Eleventh Circuit Court of Appeals - Published Opinions

Wednesday, May 21, 2014

Esquenazi: Definining an FCPA "Instrumentality"

In U.S. v. Esquenazi, No. 11-15331 (May 16, 2014), the Court affirmed convictions under the Foreign Corrupt Practices Act (FCPA) for conduct involving payments by a Florida company to Haitian officials of the Haitian telecommunications company owned by the Haitian government. The defendants claimed that the telephone company in Haiti did not qualify as an “instrumentality” of the Haitian government, and that the jury instructions were erroneous on the definition of an “instrumentality.” Rejecting this argument after a lengthy analysis, the Court concluded that the jury instructions were not erroneous. Further, the evidence was sufficient to show an “instrumentality” because the telephone company was a nationalized monopoly of Haiti, whose director was chosen by the Haitian President. The Court also rejected the argument that the defendants lacked the requisite “knowledge” that the recipient of their payments was a foreign official. The Court pointed out that they purchased a “political-risk insurance policy” in connections with their transactions, and knew that they were dealing with a state-sanctioned monopoly. The Court also rejected a Brady claim based on statements made by a Haitian official after the defendants were convicted. The Court pointed out that information known to an independent foreign government is not imputed to prosecutors in the United States simply because that government cooperates in the investigation. The Court also rejected the argument that the money-laundering count merged into the underlying bribery counts. The Court noted that funneling money through shell corporations was not necessary to the bribery, but just made it less likely that the conduct would be uncovered – the distinct conduct that the money laundering offense covers. On plain error review, the Court rejected the argument that the value of the “benefit received” should have measured by the amount of the bribe, not by the amount of the benefit to the defendant’s company. The Court found nothing in its caselaw to support this argument.