21 May 2014
On May 16, 2014 the U.S. Court of Appeals for the Eleventh Circuit issued an opinion in United States v. Joel Esquenazi, et al, affirming the government's broad interpretation of what constitutes a "government instrumentality" under the Foreign Corrupt Practices Act (FCPA). For several years, the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have brought enforcement actions against employees of companies alleged to be engaged in corrupt practices involving state-owned enterprises, including state-owned hospitals and construction firms, with the understanding that such entities were "government instrumentalities" under the FCPA. In cases such as United States v. Lindsey Manufacturing, defense lawyers have countered that such broad definitions cannot apply where a company acts as a commercial participant in a country’s economy. However, until last week the DOJ's and SEC's broad interpretation had never been tested in a court of appeals.