Execs Seek Review of FCPA ‘Instrumentality’ Ruling

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By Phyllis Diamond

Aug. 15 — Two former telecommunications executives convicted over their alleged roles in a foreign bribery scheme petitioned the U.S. Supreme Court to review a federal appeals court's first-impression definition of “instrumentality” for Foreign Corrupt Practices Act purposes.

Faulting the U.S. Court of Appeals for the Eleventh Circuit's “unacceptably broad interpretation of the term,” they called on the Justices Aug. 14 “to bring much needed clarity to the correct definition of `instrumentality' under the FCPA.”

The statute bars U.S. entities from bribing a “foreign official,” which includes “any officer or employee of a foreign government or any department, agency, or instrumentality thereof.” The term “instrumentality” is not defined.

Control, Function

The defendants in this case were convicted in federal district court in August 2011 on charges that they paid kickbacks to two employees of Haiti Teleco, the state-owned telecommunications provider, in exchange for reduced international rates and “unearned credits.”

The case yielded the longest sentence ever imposed in an FCPA case—15 years—while another defendant received a seven-year term.

On appeal, the defendants asked the Eleventh Circuit to review whether the jury was properly instructed on various FCPA terms, including “instrumentality”.

They argued that Haiti Teleco is not a government “instrumentality,” and accordingly, the Teleco employees they bribed are not “foreign officials” for FCPA liability purposes. Prosecutors, however, rejoined that the evidence “sufficiently established that Teleco was an instrumentality of Haiti during the relevant time period.”

Earlier this year, the Eleventh Circuit—the first federal appeals court to consider the issue—essentially affirmed the government's approach, defining the term through an examination of the control and function of the entity being bribed.

To contact the reporter on this story: Phyllis Diamond in Washington at pdiamond@bna.com

To contact the editor responsible for this story: Susan Jenkins at sjenkins@bna.com


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