FCPA Update: Eleventh Circuit Defines “Instrumentalities” of Foreign Governments

May 2014

On May 16, 2014, the Eleventh Circuit issued its decision in United States v. Esquenazi, an important ruling that provides guidance as to what types of foreign entities may constitute “instrumentalities” of a foreign government under the anti-bribery provisions of the Foreign Corrupt Practices Act (“FCPA”). Given the paucity of decisional law interpreting the FCPA, the Eleventh Circuit’s decision in Esquenazi is likely to have substantial influence on other courts addressing the issue.

In affirming two criminal convictions, the Eleventh Circuit defined an instrumentality under the FCPA to be “an entity controlled by the government of a foreign country” that “performs a function the controlling government treats as its own.” The Eleventh Circuit identified a list of factors that should be examined by courts or juries when applying this definition.

The Eleventh Circuit’s definition of instrumentalities provides useful guidance for practitioners and for companies that do business internationally. The factors identified by the court should be taken into consideration by companies formulating FCPA compliance programs. At the same time, this decision does not represent a major shift in the law, and some degree of uncertainty as to the FCPA’s scope remains under the multi-factor analysis adopted by the Court.

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