Fifth Circuit Interprets Foreign Corrupt Practices Act Expansively And Rules That Paying Bribes to Receive Reduction in Customs Duties or Taxes Could Violate Act.

Mondaq Business Briefing, October, 2004

The United States Court of Appeals for the Fifth Circuit recently issued its opinion in United States of America v. Kay, No. 02-20588 (5th Cir. Feb. 4, 2004), a much-anticipated ruling regarding the scope of the Foreign Corrupt Practices Act ("FCPA"). The specific issue on appeal was whether bribes paid to obtain a reduced customs duty or a reduced tax bill were payments made to "obtain or retain business" within the prohibitions of the FCPA. The Fifth Circuit's answer: "Maybe." Finding the FCPA's scope to be quite expansive, the Fifth Circuit ruled that bribes paid to evade customs duties and taxes could fall within the prohibitions of the FCPA. Whether such bribes violate the law, however, depends on whether the bribery was intended to produce an effect that would "assist in...