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Kay Day At The Court’s Conference

I have a question for anyone on the FCPA blog, a reader wrote ten days ago: Are there any known cases where an individual was prosecuted allegedly for bribing a foreign official where the “donor” did not ask for anything from the foreign official and where he received nothing?

Can there be a crime without criminal intent? We assume the question is sincere and not a send up related to the Kay case. The petition for cert in Kay is on the docket of the Justice’s opening conference today for the Supreme Court’s October 2008 term. Part of the defendants – appellants’ argument is that bribes to reduce company taxes aren’t paid to “assist in obtaining or retaining business,” and therefore don’t satisfy the FCPA’s business nexus element.

Pushing their argument further, the U.S. Chamber of Commerce says in its amicus brief that the Fifth Circuit’s decisions in Kay have obliterated the business nexus element, exposing U.S. executives to potential prosecution for nearly any contact with a foreign official. That argument sounds like the question posed by our reader — Have there been any FCPA prosecutions based on donations to a foreign official where there was no quid pro quo?

The Fifth Circuit itself says in Kay that an FCPA offense requires a corrupt intent. The elements, it says, are (1) to willfully (2) make use of the mails or any means or instrumentality of interstate commerce (3) to corruptly (4) in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to (5) any foreign official (6) for purposes of either influencing any act or decision of such foreign official in his official capacity or inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official or securing any improper advantage (7) in order to assist in obtaining or retaining business for or with, or directing business to, any person. See the Fifth Circuit’s Opinion in U.S. v. Kay (October 24, 2007) here.

And while the U.S. Chamber of Commerce warns that the government’s view of “obtaining or retaining business” is so broad and vague that it could mean anything or nothing, the cases it cites don’t say that. Instead they show that the government has taken action not only against bribes related directly to obtaining or retaining business but also against bribes paid for a quid pro quo intended to produce an indirect commercial advantage. The list below from the amicus brief is annotated with links to our posts where available or with original citations:

(1) Government inspection reports and laboratory certifications. See SEC v. Delta & Pine Land Co. at our post here.

(2) Reductions in annual employment tax obligations. See In the Matter of Bristow Group Inc. at our post here.

(3) Reductions in general tax obligations. In the Matter of Baker Hughes Inc., SEC Admin. Proceeding File No. 3-10572, Cease & Desist Order (Sept. 12, 2001), available at; SEC v. KPMG Siddharta Siddharta & Harsono, No. H-01-3105 (S.D. Tex. filed Sept. 11, 2001); SEC v. Mattson, No. H-01-3106 (S.D. Tex. filed Sept. 11, 2001).

(4) Refunds on previous tax payments. SEC v. Triton Energy Corp., No. 97-cv-00401-RMU (D.D.C. filed Feb. 27, 1997).

(5) Customs clearance for goods or equipment that were improperly or illegally imported. In the Matter of BJ Servs. Co., SEC Admin. Proceeding File No. 3-11427, Cease & Desist Order (Mar. 10, 2004), available at

(6) Customs clearance for goods delayed due to the failure to post bonds with sufficient funds to cover duties and tariffs. United States v. Vetco Gray Controls Inc., No. 07-cr-004 (S.D. Tex. filed Jan. 5, 2007).

(7) Encourage the repeal or amendment of national regulations limiting foreign investments. SEC v. BellSouth Corp., No. 02-cv-00113-ODE (N.D. Ga. filed Jan. 15, 2002).

(8) Repeal of a government decree requiring an environmental impact study to be conducted. See News Release, Monsanto Announces Settlements With DOJ and SEC Related to Indonesia (Jan. 6, 2005), available at

(9) Expedited government registration certifications required by law to produce, warehouse, or market products in the country. See SEC v. Dow Chem. Co., No. 07-cv-336 (D.D.C. filed Feb. 12, 2007).

(10) Beneficial changes to laws and regulations relating to land development. United States v. Halford, No. 01-cr-00221-SOW-1 (W.D. Mo. filed Aug. 3, 2001); United States v. Reitz, No. 01-cr-00222-SOW-1 (W.D. Mo. filed Aug. 3, 2001); United States v. King, No. 01-cr-0190-DW (W.D. Mo. filed June 27, 2001).

The United States Attorneys’ Manual hasn’t been changed since the Fifth Circuit’s opinions in Kay. It says there is no criminal violation without a corrupt intent.

Under the FCPA, the person making or authorizing the payment must have a corrupt intent. The payment must be intended to induce the recipient to misuse his official position to direct business wrongfully to the payer or to any other person. The FCPA prohibits any corrupt payment intended to influence any act or decision of a foreign official in his or her official capacity, to induce the official to do or omit to do any act in violation of his or her lawful duty, to obtain any improper advantage, or to induce a foreign official improperly to use his or her influence with other government officials or agencies to affect or influence any act or decision. Where such intent is present, the FCPA prohibits paying, offering, promising to pay (or authorizing to pay or offer) money or anything of value. The FCPA does not require that a corrupt act succeed in its purpose. The offer or promise of a corrupt payment can constitute a violation of the statute.

See Title 9, Criminal Resource Manual §1018 “Prohibited Foreign Corrupt Practices” (November 2000), available here.

If there is an example of an antibribery prosecution based on a “donation” without a quid pro quo, the Chamber of Commerce would have headlined it. Nothing would better support its argument that U.S. executives should be fearful of criminal prosecution under the FCPA for conduct that is either innocent or at least not expressly prohibited by the statute.

The business nexus element of an offense has been broadened through aggressive enforcement. In the government’s view, bribes to foreign officials intended to assist a company to obtain or retain business by giving it an unfair commercial advantage are consistent with the words and history of the statute and fair game for punishment. And so far, at least, there hasn’t been a criminal prosecution based on bribes to foreign officials — or, as our reader puts it, based on donations — where nothing was asked for or given in return.

The Kay petition for certiorari and all cert-stage briefs including the U.S. Chamber of Commerce’s amicus brief are available at here.

View our prior post about Kay here.


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  1. There are a number of other problems with the C of C list.

    First, Kay I was not decided until February 2004. It is, therefore, somewhat odd to argue that the government has used the Kay I rationale to justify cases that were brought in 1997 (Triton), 2001 (Baker Hughes I/KPMG Siddharto, and Halford/Reitz/King), and 2002 (BellSouth).

    Second, two of the cases (BellSouth and Dow Chemical) do not charge the defendants with violations of the anti-bribery provisions at issue in Kay at all. Both cases charge books and records violations relating to how improper payments were booked. The "assist in obtaining or retaining business" element is simply not relevant to such violations.

    Third, in the Halford/Reitz/King matter, the proposed payments (which were never paid) were not to obtain mundane "beneficial changes in laws and regulations" but to obtain the land concession necessary to build a land development.

    This is not to say that some of the cases don't seem to fall squarely into the Kay rationale. It may be that the government failed to articulate the business nexus sufficiently in what were settled matters. It may also be a case of bad facts making bad law; many of these cases had facts that may have represented a red flag to the government. For example, in Vetco II, the company paid an enormous amount of bribes to customs officials ($2.1MM in 61 payments) after having already pleaded guilty once to FCPA bribery. The amount of alleged bribes in Bristow may also have been a motivating factor for the SEC, and, while the alleged bribes in Delta & Pine may have been small in amount, they appear to have continued with US managers' consent.

  2. Good points. The anachronisms in the list are perhaps the most glaring oddity. They seem to argue against the point the Chamber of Commerce is making — i.e., that the Kay decisions gutted the business nexus element and need to be overturned. But as some of the items on the list show, the Kay decisions played no role in the government’s interpretation of “obtaining or retaining business.”

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