Issue link: https://digital.shearman.com/i/1265921
FCPA DIGEST July 2020 19 accounts, access of U.S. bank accounts, etc.—to justify application of U.S. law to the defendants' conduct. Critically, however, the court noted, "for incidental domestic wire transactions not to haul essentially foreign allegedly fraudulent behavior into American courts, 'the use of the . . . wires must be essential, rather than merely incidental, to the scheme to defraud.' This ensures that the domestic tail [does] not wag, as it were, the foreign dog." In other words, in applying language almost identical to the territorial language of §78dd-3, the court required a two-step analysis: (i) whether the use of the wires in furtherance of the scheme occurred in the United States and (ii) whether the use of the wires was "essential, rather than merely incidental" to the offense. It is, in our view, questionable whether each and every case in which the government has relied on tenuous "jurisdictional facts" in a FCPA case would survive this test. That is, however, a question for the next case. FOREIGN OFFICIALS In February 2020, the DOJ brought a case in which it extended its reach of who could be considered a "foreign official" to employees of a company based and registered in the United States. In the Farias-Perez case, the DOJ had alleged that improper payments to employees of Citgo Petroleum, a Houston- based corporation registered in Delaware, were violations of the FCPA's anti-bribery provisions. Significantly, such employees were considered foreign official by the DOJ because Citgo is a wholly-owned subsidiary of PdVSA, Venezuela's state-owned oil company. THING OF VALUE Consistent with previous DOJ positions, all-expenses-paid events and travel to China, Utah, and Hawaii for government officials and their families were considered a "thing of value" in the Airbus enforcement action. MODES OF PAYMENT As in previous years, the use of high-risk intermediaries continues to be an issue in FCPA enforcement actions. In the Eni S.p.A. enforcement action, for example, the company was pressured to hire a third-party intermediary by the Algeria Energy Minister in order to conduct business in the country. The company then paid the intermediary "brokerage fees" to the tune of €198 million. In the Airbus enforcement action, the company allegedly used third- party consultancy agreements to secure contracts with Chinese state-owned enterprises. In the Marubeni and Alstom investigation, under which Kusunoki and his co-defendants were charged, the defendants allegedly hired two consultants with the intent to bribe members of the Indonesian parliament and the state-owned power company. Whether the intermediaries nominally claim to be independent consultants (Airbus and Kusunoki et al.) or independent brokers (Eni S.p.A.), such third- party relationships have come under increased scrutiny by the DOJ and SEC and require close review by compliance personnel.