One of the ongoing definitional challenges facing compliance professionals worldwide is whether and under what circumstances traditional authorities, such as aboriginal ‘‘band’’ or ‘‘tribal’’ leaders, qualify as ‘‘foreign officials’’ under the FCPA. These traditional leaders, after all, routinely exercise considerable influence over business matters.
This is a particularly central question for natural resources extraction companies. Such companies regularly pursue business interests in Canada, Africa, and South America, where numerous self-governing aboriginal communities (including First Nations, Me´tis and Inuit peoples) hold rights to mineral-rich areas and otherwise must grant a “social license” to operate. These companies need to consider the extent to which their interactions with traditional authorities could raise FCPA concerns (click here for a flow chart breaking down the FCPA and Travel Act’s flow and function).
As we detail in our just-published Bloomberg-BNA article titled “Clearing Up the Murky Waters Surrounding Whether (and When) Aboriginal Community and Other Tribal Leaders Can Create FCPA Liability,” definitive answers are unfortunately in short supply. For example, the DOJ and the Securities and Exchange Commission’s FCPA guidance that is silent on the issue of the status of traditional authorities.
That said, the existing case law, prevailing enforcement practices, and DOJ opinion releases provide a basis for identifying the appropriate questions to ask:
Government Membership/Agency? Does the traditional authority hold him/herself out as a member of, or agent for, the foreign government, whether at the national, regional, provincial or municipal level?
Government-Granted Privileges or Obligations? What are the traditional authority’s privileges and obligations under applicable local law?
Formal/Actual Status? What is the traditional authority’s formal and de facto status?
‘‘Employer-Employee’’ Relationship? Can the traditional authority be said to be an employee of a state-owned or -controlled entity or otherwise connected to a foreign official?
Perform Traditional Governmental Functions? Does the traditional authority perform purely ceremonial functions, or is he or she empowered to perform traditional governmental functions (such as officiating at marriages, adjudicating land and other disputes, etc.)?
Granted Discretionary Authority? Is the traditional authority’s permission or approval required by law (or in practice) to obtain permits, concessions or rights from the foreign government?
Compensation Provided? How does the traditional authority earn compensation, and from whom is it received?
Tribe Subsidized or Administered by Government? Does a foreign government subsidize or administer the tribe or other traditional community?
Depending on the answers to any of the foregoing, and assuming the company otherwise falls under the FCPA’s jurisdiction, U.S. enforcers could view a company’s interactions with these traditional authorities as potentially implicating the FCPA.
Our article is here (pdf).
T. Markus Funk is a white collar, compliance and commercial litigation partner at Perkins Coie LLP. Prior to joining the firm, he served as an assistant U.S. attorney in Chicago, as a Department of Justice section chief in
the Balkans and as a law professor. Markus represents numerous clients in the mining and oil and gas industries and has served as a World Bank-selected anti-corruption monitor/adviser to a business in Africa.
Barak Cohen is senior counsel in Perkins Coie’s White Collar & Investigations practice in Washington. A former DOJ prosecutor, he has tried sensitive high-profile white collar criminal matters in jurisdictions throughout the U.S. Cohen represents companies and individuals in criminal and government enforcement matters before federal and state law-enforcement authorities.