• McDonnell Decision and the FCPA
  • July 22, 2016
  • Law Firm: Duane Morris LLP - Philadelphia Office
  • On June 27, 2016, in the last decision of the 2015-2016 term, the U.S. Supreme Court, in McDonnell v. United States, No. 15-474, narrowed the type and character of “official acts” that could underpin corruption charges against a public official. Federal prosecutors contended that former Governor of Virginia Robert McDonnell was guilty of a variety of corruption charges for accepting $175,000 worth of loans, gifts and other benefits in exchange for what the government termed “official acts.” After being found guilty by a jury, McDonnell’s conviction was upheld on appeal, but ultimately reversed by the Supreme Court, which held that the jury instructions too broadly defined “official acts” as “acts that a public official customarily performs.” Instead, the Court concluded that it is impermissible to accept payment only for an “official act,” which it defined as a “decision or action” on a pending “question, matter, cause, suit, proceeding, or controversy,” and not a routine political action, such as setting up a meeting, call or event. The Court’s decision provides much-needed clarification to politicians and stakeholders alike regarding the scope of federal anti-corruption law.

    While most companies that are not traditionally in the business of paying politicians may not think twice about this opinion, it is important to note the potential effects this decision has on companies interacting with foreign government officials. The heart of the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) prohibits the direct or indirect payment or offering of money or anything of value to a foreign official for purposes of influencing any act or decision of such foreign official in his official capacity or inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official, for the purpose of obtaining or retaining business in that foreign country. At first blush, McDonnell may seem reassuring to companies operating in foreign countries where customary gratuities, such as wine, trips or meals, in exchange for political face time may be seen as common place. However, companies should consider that subsection (iii) of the FCPA’s anti-bribery provisions prohibits payments to foreign officials with the intent to secure “any improper advantage” and is written in much broader terms than the domestic corruption statutes at issue in McDonnell.

    The bottom line is while it may initially seem like the holding in McDonnell loosens restrictions on business activities in foreign jurisdictions, it likely will not. So, it is likely to be all the more worthwhile to consult knowledgeable legal counsel before taking any action that could implicate the FCPA.