FCPA Whistleblower Victory Preserved by Supreme Court Cert. Denial

The United States Supreme Court this week declined to review a decision concerning the Foreign Corrupt Practices Act of 1977 (“FCPA”), which makes it illegal for American citizens to bribe foreign officials to assist in obtaining or retaining business.  The petition for certiorari challenged a decision by the U.S. Court of Appeals for the Eleventh Circuit in which that court advanced a broad interpretation of the FCPA, which Congress amended with the passage of the Dodd-Frank Act of 2010 to provide rewards to whistleblowers who provide the U.S. government with actionable information concerning bribery of foreign officials.

According to a Law360 article, the decision concerned the interpretation of the phrase “foreign official,” defined in the statute as “any officer or employee of a foreign government or any department, agency or instrumentality thereof.”  Specifically, the Eleventh Circuit decision addressed the scope of the term “instrumentality.”  Over the years, the U.S. government has broadly construed the term, enabling its prosecutors to cast a wider net in securing large FCPA convictions of or settlements with offending corporations, as well as filing criminal charges against complicit individuals.

The case forming the basis of the petition for certiorari was USA v. Joel Esquenazi, et al., which involved criminal charges brought against individuals alleged to have bribed employees of Haiti Teleco, a telecommunications company that the U.S. Department of Justice alleged to be owned by the Haitian government.  The defendants were convicted and appealed their convictions to the Eleventh Circuit, arguing that the company for which they had worked was neither “part of the [Haitian] government itself” nor performed “traditional, core government functions,” and therefore could not be reasonably defined as an instrumentality of the Haitian government.  The Eleventh Circuit rejected those arguments and upheld the convictions of the defendants, defining an “instrumentality” as “an entity controlled by the government of a foreign country that performs a function the controlling government treats as its own.”

While the defense bar may be concerned by the government’s continued expansion of the FCPA’s scope, the decision should be seen as a victory in for potential whistleblowers.  The decision – and the Supreme Court’s refusal to reconsider it – significantly broadens the scope of entities subject to the FCPA, which in turn expands the scope of bribery activities that whistleblowers may report to the government and gain entitlement to a whistleblower award.  If an FCPA whistleblower reports original information concerning illegal bribery and that information leads to a successful government enforcement action, the whistleblower may be entitled to up to 30 percent of any government recovery that comes as a result of that information.