Appellate Court Clarifies FCPA "Instrumentality" Definition
May 19, 2014
BY TARA K. GIUNTA, NATHANIEL EDMONDS, MOR WETZLER & IAN HERBERT
On Friday, May 16, 2014, the Eleventh Circuit Court of Appeals weighed in on a multi-year debate surrounding who is a “foreign official” under the U.S. Foreign Corrupt Practices Act (“FCPA”). While litigants have challenged the government’s broad interpretation with mixed success before, this is the first time that an appellate court has provided guidance on the critical issue of the reach of the FCPA. The Eleventh Circuit used this opportunity to provide a definition of “instrumentality” under the FCPA and offer a non-exhaustive list of factors for the two-step analysis it set forth to define when employees of a state-owned entity would be considered public officials under the FCPA. In affirming the convictions of two defendants for violating the FCPA, the Eleventh Circuit generally agreed with the U.S. government’s position that an entity is an instrumentality of a foreign government if it is “controlled by the government of a foreign country” and “performs a function the controlling government treats as its own.” United States v. Esquenazi, No. 11-15331, at 20 (11th Cir. May 16, 2014).