A foreign concept: Bolivian official pleads to bribery-related charges in US

On October 20, 2022, the US Department of Justice (DOJ) secured a guilty plea from a former Minister of the Government of Bolivia, Arturo Carlos Murillo Prijic (Murillo), for conspiracy to commit money laundering in connection with US$532,000 paid in exchange for helping an American company obtain a US$5.6 million contract with the Bolivian government.¹ The plea marks the latest development in the DOJ's year-and-a-half long pursuit of Murillo, which boasts a multi-count indictment alleging money laundering in connection with violations of the Foreign Corrupt Practices Act (FCPA).² Among Murillo's co-conspirators was Sergio Rodrigo Mendez Mendizabal (Mendez), the former Chief of Staff for the Bolivian Ministry of Government, who also pled guilty about a year earlier.³ Mendez's plea agreement included a provision to forfeit US$280,000 and a recommended sentence of 42 months in prison.⁴ Murillo, who has yet to be sentenced, faces a maximum prison term of 120 months.⁵ Even ignoring the steep punishment, the DOJ's enforcement action is noteworthy for its targeting of foreign government officials, a rare outcome in FCPA-related cases, despite the fact that government officials are often the greatest and most direct beneficiaries of corrupt payments. While prosecuting foreign government officials continues to be the exception rather than the rule, these guilty pleas may hint that the DOJ is becoming even more aggressive—and facing little opposition—in its FCPA enforcement and related anti-corruption prosecutions.

The conduct

In May of 2021, the DOJ filed complaints against Murillo and Mendez detailing an elaborate bribery scheme.⁶ Through that scheme, the former Bolivian government officials received corrupt payments from affiliates of a Florida company that specializes in non-lethal military and law enforcement equipment.⁷ In return for those payments, which totaled over US$600,000, the two members of the Bolivian government—Murillo and Mendez—helped the company win its contract to provide tear gas and other tactical gear to the Bolivian Ministry of Defense.⁸ The corrupt payments involved in the scheme were made via wire transfer through the US financial system, including bank accounts in Miami, Florida.⁹

Unusual targets: Government officials

Since 1977, the FCPA has imposed liability to address "domestic concerns" regarding the bribery of foreign government officials.¹⁰ In enforcing the FCPA and related anti-corruption laws, however, the DOJ typically turns its aim away from government officials themselves and concentrates instead on holding the payors of bribes accountable. From 2018 to the present, there have been approximately 175 FCPA-related enforcement actions.¹¹ Of those actions, only 10 charged foreign government officials.¹² The imposition of liability on foreign government officials thus comprises a small fragment of FCPA-related enforcement activity. Yet, the rate at which government officials were charged in FCPA-related cases was more than three times as high during 2021 and 2022 as compared to 2018 through 2020.¹³ The increased targeting of foreign government officials could indicate a shift in the DOJ's enforcement approach, even if the individuals or entities that bribe those officials remain the main focus of FCPA cases and related prosecutions. This discrepancy is somewhat surprising considering it is the bribed officials who tend to extract more profit from bribery schemes, or perhaps it reflects a symptom of the DOJ's need to be more creative in finding jurisdictional hooks as well as the political considerations at play in prosecuting foreign officials themselves.

The Foreign Sovereign Immunity Act

One possible explanation for the DOJ's apparent hesitance to prosecute foreign government officials could be the Foreign Sovereign Immunity Act (FSIA). The FSIA insulates foreign governments and their officials from liability in US courts to avoid encroaching upon the sovereignty of other countries.¹⁴ Whether or not the FSIA is the reason for the skewed FCPA-related enforcement actions, the FSIA still holds relevant implications for foreign officials. The FSIA provides the DOJ with a commercial activity exception, where sovereign immunity may not attach for certain commercial behavior.¹⁵ This exception is particularly relevant when considering potential liability for corrupt practices abroad. Under this exception, foreign government officials can be charged for acts that have a nexus to the United States and that do not constitute exercises of sovereign power but instead represent private commercial dealings.¹⁶ Whether the DOJ is testing out the limits of the FSIA or simply has not encountered any serious push back from foreign governments, it is prudent for foreign officials to take special caution if their private transactions touch the United States.

Noteworthy

The Murillo case may signal the DOJ’s growing aggressiveness in its international enforcement efforts related to the FCPA and anti-corruption. This aggressiveness appears based on a narrow view of the FSIA as shielding conduct that emanates from the power of a sovereign, but extending no immunity for actions that simply reflect the sovereign’s commercial activity.

Perhaps surprisingly, foreign governments and officials have yet to significantly challenge the DOJ’s reach, possibly because the potential repercussions for doing so would be too severe to shoulder. Rather than legal, such repercussions would likely be largely political and fall on the governments rather than the individual officials themselves. There are likely few countries willing to risk destabilizing their political relationships with the United States to protect allegedly corrupt individual government officials. Given this dynamic, foreign government officials should view the recent uptick in prosecutions in their ranks as a reminder that the DOJ does not view them as completely immune or off-limits. Meanwhile, their employers, whether it be government bodies or government‐owned or controlled entities, should take steps to defray the reputational and economic harm caused by corrupt conduct, avoid similar risks in the future caused by systematic shortcomings and consider how to best position themselves moving forward. As such, officials, and by extension their employers who are foreign governments themselves, are well advised to seek guidance when facing corruption allegations, as corruption cases can result in huge fines and immense reputational harm.

Special thanks to law clerk Max Nettler for assisting in the preparation of this content.

This content first appeared on Law360.com.