FCPA Update: Another Challenge to DOJ’s Expansive “Foreign Official” Definition Fails, But Clarifies DOJ’s Burden

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In yet another key development in the evolution of Foreign Corrupt Practices Act (“FCPA”) case law, a federal court has denied the defendants’ motion to dismiss the indictment in the closely watched United States v. Carson case. This marks the fourth unsuccessful bid by a defendant to challenge the federal regulators’ expansive interpretation of “foreign official” under the FCPA. This decision may nevertheless provide future defendants with some much-needed judicial guidance—and possibly assistance—in fighting FCPA

In Carson, the CEO and other executives of Control Components, Inc., a California-based valve manufacturing company, were charged with allegedly paying approximately $4.9 million in corrupt payments to employees of state-owned customers in China, Korea, Malaysia and the United Arab Emirates. The defendants moved to dismiss on the basis that employees of state owned enterprises (“SOEs”) can never be foreign officials under the FCPA. Since a necessary element to prove a violation of the FCPA is that the intended recipient of the corrupt payment be a “foreign official,” defendants contended that the indictment was facially insufficient, and that the case should be dismissed.

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