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Harry Cassin
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Supremes won’t review Esquenazi ‘foreign official’ challenge

The U.S. Supreme Court Monday denied a writ of certiorari for two jailed Haiti teleco defendants who argued that employees of state-owned enterprises aren’t “foreign officials” under the Foreign Corrupt Practices Act and bribes paid to them shouldn’t be FCPA violations.

Joel Esquenazi and Carlos Rodriguez, former executives of Terra Telecommunications Corp., were convicted by a Miami jury of bribing officials at Haiti’s state-owned telecom company. They were also convicted of money-laundering related offenses.

Esquenazi is serving a 15-year jail sentence, the longest FCPA-related sentence ever imposed. Rodriguez was jailed for 7 years.

The FCPA prohibits giving or promising to give anything of value to a foreign officlal to win or keep business or gain an unfair advantage.

A “foreign official” under the FCPA is “any officer or employee of a foreign government or any department, agency, or instrumentality thereof.”

Esquenazi and Rodriguez argued to the Supreme Court that the definition of “instrumentality” adopted by the U.S. Court of Appeals for the 11th Circuit wasn’t correct and they were denied a fair trial.

The 11th Circuit said “instrumentality” is defined “by who controls an entity and what functions it performs, and that several factors play into the question of control and function,” Sam Rubenfeld of the Wall Street Journal said.

The Supreme Court issued a summary denial Monday in Esquenazi’s case and didn’t provide any basis for its decision.

The DOJ has always taken an expansive view of “instrumentality” and has used its interpretation to support dozens of enforcement actions against companies and individuals who bribed SOE officials and employees.

Before Esquenazi and Rodriguez unsuccessfully appealed to 11th Circuit, at least three other U.S. district court judges had sided with the DOJ in challenges by other defendants about whether “instrumentalities” include SOEs.

There was unanimous agreement among the trial court judges and no split among federal appeals courts on the issue. That always made Esquenazi’s petition to the Supreme Court a weak proposition.

But Markus Funk, a partner at Perkins Coie who represented Esquenazi, told the WSJ: “That the Court decided to pass on the opportunity is disappointing.”

The order list from the Supreme Court for October 6, 2014 is here (pdf).


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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