Page 29 - U.S. FOREIGN CORRUPT PRACTICES ACT

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

involving a $1 million bribe to the chairman of to being convicted of funneling millions of dollars
Trinidad and Tobago’s racing authority. 126 in bribes to two sitting presidents in two different
DOJ and SEC continue to regularly bring FCPA countries, a French issuer’s three subsidiaries
cases involving bribes paid to employees of agencies were convicted of paying bribes to employees of
and instrumentalities of foreign governments. a Malaysian telecommunications company that

In one such case, the subsidiary of a Swiss was 43% owned by Malaysia’s Ministry of Finance.
engineering company paid bribes to officials of a There, notwithstanding its minority ownership
state-owned and controlled electricity commission. stake in the company, the Ministry held the status
The commission was created by, owned by, and of a “special shareholder,” had veto power over
controlled by the Mexican government, and it had all major expenditures, and controlled important
a monopoly on the transmission and distribution operational decisions. 129 In addition, most senior

of electricity in Mexico. Many of the commission’s company officers were political appointees,
board members were cabinet-level government including the Chairman and Director, the Chairman
officials, and the director was appointed by Mexico’s of the Board of the Tender Committee, and the
president. 127 Similarly, in the case involving Haiti’s Executive Director. 130 Thus, despite the Malaysian
state-owned and controlled telecommunications government having a minority shareholder

company, Miami telecommunications executives position, the company was an instrumentality of
were charged with paying bribes to the the Malaysian government as the government had
telecommunications company’s employees. The substantial control over the company.
telecommunications company was 97% owned Companies and individuals should also
and 100% controlled by the Haitian government, remember that, whether an entity is an
Haiti granted the company a monopoly over instrumentality of a foreign government or a

telecommunications service and gave it various tax private entity, commercial (i.e., private-to-private)
advantages, the company’s Director General was bribery may still violate the FCPA’s accounting
chosen by the Haitian President with the consent provisions, the Travel Act, anti-money laundering
of the Haitian Prime Minister and the ministers of laws, and other federal or foreign laws. Any type of

public works and economic finance, and the Haitian corrupt payment thus carries a risk of prosecution.
President appointed all of the telecommunications
company’s board members. 128 Public International Organizations
While no one factor is dispositive or In 1998, the FCPA was amended to expand the
necessarily more important than another, as a definition of “foreign official” to include employees
practical matter, an entity is unlikely to qualify as and representatives of public international

an instrumentality if a government does not own organizations. 131 A “public international organization”
or control a majority of its shares. However, there is any organization designated as such by Executive
are circumstances in which an entity would qualify order under the International Organizations
as an instrumentality absent 50% or greater foreign Immunities Act, 22 U.S.C. § 288, or any other
government ownership, which are reflected in a organization that the President so designates. 132

limited number of DOJ or SEC enforcement actions Currently, public international organizations include
brought in such situations. For example, in addition entities such as the United Nations, the World

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