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Lindsey Case: Judge Issues Written Ruling On ‘Foreign Official’

Judge Matz today issued his written ruling on the meaning of “foreign official” in the FCPA trial going on now in Los Angeles.

He said the state-owned utility CFE is an “instrumentality” of the Mexican government, as the word is used in the FCPA, and its officers who allegedly received bribes are therefore “foreign officials” under the law.

The defendants in the case — Lindsey Manufacturing, CEO Dr. Keith Lindsey, CFO Steve K. Lee, and Lindsey agent Angela Aguilar — mounted the strongest challenge ever to the government’s so-called expansive application of the FCPA to employees of foreign state-owned enterprises.

The key reasoning from Judge Matz’s ruling upholding the DOJ was this paragraph (without footnotes):

The Government agrees with Defendants’ proposition that “instrumentality” should be interpreted in light of the two words preceding it, “department” and “agency.” According to the Government, however, Defendants are wrong to assert that instrumentality “‘must be understood to capture only entities that share qualities both agencies and departments share.’” Indeed, the Government argues, state-owned corporations do share various qualities with both agencies and departments, such as existing at the pleasure of the government and being oriented to public policy. Moreover, as the Government sensibly points out, if an instrumentality must share all of its characteristics with both a department and an agency, then the term “instrumentality” would be robbed of independent meaning. Canons of statutory construction counsel against this outcome, which would turn “instrumentality” into surplusage.

Our italics.

On the FCPA’s legislative history, the judge concluded, as we once did, that the argument between the defendants and the government about Congress’s intent to include or exclude employees of state-owned enterprises is a draw. Judge Matz said,

The Court finds that the legislative history of the FCPA is inconclusive. Although it does not demonstrate that Congress intended to include all state-owned corporations within the ambit of the FCPA, neither does it provide support for Defendants’ insistence that Congress intended to exclude all such corporations from the ambit of the FCPA.

The trial is continuing.

Defendants in two other FCPA prosecutions are also challenging the government’s view of “foreign officials” — in U.S. v. Carson et al in the Central District of California, and in Houston in U.S. v. O’Shea. The trials in those prosecutions have not yet started.

Judge A. Howard Matz is presiding over the Los Angeles case — U.S. v. Noriega et al, U.S. District Court, Central District of California (Western Division – Los Angeles), Case #: 2:10-cr-01031-AHM-4.

Jan L. Handzlik of Greenberg Traurig is defending Lindsey Manufacturing and Dr. Keith Lindsey. Steve K. Lee is represented by Janet Levine of Crowell & Moring. Angela Aguilar is represented by Stephen G. Larson of Garardi Keese.


Download Judge Matz’s April 20, 2011 ruling on foreign officials here.

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1 Comment

  1. So who exactly is considered at foreign official aside from the obvious? I'd like to hear if any of the following are considered "Foreign Officials":

    1 – Mail room clerk or janitor at a government agency?
    2 – Non-officer position at state owned government entity?
    3 – If the company is majority owned but not 100% owned by the government are any of the employees considered "foreign officials"?
    4 – If the company is a minority owned government entity (semi-private)are any of the employees considered "foreign officials"?
    5 – If a person works part time for a government entity are they a foreign official?
    6 – Any officer of a company NOT owned by the government a foreign official?
    7 – Any non-officer of a company NOT owned by the government a foreign official?

    I was told point blank by a DOJ lawyer that there were "gray areas" in the definition.

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