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Second Circuit Declines To Limit FCPA's Scope

The Second Circuit’s decision in United States v. Ng Lap Seng is a win for the government, because it reinforces the broad reach and scope of the Justice Department’s enforcement of the FCPA. When adopting and implementing an anti-corruption compliance program, international companies should continue to take measures to avoid any conduct that may place them at risk.


On August 9, 2019, in United States v. Ng Lap Seng, the US Court of Appeals for the Second Circuit declined to extend the limitations established in the Supreme Court’s McDonnell ruling to other federal corruption and bribery laws, including the Foreign Corrupt Practices Act (FCPA). The Second Circuit’s decision means that prosecutors will not be constrained in prosecuting FCPA violations in the way the Supreme Court unanimously limited the application of the federal domestic corruption statute. A win for the government, the Second Circuit’s decision reinforces the broad reach and scope of the Justice Department’s enforcement of the FCPA.

In 2018, a jury in the Southern District of New York convicted Ng Lap Seng of violating the FCPA for paying two UN ambassadors more than $1 million to secure their commitment to base an annual UN conference at his Macau, China, real estate development. In particular, Ng paid one ambassador $20,000 per month purportedly to serve as president of a media organization called South-South News when, in fact, the ambassador understood a portion of that payment was to secure his support for the use of Ng’s development. In addition, Ng paid another ambassador’s wife purportedly for consulting when, in fact, she never performed such services. After his conviction, Ng appealed, arguing among other points that the jury instructions for his FCPA violation were deficient under the Supreme Court’s 2016 decision in McDonnell.

In McDonnell, the Supreme Court considered the meaning of “official act” under 18 U.S.C. § 201, which penalizes the provision of “anything of value” for the purpose of influencing a public official to take an “official act.” The Supreme Court unanimously held that arranging a meeting, contacting other public officials or hosting events concerning a broad policy issue such as economic development, “without more,” did not qualify as “official act[s]” under the statute. The Court looked to the language of the statute, and had two statutory bases for its holding. First, under § 201, an “official act” must involve a “question, matter, cause, suit, proceeding or controversy” that is either pending or may be brought before a public official, or must involve a formal exercise of governmental power akin to a hearing, administrative proceeding or lawsuit. Second, to make a violation of the statute, the government must prove the public official made a decision or took an action “on” that “official act.”

In his appeal, Ng argued that FCPA bribery charges required proof of an “official act” satisfying the McDonnell standard. In joining a number of other circuits that have declined to extend McDonnell, the Second Circuit held that the FCPA has no such limiting requirement. First, the Court explained that no uniform definition applies to the word “bribe” in the federal code. While Congress has generally prohibited “corruptly giving an official ‘anything of value’ (the quid),” not all federal bribery statutes identify an “official act” as “the necessary quo for bribery.”

The FCPA makes it a crime to “corruptly … give a foreign official anything of value” (the quid) for four purposes. First, for the purpose of “influencing any act or decision of such foreign official in his official capacity.” Second, for “inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official.” Third, for “securing any improper advantage.” Or fourth, for “inducing such foreign official to use his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality.” The Second Circuit explained that these four purposes are “the quos” under the FCPA, which further requires “that the quos serve a particular purpose” (i.e., to assist the giver in “obtaining,” “retaining” or “directing” business). Accordingly, the Second Circuit found that McDonnell‘s ruling on the “quo component of bribery” in §201(a)(3) does not “delimit the quo components of other bribery statutes,” including the FCPA.

While prosecutors are now constrained in the types of conduct they can pursue in bribery cases against US officials, the Second Circuit’s ruling means that those same limits do not apply in FCPA prosecutions. Even if payments or gifts made to a foreign official do not result in an “official act” by that official, such conduct could still result in an FCPA violation if it was done to influence or induce that official to take (or not take) action. Because the broad reach of the FCPA remains intact after the Second Circuit’s ruling, companies should continue to draw clear lines in their policies and codes of conduct prohibiting such payments, and in placing parameters around the provision of gifts and gratuities, to avoid any uncertainty as to what may place the company at legal risk.

© 2020 McDermott Will & EmeryNational Law Review, Volume IX, Number 232


About this Author

Paul M. Thompson, McDermott Will Emery, White Collar Criminal Defense,

Paul M. Thompson is a partner in the law firm of McDermott Will & Emery LLP and serves as the Partner-in-Charge of the Firm’s Washington, D.C., office.  Paul focuses his practice on white-collar criminal defense, congressional investigations and appellate matters.  Paul has been repeatedly recognized by the National Law Journal in its Appellate Hot List.  He was named as a “Star” in Benchmark Litigation 2015 for his work on white-collar matters and appeals. 

Paul is a former federal prosecutor.  He has represented clients...

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Sarah Walters, Mcdermott Will Emergy, Trial Lawyer

Sarah Walters is an experienced trial lawyer who focuses her practice on white collar criminal defense, regulatory enforcement and compliance matters, and complex civil litigation. In addition to both criminal and civil trial work, Sarah has substantial experience conducting internal investigations and assists companies in developing compliance policies and training programs.

Before joining McDermott, Sarah served 10 years as an Assistant United States Attorney in the Boston US Attorney’s office, holding the position of Chief of the Economic Crimes Unit during the last four years of her tenure. Sarah’s work as a prosecutor included leading successful investigations and numerous jury trials covering a broad spectrum of economic crimes, including insider trading, market manipulation, investment advisor fraud, Ponzi schemes and tax evasion. She was the lead prosecutor on the first securities fraud undercover operation in the District of Massachusetts, which led to more than 30 convictions in pay-to-play and market manipulation cases. Sarah also served as a liaison to President Obama’s Financial Fraud Enforcement Task Force.

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Michael S. Stanek white-collar and securities defense, government investigations, Lawyer

Michael (Mike) S. Stanek focuses his practice on white-collar and securities defense, government investigations, anti-corruption compliance and political law. He represents corporations, boards and individuals in a variety of enforcement matters, including the Foreign Corrupt Practices Act (FCPA) and the federal securities laws and regulations. He is highly skilled in designing, managing and executing global internal investigations and investigations before numerous government enforcement authorities. Mike also counsels clients with respect to corporate compliance policies, procedures,...

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