Federal Judge Rules That Officers of Foreign State-Owned Utilities Are Foreign Officials For Purposes of FCPA Liability


On an issue being closely watched by the white-collar bar, a federal judge in Los Angeles has handed down an important ruling on the definition of “foreign official” within the meaning of the U.S. Foreign Corrupt Practices Act (“FCPA”).

In an oral ruling on April 1, 2011, United States District Judge A. Howard Matz held that officers of a state-owned utility could constitute “foreign officials” under the FCPA. The ruling paved the way for the criminal FCPA trial, in the matter of United States v. Lindsey Manufacturing Co., which began on April 5 in the Central District of California. The U.S. Justice Department faces similar challenges to its broad interpretation of the “foreign official” statutory term in two other closely watched cases.

In the Lindsey Manufacturing prosecution, the Government’s case focuses on Lindsey Manufacturing’s retention of Grupo Internacional de Asesores S.A. to serve as its sales representatives in Mexico to obtain contracts from Comisión Federal de Electricidad (“CFE”), Mexico’s state-owned utilities company. Prosecutors allege that Grupo used a portion of Lindsey’s commission to bribe CFE officials in exchange for awarding contracts to Lindsey Manufacturing.

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