I use the picture above as a symbol to ask a question: If one of these individuals represents an “instrumentality” as defined and affirmed by the FCPA and Federal Appeals Court (respectively), and the other does not, should it make a difference to an anti-bribery program? The basis for this post is the Federal Appeals Court ruling in case of Mr. Esquenazi (and Rodriguez), where, as Michael Volkov summarized, “most importantly, and as predicted, the Eleventh Circuit upheld the Department of Justice’s interpretation of the term “instrumentality” in the definition of a foreign official to include state-owned enterprises owned or controlled by foreign governments. “
Before elaborating, a few points, and my first goes to the families of Mr. Esquenazi and Mr. Rodriguez. Having spent time in the Federal Prison System, on the personal side, I take no pleasure or comfort in supporting their incarceration, even if understand the Appeals Court ruling. Second, my response here is entirely devoid of any legal interpretation or debate. I am not an attorney, this blog is not in any way designed to suggest or provide legal opinion, so my discussion of the Esquenazi Appeal is only from my perspective as a former international sales executive.
So, here is where I get lost in the “fog” of the debate; I have read numerous posts, opinions, charts, comparatives, etc, on the various FCPA blogs about the ruling, and no doubt, from a legal perspective, these posts are well thought out and provide significant legal value to compliance practitioners. However, with that said, I have yet to see any discussion from the viewpoint of those on the “front line” of international sales, and how this ruling might (or might not) provide additional direction in how they contend with corruption risk in the performance of their overseas responsibilities.
Was it ok to bribe “non-instrumentalities” before the ruling?
Is the legal analysis somehow meant to imply that training and compliance programs need to now be re-engineered, as if perhaps beforehand it was acceptable to bribe people who fell outside of the definition of “instrumentality”? Obviously not, but again, from a sales and marketing perspective, specifically with respect to how training and compliance are organized and implemented, what difference should this ruling make? I can certainly see in the areas of “gifts, travel, entertainment, charitable contributions, and other things of value” as set forth in the Department of Justice Resource Guide, that the shoring up of this “line in the sand” will be helpful in guiding those in the field who have probably requested prior guidance about such definition. However, beyond those “travel and entertainment issues” how would this ruling change or modify compliance guidance to an international sales or marketing team?
A bribe by any other name….
A bribe is a bribe, it should not be condoned or sanctioned, foreign official or no foreign official. Isn’t the primary compliance and ethics message amplified and disseminated as “we don’t bribe.” Thus, I can’t see any responsible compliance executive now having to “change their tone” due to the ruling, as that would imply there were allowances for “non-instrumentality” bribes beforehand, and again, I don’t see that as having been in place. Nonetheless, this type of conversation as to “who is and who isn’t” could be misleading to an overseas sales team.Such a prolonged discussion of “instrumentality” might lead an overseas team to interpret a “hidden meaning” behind dividing customers into “public” and “non-public” entities, concluding that while bribing one group is illegal, perhaps the other is permissible, even if unethical. I don’t think that would be the intention of compliance personnel, so why make it an area of focus? I realize its a complicated issue, as it conflates ethics and legality, so again, why make the differentiation and elevate the potential for misinterpretation?
I think Michael Volkov comes closest in touching this issue in his post (see here) when he states “in the end, the appeal strengthened the government’s hand and left little room for doubt-the FCPA applies with full force to entities that are controlled by foreign governments.” Plain and simple. So, from a compliance and training perspective, my take away is “move on,” as there has been no dilution to the FCPA and to the importance of business strategy, training and incentives as part of an anti-bribery ethic. In other words, the Appeals ruling provides no “ground cover” for corrupt behavior, and for those in the field who thought there was “wriggle room,” take note.