Gregor Wynne Arney, PLLC Challenges Extraterritorial Jurisdiction of the FCPA
Raising issues that may be ones of first impression, Gregor Wynne Arney, PLLC, on behalf of Javier Alvarado Ochoa, filed in federal court in the Southern District of Texas a comprehensive Motion for Reconsideration and in the Alternative to Certify Questions of Law to the Fifth Circuit. The motion covers the history of U.S. efforts to extend its prosecutorial arm to foreign officials and the dynamics at play when there are competing criminal proceedings in different countries arising out of the alleged chain of events. This particular challenge concerns an exception to the Foreign Corrupt Practices Act (FCPA) that exempts from U.S. federal prosecutorial reach foreign public officials who never stepped foot in the U.S. during an alleged public corruption scheme. Such cases involve allegations that U.S. energy companies bribe foreign public officials, often in Latin America or West Africa, for favorable treatment in public contracts or in payment of invoices. At all times relevant to this case, Mr. Alvarado was the President of Bariven, the purchasing agent of PDVSA, the Venezuelan national oil company. He was appointed by the late Hugo Chavez. He is now a citizen of Spain, and the Spanish authorities have denied U.S. extradition requests in deference to proceedings pending there. The Spanish authorities have invited the U.S. Government to state its case in Spain if it wants to proceed separately.
The FCPA was enacted in 1997, under President Gerald Ford. U.S. prosecutorial authorities then and until recently have focused on the “supply side” of the bribery equation. That means, the law criminalized the U.S. citizen or company alleged to have paid the bribe. It also swept up foreign nationals who acted effectively as agents or co-conspirators of the “briber.” It also exempts “grease payments,” under the principle that the U.S. is not for better or worse the world’s policeman.
DOJ has tried an end-run around the foreign official exception in recent years by charging violations of the Anti-Money Laundering Statute, 18 U.S.C. Section 1956. The motion and memorandum argue why that does not work (an issue never directly challenged in this context) and that law as enacted by Congress says what it says, consistent with traditional principles of international comity.
As recently as December of 2023, Congress has recognized this deliberation omission in the federal law governing foreign public corruption by passing the Foreign Extortion Protection Act, now codified in Section 201 of Title 18, with cross reference to the FCPA. Congress is now addressing the “demand side.” Whether the new statute passes constitutional muster remains to be seen. What is certain, however, is that the new law is retroactive and that the current charges against Mr. Alvarado must be dismissed as a federal prosecutorial overreach.