For defense lawyers in the Foreign Corrupt Practices Act criminal case against six employees of Controlled Components Inc., a Los Angeles district ruling on Thursday could have been worse.
Judge James Selna denied motions to dismiss 10 of the 16 counts in a government indictment accusing CCI employees of paying $4.9 million in bribes to executives of state-owned energy companies in China, Korea, Malaysia, and United Arab Emirate. He concluded that defense lawyers hadn’t established as a matter of law that employees of state-controlled businesses can never be considered ‘foreign officials’ under FCPA. In fact, the judge found lots of support in case law and legislative history to support the opposite conclusion--that government-owned businesses are instruments of the state. But Judge Selna stopped short of a definitive rejection of the defendants’ challenge to the government’s interpretation of ‘foreign officials.’ He ruled that the question is a matter of specific facts, not just the law, so it can’t be resolved until trial.
And all things considered, that’s not a fatal outcome for the CCI defendants’ lawyers from Gibson, Dunn & Crutcher; Sidley Austin; Bienert, Miller & Katzman; and the Law Offices of David Weichert. At least they’ll get another shot at arguing that the specific state-owned companies in the CCI case are not instruments of the government for the purposes of FCPA prosecution. In the last case in which defendants challenged prosecutors’ expansive definition of foreign officials under FCPA, Judge A. Howard Matz of U.S. district court in Los Angeles ruled in April in the Lindsay Manufacturing case that a Mexican utility is a state instrument, so alleged bribes to its employees are covered by FCPA.
It’s worth noting, however, that juries haven’t been very sympathetic to FCPA defendants. Only one has been acquitted at trial, according to the FCPA Blog. Most recently, a Los Angeles jury convicted Lindsay Manufacturing and two of its top officials for bribing those Mexican utility company employees.
Nicola Hanna of Gibson Dunn (counsel to CCI defendant Stuart Carson), Kimberley Dunne of Sidley (counsel to Rose Carson), and Thomas Bienert of Bienert Miller (counsel to Paul Cosgrove) didn’t respond to messages requesting comment.
The FCPA Blog has links to and analysis of both Judge Selna’s ruling in the CCI case and Judge Matz’s ruling in the Lindsay Manufacturing case.
(Reporting by Alison Frankel)