Page 32 - U.S. FOREIGN CORRUPT PRACTICES ACT

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

The Local Law Defense defense. 146 In that case, the defendant was
For the local law defense to apply, a defendant convicted of conspiracy, violating the FCPA, bribery,
must establish that “the payment, gift, offer, or and money laundering, in connection with a scheme

promise of anything of value that was made, was to bribe two ambassadors to the United Nations. In
lawful under the written laws and regulations of arguing in favor of a jury instruction for the local
the foreign official’s, political party’s, party official’s, law affirmative defense, the defendant maintained
or candidate’s country.” 143 The defendant must that a finding by the jury that the payments at
establish that the payment was lawful under the issue were not unlawful under the written laws and
foreign country’s written laws and regulations at regulations of Antigua and the Dominican Republic

the time of the offense. In creating the local law would require acquittal on the FCPA-related counts.
defense in 1988, Congress sought “to make clear The court denied the defendant’s request for the
that the absence of written laws in a foreign official’s affirmative defense instruction, finding that the
country would not by itself be sufficient to satisfy proposed instruction was “inconsistent with the

this defense.” 144 Thus, the fact that bribes may plain meaning of the language of the written laws
not be prosecuted under local law is insufficient and regulations affirmative defense contained in
to establish the defense. In practice, the local law the FCPA.” 147 The court further explained that the
defense arises infrequently, as the written laws defendant’s request was not directly supported
and regulations of countries rarely, if ever, permit by the majority of sources that had addressed the
corrupt payments. Nevertheless, if a defendant can issue and, if applied, “would lead to impractical

establish that conduct that otherwise falls within results.” 148
the scope of the FCPA’s anti-bribery provisions was
Reasonable and Bona Fide Expenditures
lawful under written, local law, he or she would have
The FCPA allows companies to provide
a defense to prosecution.
reasonable and bona fide travel and lodging
In United States v. Kozeny, the defendant
expenses to a foreign official, and it is an affirmative
unsuccessfully sought to assert the local law
defense where expenses are directly related to
defense regarding the law of Azerbaijan. The parties
the promotion, demonstration, or explanation of a
disputed the contents and applicability of Azeri law,
company’s products or services, or are related to a
and each presented expert reports and testimony
company’s execution or performance of a contract
on behalf of their conflicting interpretations. The
with a foreign government or agency. 149 Trips that
court ruled that the defendant could not invoke
are primarily for personal entertainment purposes,
the FCPA’s affirmative defense because Azeri law
however, are not bona fide business expenses and
did not actually legalize the bribe payment. The
may violate the FCPA’s anti-bribery provisions. 150
court concluded that an exception under Azeri
Moreover, when expenditures, bona fide or not,
law relieving of criminal liability bribe payors
are mischaracterized in a company’s books and
who voluntarily disclose bribe payments to the
records, or where unauthorized or improper
authorities did not make the bribes legal. 145
expenditures occur due to a failure to implement
In United States v. Ng Lap Seng, the district
adequate internal controls, they may also violate
court rejected the defendant’s request to instruct
the FCPA’s accounting provisions. Purposeful
the jury with respect to the local law affirmative

24