FCPA’s Legacy for Multinational Corporations: Foreign Officials Can Come in Many Guises

Scholars and practitioners alike have criticized the SEC’s and DOJ’s enforcement of the Foreign Corrupt Practices Act (“FCPA”) as overly aggressive. Although dormant for years since its passage in 1977, in the last decade the FCPA (generally prohibiting the making of a corrupt payment to a “foreign official” for the purpose of obtaining or retaining business) has been vigorously enforced against US companies and citizens as well as foreign entities. Due to the fact that most of the enforcement actions have resulted in pleas, settlements, or NPA/DPAs, FCPA law for many years developed largely through private negotiations between the SEC/DOJ and the company, and therefore almost wholly outside the judicial process. Commentators have opined that the absence of judicial scrutiny is troubling, particularly given the so-called dubious legal theories put forth by the enforcement agencies. They have pointed out, in particular, that the enforcement agencies’ definition of “foreign official” is overly broad as it includes employees of state-owned or state-controlled enterprises. This Article argues that employees of such entities should, under certain circumstances, come under the FCPA and that courts (which addressed this issue only in the past two years) have appropriately allowed flexibility in the determination of whether someone is a “foreign official.” The government’s nuanced interpretation of who can be designated a “foreign official” for purposes of the Act is necessary in light of the the broad aims of the statute.