friday‐
roundup‐21.
13UnitedStatesv.Noriega,No.10‐1031(A)–AHM,
2010WL4316920(C.D.CalOct.21,2010).
14UnitedStatesv.Aguilar,783F.Supp.2d1108,
1112(C.D.Cal.2011).
15Id.
16Id.at1115.
17Id.
18Indictmentat¶14,UnitedStatesv.Carson,No.
09‐cr‐00077‐JVS(C.D.Cal.Jan.24,2011),ECFNo.
298‐1.
19Defendants’NoticeofMotion&MotiontoDismiss
CountsOneThroughTenoftheIndictment;
MemorandumofPoints&AuthoritiesinSupport
Thereof,UnitedStatesv.Carson,No.09‐cr‐00077‐
JVS(C.D.Cal.Feb.21,2011),ECFNo.304.
20OrderDenyingDefendants’MotiontoDismiss
Counts1Through10oftheIndictmentat7,United
Statesv.Carson,No.09‐cr‐00077‐JVS(C.D.Cal.May
18,2011),ECFNo.373[hereinafterOrderDenying
MotiontoDismiss].
21Id.at5.
31Seeid.
32JudgetoDOJ:YourPrincipalWitnessKnowsAlmost
Nothing,FCPABLOG(Jan.19,2012),
http://www.fcpablog.com/blog/2012/1/19/judge‐
to‐doj‐your‐principal‐witness‐knows‐almost‐
nothing.html.
33
22Id.
23OrderreSelectJuryInstructionsat5‐6,United
Statesv.Carson,No.09‐cr‐00077‐JVS(C.D.Cal.Feb.
16,2012),ECFNo.549.
24OrderDenyingMotiontoDismiss,supranote20,
at11.
25Id.at7.
26Indictmentat¶14,UnitedStatesv.O’Shea,No.09‐
cr‐00629(S.D.Tex.Nov.16,2009),ECFNo.1.
See O’Shea Acquitted on All Counts, FCPA BLOG (Jan. 17, 2012), http://www.fcpablog.com/blog/2012/1/17/ oshea‐acquitted‐on‐all‐counts.html. 34Indictmentat¶3,UnitedStatesv.Esquenazi,No.
1:09‐cr‐21010‐JEM(S.D.Fla.Dec.8,2009),ECFNo.
3.
35MikeKoehler,Big,Bold,andBizarre:TheForeign
CorruptPracticesActEntersANewEra,43U.TOL.L.
REV.99,117‐18(2011).
KimberlyA.Dunne|AlexisMillerBuese
I‐10
36Id.at119.
37BriefofAppellantat39,UnitedStatesv.
Esquenazi,No.11‐15331‐C(11thCir.May9,2012).
38Id.at40.
39Court’sFinalInstructionstotheJuryat23,United
Statesv.Esquenazi,No.09‐21010‐CR(S.D.Fla.Aug.
5,2011),ECFNo.520.
40BriefofAppellant,supranote38.
41U.S.DEP’TOFJUSTICE,CRIM.DIV.,&U.S.SEC.&
EXCHANGECOMM’N,ENFORCEMENTDIV.,ARESOURCE
GUIDETOTHEU.S.FOREIGNCORRUPTPRACTICESACT20
(Nov.14,2012),availableat
http://www.justice.gov/criminal/fraud/fcpaand
http://www.sec.gov/spotlight/fcpa.shtml.
42Id.at21.
43Id.(citingCriminalInformation,UnitedStatesv.
Alcatel‐LucentFrance,S.A.,No.10‐cr‐20906(S.D.
Fla.Dec.27,2010)).
44Id.at20.
45OrderDenyingMotiontoDismiss,supranote20,
at15.
46See,e.g.,EmpireGasCorp.v.Am.BakeriesCo.,840
F.2d1333,1337(7thCir.1988)(Posner,J.)(“Itis
nottruethatthelawiswhatajurymightmakeout
ofstatutorylanguage.Thelawisthestatuteas
interpreted.Thedutyofinterpretationisthejudge’s.
Havinginterpretedthestatutehemustthenconvey
thestatute’smeaning,asinterpreted,inwordsthe
jurycanunderstand.”).
47OrderDenyingMotiontoDismiss,supranote20,
at16.
48Stichtingv.Schreiber,327F.3d173,183(2ndCir.
2003).
49UnitedStatesv.Kay,513F.3d432,449(5thCir.
2007)(approvingFCPAinstructiondefining
“corruptly”).
50SeeStichting,327F.3dat179‐180(“knowingthat
themoneywouldbeofferedorgivendirectlyor
indirectlytoanyforeignofficial”);UnitedStatesv.
Jefferson,594F.Supp.2d655,667(E.D.Va.2009)
(same);seealsoJuryInstructionsbyJudgeA.
HowardMatzatNo.30,UnitedStatesv.Aguilar,No.
2:10‐cr‐01031‐AHM‐2(C.D.Cal.May16,2011),ECF
AmericanBarAssociation
WhiteCollarCrime2013
No.511(“knowingthatalloraportionofthe
paymentwouldbeoffered…toaforeignofficial”).
51OrderreSelectJuryInstructions,supranote23,at
7;JuryInstructionsbyJudgeA.HowardMatz,supra
note51,atNo.31;FinalJuryInstructionsatNo.37,
UnitedStatesv.Patel,No.1:09‐CR‐335(RJL)(D.C.
Cir.2011).
5215U.S.C.§78dd‐2(g)(2)(A).
53Kay,513F.3dat447‐48(construing“willfully”
underFCPA).
54Id.at449‐50.
55Seeid.at447‐48.
56OrderreSelectJuryInstructions,supranote23,at
10‐11.
57Id.
58Id.
59Id.at12.
6015U.S.C.§17dd‐2(h)(3)(A)(ii).
61Id.§17dd‐2(h)(3)(B).
62Global‐TechAppliances,Inc.v.SEBS.A.,563U.S.
___,131S.Ct.2060,2070‐71(2011).
63Id.at2063.
64SeeUnitedStatesv.Hunter,101F.3d82,85(9th
Cir.1996)(“[A]samatterofstatutoryconstruction,
wepresumethatCongressisknowledgeableabout
existinglawpertinenttothelegislationitenacts.”)
(internalquotationsandcitationsomitted);seealso
UnitedStatesv.Kozeny,643F.Supp.2d415,418‐19
(S.D.N.Y.2009)(recognizingdeliberateignorance
undertheFCPArequiresproofdefendantbothwas
“awareofahighprobability...andconsciously
avoidedconfirmingthatfact”).
65OrderreSelectJuryInstructions,supranote23,at
9.
66UnitedStatesv.Yi,‐‐F.3d‐‐,No.11‐50234,2013
WL11890(9thCir.Jan.2,2013).