The Securities and Exchange Commission and the U.S. Justice Department have finally released a long-awaited guide to the controversial Foreign Corrupt Practices Act (FCPA), but the volume has landed with a dull thud in corporate America’s legal departments and risk management offices.
The 120-page guide offers interpretations and clarifications of various aspects of the law, including real-life examples of cases (with company names deleted) in which the SEC or the Justice Department prosecuted a company for violating the act or decided some company action was not a violation or didn’t warrant bringing a case.
The FCPA defines a foreign official as “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, or for or on behalf of any such public international organization.”
By way of clarification, the guidance adds: “The term ‘instrumentality’ is broad and can include state-owned or state-controlled entities. Whether a particular entity constitutes an ‘instrumentality’ under the FCPA requires a fact-specific analysis of an entity’s ownership, control, status, and function.” It goes on to list 11 issues to consider in determining whether a state enterprise is a government instrumentality, such as the degree of state ownership and whether it has “official or governmental functions.”