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Sec 6-2, Ex 01
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Cengage Advantage Books: Foundations of the Legal Environment of Business 3rd Edition

Cengage Advantage Books: Foundations of the Legal Environment of Business (3rd Edition)

Book Edition3rd Edition
Author(s)Jennings
ISBN9781305117457
PublisherCengage Learning
SubjectBusiness
Start of Chapter
Consider
Section 6-2: Trust, Corruption, Trade, and Economics
ETHICAL ISSUES
Consider
Section 6-4: Principles of International Law
CASE 6.1
Consider
CASE 6.2
End of Chapter
Questions and Problems
Review Questions
Chapter 6, Start of Chapter, Consider, Exercise 01
Page 141

James H. Giffen, owner of Mercator Corporation, a New York company, made $78 million in payments to two government officials in Kazakhstan. He was charged with violations of the FCPA. Giffen moved to have the charges dismissed because he had been named a Counselor to the President of Kazakhstan and was immune from prosecution under the act of state doctrine. He also asked that the charges be dismissed because any payments he made to the officials were for facilitation and access and were not bribes for contracts with his company.

 

Is he correct? Does the act of state doctrine apply? Did he bribe, or did he facilitate?

Explanation

  • No, he is not correct. The act of state doctrine doesn't apply here
  • The act of state doctrine is a rule of U.S. law that prevents the courts from examining the validity or legality of acts performed by foreign sovereigns within their own territory, except when the act violates a "universal standard of justice." The doctrine only applies to official acts taken within a foreign nation's own territory, and only applies to actions taken by the foreign nation's government. The doctrine is most often invoked in cases where United States' citizens are denied property rights abroad by an action of a foreign government.
  • The act of state doctrine does not apply in Giffen's case because he was not acting as an agent for the President of Kazakhstan when he paid the officials. He was working as a corporate agent for his company, Mercator Corporation, which was attempting to obtain business contracts with the Kazakh government.
  • Giffen's payments could not be considered facilitation or access payments because they were not made to expedite legitimate business transactions. They were made to bribe government officials into awarding contracts to his company that they otherwise would not have awarded. Further evidence that these payments were bribes lies in the fact that Giffen did not disclose them on his company's books as required under U.S. law.

Answer

  1. He is not correct.
  2. The act of state doctrine does not apply.
  3. He bribed. 
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Page 141

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