The U.S. Department of Justice (DOJ) has released guidance on the Foreign Corrupt Practices Act (FCPA) and how the agency enforces the law. The 120-page report, A Resource Guide to the U.S. Foreign Corrupt Practices Act, provides basic information on the law as well as a more advanced analysis of certain provisions, such as what constitutes a foreign official under the law and how the DOJ assesses corporate compliance programs.
The definition of a “foreign official” is one of the controversial issues clarified by the guide. The guide states that the FCPA “applies to any officer or employee of a foreign government and to those acting on the foreign government’s behalf.” This means that the law applies to any rank of employee or official so long as they are acting on behalf of a foreign government.
Similarly, the guide discusses the concept of “instrumentality.” This comes into play when governments operate through state-owned or state-controlled entities.
This issue is of particular interest to companies because the definition of instrumentality has been murky. The guide notes that the DOJ uses an analysis of “ownership, control, status, and function” to determine whether an entity is an instrumentality of a foreign government. According to the guide, an entity is unlikely to qualify as an instrumentality unless a government owns or controls a majority of its shares. However, an entity may qualify as an instrumentality absent a controlling stake by a government, if that government has other means of control.
For example, in one case, a government owned a 43 percent share in a telecommunications company, but was considered a “special shareholder,” and had veto power over all major purchases as well as controlling operational decisions. In this case, the telecommunications company would be considered an instrumentality of a foreign government.
A section of the guide that focuses on gifts is also of interest because it clarifies when gifts to government officials are considered bribery. The guide states that to be considered bribery, gifts must be given with corrupt intent—to improperly influence the official.