Ignoring the Technicality's Temptation: Interpreting the Citizenship of a Foreign Official under the Foreign Corrupt Practices Act
Grant, Elizabeth, American University Business Law Review
The Foreign Corrupt Practices Act ("FCPA") prohibits bribing "foreign officials," but it does not define the word "foreign" or give any guidance to what citizenship the official must have to fall under the FCPA. Adding to the difficulty when defining "foreign," the recent rise in prosecutions and increased FCPA case law has failed to produce an obvious answer as to how a court should address these issues. This makes it harder for businesses to comply with the FCPA or, in the alternative, obtain favorable deferred prosecution agreements. This Comment argues that, while the FCPA excludes those with U.S. citizenship from being "foreign officials" to protect defendants from an ambiguous criminal statute, businesses should structure compliance programs to treat "foreign officials" as including those with U.S. citizenship. Section I of this Comment traces the evolution of the United States' anti-bribery obligations. Section II analyzes courts' divergent readings of the FCPA and the problem this creates for interpreting whether "foreign" implies that the actor must be a non-U.S. citizen to constitute a "foreign official." Section III identifies how a court would use past approaches to interpret the term "foreign" to include actors with U.S. citizenship, but ultimately would adopt a defendant's narrow definition under the rule of lenity. It then argues that businesses should consider this loophole nonexistent for compliance program purposes. The Conclusion places this issue within the current debate over narrowing the FCPA's terms, determining that it shows the need for statutory clarification and reform to better allow businesses to comply with the law.
On paper, the United States criminalizes bribing "foreign officials,"1 but despite clear evidence, some instances of bribery have escaped prosecution.2 In June 2012, R. Allen Stanford stood trial for running an investment fraud scheme.3 At trial, a witness recounted that Stanford bribed an Antiguan bank regulator, Leroy King, as part of his actions to support the Ponzi scheme.4 Although King may have qualified under the Foreign Corrupt Practices Act ("FCPA") as a "foreign official" because he was an instrumentality of another state, U.S. officials chose not to charge Stanford with a FCPA violation.5 Richard Cassin, a FCPA expert, inferred that Stanford escaped charges because King maintained dual citizenship with the United States and Antigua and Barbuda, West Indies.6
This situation presents particular difficulty for businesses that operate overseas because unpredictable application of the FCPA hinders compliance with the law.7 The Stanford case could indicate relaxed FCPA enforcement by the United States,8 or it could mean that the United States interprets the FCPA's "foreign official" to mean a non-U.S. citizen.9 Although a business could operate under the assumption that the United States interprets "foreign official" to include only non-U.S. citizens, the business would do so at the risk of preparing an inadequate compliance program and potentially violating the statute.10
When looking for a citizenship requirement, there is little tangible legal guidance for businesses to follow.11 The FCPA specifically criminalizes the bribery of "foreign officials," making it unlawful for a business and its agents to offer payment, promise to pay, or authorize the payment of anything of value to any foreign official or foreign political party.12 Additionally, the payments must be made for purposes of influencing any act or decision of the official or political party to obtain or retain business of the payor.13 The statute defines "foreign official" as "any officer or employee of a foreign government or any department, agency, or instrumentality thereof" without specifically defining "foreign" to mean a non-U.S. citizen.14 While cases have analyzed the meaning of other aspects of the statutory definition of "foreign official,"15 courts have yet to decide on the specific citizenship requirements of a "foreign official," leaving businesses without a concrete answer as to what constitutes a FCPA violation. …