On April 20, 2011, a federal district judge in California issued a rare and significant decision on the question of who is a “foreign official” within the meaning of the Foreign Corrupt Practices Act (FCPA). The decision, issued in the case of U.S. v. Noriega, provides important guidance on a dispositive FCPA question for companies in many different industries, particularly those whose customers include corporations that are wholly or partially controlled by foreign governments – such as state-owned hospitals, oil companies and banks.

The FCPA, among other things, prohibits giving, offering or promising anything of value to a foreign official in order to obtain or retain business or to secure an improper business advantage. The statute defines “foreign official” to include “any officer or employee of a foreign government or any department, agency, or instrumentality thereof.” Both the Department of Justice (DOJ) and the Securities and Exchange Commission, which share enforcement authority under the FCPA, have long considered government owned corporations to be “instrumentalities” of the government for FCPA purposes, and their employees therefore to be “foreign officials.” Because most FCPA cases are settled without any contested litigation on the merits, the government’s position has gone largely unchallenged in the courts.

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