I read the news with FCPA goggles on. It’s an occupational hazard. An article last week in the Wall Street Journal - ”China Bids in Fracking” by Dinny McMahon and Chester Yung caused me to scratch my head.
Earlier this week, I entered my final grades after days of grading. But I offer one more final exam. This final exam is for people who believe (see here for the prior post) that the FCPA “sufficiently defines the term foreign official” and that “given the various forms of government found around the world, it would be impractical to articulate each of the myriad of ways that one could use to identify a foreign official in particular countries or cultures. ”
The WSJ article discusses how Cnooc Ltd. and China Petroleum Corp. (Sinopec), two Chinese state-owned or state-controlled enterprises (SOEs), are competing to buy a 30% stake in Texas-based Frac Tech Holding LLC.
Are SOE’s “instrumentalities” under the FCPA such that SOE employee are “foreign officials.” You know my conclusion – see here for my “foreign official” declaration. Yet, in Lindsey and Carson the trial court judges concluded (see here and here) that certain SOEs may be “instrumentalities” under the FCPA such that SOE employees are “foreign officials.”
Can minority ownership qualify an enterprise as an SOE? In its charging decisions, both the DOJ and SEC have answered yes. See here for the current “foreign official limbo low.”
Competing against Cnocc and China Petroleum for the stake in Frac Tech is Saudi Arabian Oil Co. (Saudi Aramco), the state-controlled oil company. So Frac Tech employees could become Chinese “foreign officials” or Saudi “foreign officials” depending on the successful bid?
But wait, perhaps Frac Tech employees are already “foreign officials.” Why? Because, as the WSJ article notes, a consortium led by Singaporean state-owned investment firm Temasek Holdings Pty. Ltd. and including sovereign wealth funds Korea Investment Corp., China Investment Corp. and Abu Dhabi Investment Council currently owns 70% of Frac Tech. Are sovereign wealth funds foreign government owned ”instrumentalities.”? The DOJ and SEC sure seem to think so. Would that make Frac Tech employees current Singaporean “foreign officials,” Korean “foreign officials,” Chinese “foreign officials” or Abu Dhabi “foreign officials”?
This is quite the “foreign official” head-scratcher. But quit scratching your head, the FCPA “sufficiently defines the term foreign official” in the minds of some and it is ”impractical to articulate each of the myriad of ways that one could use to identify a foreign official in particular countries or cultures.”