In the Courts

In their petition, Esquenazi and Rodriguez framed the FCPA question as “[w]hether the Eleventh Circuit's definition of 'instrumentality': 1) fails to satisfy the constitutional requirement of adequate notice of what specific conduct violates the FCPA; and 2) is erroneously derived from commentary to an unrelated treaty [the OECD anti-bribery convention] that postdates the FCPA's enactment.” Accordingly, the petition characterized the Eleventh Circuit's five-part test as a “definitional jumble” so “open-ended” that it would result in a “janitor working U.S. Government-subsidized General Motors ' qualify[ing] as a 'foreign official' if General Motors were located overseas.” The petition argued that this fact-intensive standard amounts to a “we-know-it-when-we-see-it” approach so vague that it is violative of the constitutional protection of adequate notice that is encompassed within due process rights. Harkening back to their prior position, the petitioners reiterated their contention that an “instrumentality” under the FCPA “should either be an actual part of the foreign government, or, at a bare, minimum, perform core traditional governmental functions.”

In addition to their instrumentality challenge, the petitioners raised a double jeopardy challenge to the Eleventh Circuit's decision, specifically “[w]hether the Eleventh Circuit erred by concluding the Petitioners' FCPA convictions did not merge with their convictions for violating the Act on the Laundering of Monetary Instruments, 18 U.S.C. ' 1956, where both were based on the same payments made by third-party intermediaries to the alleged foreign officials employed by Haiti Teleco.”

As a general matter, the petitioners face an uphill battle in their efforts to receive Supreme Court review, given the low rate at which certiorari is granted. However, even if certiorari is denied, the debate over the FCPA's foreign instrumentality provision is far from over, as the status quo leaves the Eleventh Circuit's standard in place as the leading guidepost ' a standard that is ripe for debate when applied to the next state-owned entity ' particularly one that does not present such a clear case as Haiti Teleco. ' Matthew J. Alexande , Mayer Brown

'

Supreme Court Review Sought in FCPA Instrumentality Case

On Aug. 14, the long-running and highly publicized Foreign Corrupt Practices Act (FCPA) saga of Joel Esquenazi and Carlos Rodriguez continued, as the former Miami-based executives petitioned the United States Supreme Court for a writ of certiorari to review the United States Court of Appeals for the Eleventh Circuit's landmark May 2014 decision. In the Eleventh Circuit decision, as previously reported in the July edition of “In the Courts,” the court affirmed the convictions of Esquenazi and Rodriguez in connection with bribes made to employees of Telecommunications d'Haiti SAM (Haiti Teleco), the Haitian state-owned telecommunications company. In doing so, the court defined an “instrumentality” under the FCPA as “an entity controlled by the government of a foreign country that performs a function the controlling government treats as its own,” and found that Haiti Teleco met this definition (thus rendering its employees “foreign officials” to whom the payment of ' or promise to pay ' anything of value is prohibited).

While the Eleventh Circuit noted in its decision that the case was not close, specifically remarking that Haiti Teleco “would qualify as a Haitian instrumentality under almost any definition we could craft,” its pronouncement of a non-exhaustive, five-part test as the means to determine whether an entity qualified as an instrumentality, coupled with the fact that the contours of the FCPA are rarely exposed to judicial review, led most white-collar practitioners to anticipate the petition to the Supreme Court for review of the decision interpreting the nearly 40-year-old statute.

In their petition, Esquenazi and Rodriguez framed the FCPA question as “[w]hether the Eleventh Circuit's definition of 'instrumentality': 1) fails to satisfy the constitutional requirement of adequate notice of what specific conduct violates the FCPA; and 2) is erroneously derived from commentary to an unrelated treaty [the OECD anti-bribery convention] that postdates the FCPA's enactment.” Accordingly, the petition characterized the Eleventh Circuit's five-part test as a “definitional jumble” so “open-ended” that it would result in a “janitor working U.S. Government-subsidized General Motors ' qualify[ing] as a 'foreign official' if General Motors were located overseas.” The petition argued that this fact-intensive standard amounts to a “we-know-it-when-we-see-it” approach so vague that it is violative of the constitutional protection of adequate notice that is encompassed within due process rights. Harkening back to their prior position, the petitioners reiterated their contention that an “instrumentality” under the FCPA “should either be an actual part of the foreign government, or, at a bare, minimum, perform core traditional governmental functions.”

In addition to their instrumentality challenge, the petitioners raised a double jeopardy challenge to the Eleventh Circuit's decision, specifically “[w]hether the Eleventh Circuit erred by concluding the Petitioners' FCPA convictions did not merge with their convictions for violating the Act on the Laundering of Monetary Instruments, 18 U.S.C. ' 1956, where both were based on the same payments made by third-party intermediaries to the alleged foreign officials employed by Haiti Teleco.”

As a general matter, the petitioners face an uphill battle in their efforts to receive Supreme Court review, given the low rate at which certiorari is granted. However, even if certiorari is denied, the debate over the FCPA's foreign instrumentality provision is far from over, as the status quo leaves the Eleventh Circuit's standard in place as the leading guidepost ' a standard that is ripe for debate when applied to the next state-owned entity ' particularly one that does not present such a clear case as Haiti Teleco. ' Matthew J. Alexande , Mayer Brown

'