The U.S. Supreme Court on Monday refused to review the first Foreign Corrupt Practices Act (FCPA) case appealed to the highest Court. The appeal sought to limit the scope of the FCPA by narrowing the law’s definition of the term “foreign official.”
Joel Esquenazi and Carlos Rodriguez, former executives of Terra Telecommunications Corp., had challenged their convictions under the FCPA and had asked the Supreme Court to clarify who counted as a foreign official under the law. The Eleventh Circuit had affirmed the conviction and the ruling that defined the term instrumentality as “any entity controlled by the government of a foreign country that performs a function the controlling government treats as its own.”
Although the Supreme Court did not provide an explanation why it denied the petition, legal experts suggest that the Court declined review based on the fact that there was no split in the federal circuits over the definition.
The U.S. Department of Justice in recent years has used the law to secure massive settlements from corporations and launch criminal charges against executives’ misconduct overseas. Several amicus briefs had been filed supporting a review of the definition, calling it an issue of great concern to the global business community. Few decisions interpreting the FCPA have been issued due to the fact that the majority of FCPA investigations have been resolved through lucrative financial settlements.
As a practical matter, practitioners and compliance officers should rely on the Eleventh Circuit’s adoption of the “instrumentality” rule and apply compliance programs consistent with that decision. Therefore, when deciding whether an individual qualifies as a “foreign official,” corporation executives should err on the side of caution.
