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State Capitalism and the Foreign Corrupt Practices Act

Paul Rose

Ohio State University - Moritz College of Law

May 7, 2012

Ohio State Law Journal, Forthcoming
Ohio State Public Law Working Paper No. 167

Who is a “foreign official” under the Foreign Corrupt Practices Act? This question will take on increasing importance in the coming years for two reasons. First, the Department of Justice and the Securities and Exchange Commission are aggressively pursuing FCPA cases and, as a consequence, testing the boundaries of the statute. Second, many foreign governments appear to be returning to the old time religion of state capitalism. Foreign governments act as state capitalists not just through state-owned enterprises, but also through public pension funds and sovereign wealth funds (SWFs); these funds are perhaps the next frontier for FCPA enforcement. Indeed, in 2011 the SEC put certain banks and private equity funds on notice that the agency’s enforcement staff had begun to take a closer look at the banks’ and funds’ dealings with SWFs. This article examines SWFs and other state-controlled funds, including public pension funds, as “instrumentalities” and their employees as “foreign officials” under the FCPA. The article concludes that although in some cases SWF and state pension fund employees would be “foreign officials” for purposes of the FCPA, in most cases the FCPA should not apply to these funds and their employees because there is no link between the employees and the type of foreign policy concern that motivated the creation of the FCPA.

Number of Pages in PDF File: 27

Keywords: sovereign wealth funds pension funds, FCPA, state capitalism

JEL Classification: K14, K2, K20, K29

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Date posted: May 7, 2012 ; Last revised: May 12, 2012

Suggested Citation

Rose, Paul, State Capitalism and the Foreign Corrupt Practices Act (May 7, 2012). Ohio State Law Journal, Forthcoming; Ohio State Public Law Working Paper No. 167. Available at SSRN: http://ssrn.com/abstract=2053456

Contact Information

Paul Rose (Contact Author)
Ohio State University - Moritz College of Law ( email )
55 West 12th Avenue
Columbus, OH 43210
United States
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