Supreme Court Denies Execs' Petition For Clarification of FCPA ‘Instrumentality'

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By Michael Greene 

Oct. 6 — The U.S. Supreme Court has denied a petition by two convicted telecommunications executives to review the Eleventh Circuit's first-impression definition of “instrumentality” for Foreign Corrupt Practices Act purposes (Esquenazi v. United States,U.S., No. 14-189, 10/6/14).

The Supreme Court provided a general denial of the writ of certiorari for the two defendants in an Oct. 6 batch order and did not provide any basis for its decision.

In 2011, Joel Esquenazi and Carlos Rodriguez were convicted by a jury for their roles in a foreign bribery scheme. Rodriguez received a seven-year sentence and Esquenazi received 15 years, the longest prison term ever handed down in an FCPA prosecution .

The U.S. Court of Appeals for the Eleventh Circuit in May upheld their convictions under the statute that bars U.S. entities from bribing foreign officials. The statute defines “foreign official” to include “any officer or employee of a foreign government or any department, agency, or instrumentality thereof.” The term “instrumentality,” however, is undefined .

In its decision, the Eleventh Circuit set forth a test for evaluating when the executives and employees of a company owned or otherwise controlled by a government constitute “foreign officials” under the FCPA, defining the term through an examination of the control and function of the entity being bribed.

The two former telecommunications executives Aug. 14 filed a petition asking the Supreme Court to review the Eleventh Circuit's ruling. They claimed that the FCPA “leaves open the pivotal question of who qualifies as ‘foreign official' by not defining what ‘instrumentality [of a foreign government]' means” and that the Eleventh Circuit provided “an unacceptably broad interpretation of the term ‘instrumentality'”.

In a statement e-mailed to Bloomberg BBNA on Sept. 23, John J. Carney, a partner at BakerHostetler, predicted that it was “unlikely” the high court would grant certiorari in this case because “there is no circuit split or conflicting authority on the topics addressed by Esquenazi.”

He added that “the definition used by the 11th Circuit is not particularly controversial. It comports with the definition used by the DOJ and SEC and is functional in nature. Other courts addressing the issue will have no problem following or distinguishing their cases, on the facts, from the 11th Circuit, so a split or major divergence is even less likely.”

Carney noted that a possible circuit split on the issue, which he said would make Supreme Court review more likely, is unlikely to develop anytime soon because “concrete, judicial guidance on the FCPA is rare.”

To contact the reporter on this story: Michael Greene in Washington at mgreene@bna.com

To contact the editor responsible for this story: Ryan Tuck at rtuck@bna.com

The Supreme Court's batch denial of certiorari writs is available at http://www.supremecourt.gov/orders/courtorders/100614zor.pdf.