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The broad scope of the Foreign Corrupt Practices Act ("FCPA") has been highlighted in a recent US court ruling. In the criminal case United States v Noriega, the US District Court of the Central District of California upheld a broad interpretation of the term "foreign official" as outlined in the FCPA. The case concerned Lindsey Manufacturing Company and two of its directors, who allegedly paid bribes through an intermediary company to two high-ranking employees of the Mexican state-owned electric utility company, Comisión Federal de Electricidad.
The FCPA prohibits the bribing of a "foreign official", being "any officer or employee of a foreign government or any department, agency, or instrumentality thereof, (...) or any person acting in an official capacity for or on behalf of any such government or department, agency or instrumentality (...)" According to the defendants, a state-owned corporation is neither a department or agency nor an "instrumentality", so none of its employees is a "foreign official". As a result, the defendants argued, the bribes allegedly paid cannot constitute a violation of the FCPA.
According to the Court, however, a state-owned corporation that (i) provides a service to inhabitants of the jurisdiction, (ii) the key officers of which are, or are appointed by, government officials, (iii) is largely financed by the state, (iv) is vested with and exercises exclusive power to administer designated functions, and (v) is widely perceived to be performing official (government) functions, may be an "instrumentality" of a foreign government and its officers may therefore be "foreign officials" within the meaning of the FCPA. Thus, the Court dismissed the defendants' arguments. Both Lindsey Manufacturing and its two directors were found guilty of violation of the FCPA.
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