FCPA Enforcement After Lindsey- DOJ’s Aggressive FCPA Pursuits Make Robust Compliance Policies Essential

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A recent landmark jury verdict out of the Central District of California significantly broadens the scope of the Foreign Corrupt Practices Act, making corporate compliance with the Act more essential now than ever before. The Department of Justice has taken notice of the decision, and now corporations must as well. After a month long trial in United States v. Lindsey Manufacturing,1 a jury deliberated for just a single day and found the manufacturing company and two of its executives guilty on all counts for their alleged roles in a scheme to pay bribes to Mexican government officials of a state-owned utility company.

The court found that the state-owned electric utility company was an “instrumentality” of a foreign government within the meaning of the FCPA. The Lindsey Court also established a list of non-exclusive factors broadening that definition of a state instrumentality under the FCPA. These factors include whether: (1) the entity provides a service to the citizens; (2) the key officers and directors of the entity are, or are appointed by, government officials; (3) the entity is financed, at least in large measure, through governmental appropriations or through revenues obtained as a result of government-mandated taxes, licenses, fees or royalties; (4) the entity is vested with and exercises exclusive or controlling power to administer its designated functions; and (5) the entity is widely perceived and understood to be performing official (governmental) functions.

While Lindsey is the first ever jury conviction against a corporation in an FCPA case, with an increased budget and a new found confidence, the Criminal Division of the Department of Justice is ensuring the victory does not represent a onetime occurrence. In fact, after the conviction, Assistant Attorney General Lanny Breuer stated, “Lindsey Manufacturing is the first company to be tried and convicted on FCPA violations, but it will not be the last.”

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Published In: Administrative Agency Updates, Business Organization Updates, General Business Updates, Criminal Law Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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