WLF Asks Supreme Court to Rein In Foreign Corrupt Practices Act

WASHINGTON, D.C.  The Washington Legal Foundation (WLF) today urged the U.S. Supreme Court to review (and ultimately overturn) a federal appeals court’s broad interpretation of the Foreign Corrupt Practices Act (FCPA), a federal law that bans payments to a “foreign official” for the purpose of obtaining or retaining business.  In a brief urging review of a decision of the U.S. Court of Appeals for the Eleventh Circuit, WLF argued that the term “foreign official” generally does not include employees of overseas commercial entities.

The Petitioners are two American  telecommunications executives who received lengthy prison sentences for making payments to employees of Haiti Teleco, the telephone company in Haiti.  The appeals court held that Haiti Teleco should be deemed an “instrumentality” of the Haiti government (and thus that its employees should be deemed “foreign officials”) because—at the time of the payments—the government of Haiti owned a controlling share of Haiti Teleco’s stock.  Haiti subsequently privatized the company.

Noting that the FCPA does not define the term “instrumentality,” and that no previous appellate court decision has ever construed the term, WLF argued that the Supreme Court ought to grant review in order to provide guidance regarding its meaning.  WLF noted that numerous FCPA investigations focus on payments made to employees of commercial entities, yet American executives lack any clear guidance regarding when payments to such entities are barred by the FCPA.  WLF argued that the language and structure of the FCPA suggest that it does not apply to payments made to commercial entities that do not perform traditional government functions.

Following its filing, WLF issued the following statement by Chief Counsel Richard Samp: “Continued uncertainty regarding the scope of the FCPA has created a constitutionally intolerable dilemma for companies operating overseas.  America executives are forced to guess at whether making payments necessary to allow them to compete will also expose them to FCPA prosecution.  Moreover, federal officials have sought to expand FCPA far beyond the limits established by the language of the statute.”

WLF is a public interest law firm and policy center that regularly litigates in opposition to overly expansive use of the criminal laws against legitimate businesses and their employees.