Foreign officials under the FCPA – a foreign concept?

The US government has always considered a state-owned or state-controlled entity (SOE) to be an instrumentality. Recent attempts at arguing to the contrary have all failed in US courts. The current US position is that an SOE can be an instrumentality, but the determination would ultimately be based on a fact-specific analysis. That position is the subject of two pending appeals in a US federal court. The US government also takes the view that the status of an individual as an employee of an instrumentality is dispositive in determining whether he is a foreign official under the FCPA. Thus, it is not necessary to consider the actual roles or duties of these individuals.

The US position is an outlier that creates risk and uncertainty. The broad and simplistic interpretation of foreign official under the FCPA is at odds not only with the FCPA's most important international counterpart, the UK Bribery Act, but also with how government officials are defined under the PRC's own bribery laws. Both regimes take into account the public function and actual role played by the person receiving the bribe. Such an inconsistency creates much uncertainty for international companies dealing with SOEs.