Wednesday, May 11, 2011
It is turning out to be a busy week on the corruption front this week. Yesterday, a U.S. District Court in California allowed a case to go foward under the Foreign Corrupt Practices Act (FCPA) against five former executives of Control Components, Inc, a valve manufacturing company. The judge rejected the defendants' argument that an executive of a state-owned corporation is not a "foreign official" within the meaning of the FCPA. The judge held that whether the state-owned corporation is an instrumentality of a foreign government is an issue of fact for the jury. The former executives are accused of paying bribes to foreign officials in China, Malaysia and the United Arab Emerates. Three Control Components employees have already pled guilty to violations of the FCPA.
In a separate case, Lindsey Manufacturing of California and two of its executives were found guilty of violations of the FCPA in a federal trial in California yesterday in connection with the payment of bribes to an electric utility owned by the government of Mexico. Once again, one of the main issues was what constitutes an "instrumentality" of the government within the meaning of the FCPA. This was one of the few FCPA cases to go to trial; most settle out of court. More information and analyses of these cases can be found at the FCPA Blog.