Securities Regulation Daily Second Circuit upholds criminal FCPA conviction for bribery of U.N. officials
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Wednesday, August 14, 2019

Second Circuit upholds criminal FCPA conviction for bribery of U.N. officials

By Lene Powell, J.D.

Illicit payments to two United Nations ambassadors to expand a Chinese national’s real estate empire were found to be bribes even though the U.N. would not pay any money under the scheme.

In a carefully reasoned decision, a Second Circuit panel found that a Chinese real estate mogul bribed two United Nations ambassadors in violation of the FCPA and a statute prohibiting bribery involving receipt of Federal funds. The U.N. was a covered organization under both laws; the statutes did not require an "official act" under McConnell vs. U.S. nor breach of an official duty, and it did not matter that on the face of a contract, all commercial benefit appeared to flow to the U.N. instead of the defendant (U.S. v. Seng, August 9, 2019, Raggi, R.).

Bribes of United Nations ambassadors. To enhance the reputation of a convention center he was developing in Macau, Chinese real estate magnate Ng Lap Seng paid two U.N. ambassadors over $1 million in bribes to have the center formally designated as the permanent site for an annual U.N. convention. The ambassadors were Francis Lorenzo, a United States citizen serving as the Dominican Republic’s Deputy Ambassador to the U.N., and John Ashe, the U.N. Ambassador for Antigua and Barbuda and, for a time during the bribery scheme, president of the General Assembly, the U.N.’s second-ranking official. In exchange for the bribery payments, which were disguised as salaries and consulting fees, the ambassadors engaged in various specific acts to secure the designation.

After the scheme came to light, Ng was convicted of paying and conspiring to pay bribes and gratuities in violation of the Foreign Corrupt Practices Act (FCPA), 15 U.S.C. §§ 78dd-2, 78dd-3, and 18 U.S.C. §§ 371, 666, which prohibits theft or bribery involving programs receiving federal funds, as well as related conspiracy and money laundering charges. He was sentenced to serve six concurrent four-year prison terms, forfeit $1.5 million, pay a $1 million fine, and pay restitution of $302,977 to the U.N. Ng appealed his conviction.

The U.N. was a covered "organization." A three-judge panel of the Second Circuit first dismissed Ng’s assertion that the U.N. is not an "organization" within the meaning of Section 666 because the statute should be construed narrowly to include only private, not public, entities. Interpreting the statute de novo, the panel concluded that although "organization" in Section 666 does not include governments or their constituent parts, it does include nongovernment public international organizations like the U.N. This element was not at issue for the FCPA, because the FCPA applies to any entity designated a public international organization.

McDonnell "official act" did not apply. Next, the panel rejected Ng’s argument that the statutes require proof of an "official act" under McDonnell v. U.S. and the prosecution did not satisfy this. The panel observed that although anti-bribery statutes generally prohibit corruptly giving federal officials "anything of value" (the quid) "to influence any official act" (the quo), not all federal bribery statutes identify "official act" as the necessary quo for bribery.

The FCPA, for example, prohibits giving anything of value in exchange for any of four specified quos, including an "act or decision" of a "foreign official in his official capacity." But the FCPA does not cabin "official capacity" acts or decisions to a definitional list like that for official acts in Section 201(a)(3). From textual differences among various bribery statutes, the panel concluded that the McDonnell"official act" standard does not necessarily delimit the quo components of Section 666 or the FCPA.

Turning to constitutional challenges, the panel decided that the statutes were not overly vague and did not violate principles of representative government and federalism. Given that Ng paid more than a million dollars to the two ambassadors, concealed the scheme, and threatened to cancel further payments for failure to deliver the designation, the statutory language was adequate to alert a reasonable person to the illegality of Ng’s conduct and to avoid arbitrary enforcement of these laws against him. Nor did the U.S. federalist and representative government structure compel application of the McDonnell "official act" standard. Finally, the panel found it harmless error that the jury instructions incorrectly required proof of an "official act" as to Section 666.

Ng "acted corruptly." The panel found that for the "acted corruptly" element, there was no requirement that an official breach an official duty. A person "acts corruptly" if he pays a government official intending "to influence any official act," whether or not the intent is "to procure a violation of the public official’s duty." Even if there had been such a duty, Ashe was also the U.N.’s second highest official and, as such, could have been found to have a duty not to sell his ability to influence subordinates.

"Obtaining or retaining business." Finally, the panel disposed of Ng’s argument that "business" should be construed as "commercial business," and, therefore, this element was not met because he intended to make the convention center available to the U.N. at no cost. First, in the context of the FCPA, the jury would not need further instruction in understanding the meaning of "business" in "obtaining or retaining business for, or with, or directing business to, any person," to bear the common meaning of "commercial or mercantile activity."

Second, a contract that imposed no monetary obligations on the U.N. could still be deemed to have obtained "commercial" business for Ng, as the FCPA prohibits commercial bribery without regard to whether the briber himself profits directly from the business obtained. Moreover, although such a contract might appear to give all commercial benefits to the U.N., the jury could find that by using bribery to direct his own business obligation to the U.N., Ng thought he would be able to obtain greater business for and, thus, to maximize profits from, the larger commercial complex of which the convention center was a part.

Conviction affirmed. Because all elements were met, the panel upheld Ng’s conviction for violation of Section 666 and the FCPA, as well as the related money laundering convictions.

The case is No. 18-1725-cr.

Attorneys: Daniel C. Richenthal for the United States. Paul Clement (Kirkland & Ellis LLP) for Ng Lap Seng.

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