2The Chamber suggests that
in order to create a “clear understanding of the parameters of ‘instrumentality’ and ‘foreign official,’” the DOJ should adopt a policy that would allowcompanies to “identify the percentage ownership or level of control by a foreign government
rily will qualify a corporation as an ‘instrumentality.’”
This is both surprising andconcerning to us.We are surprised at this position because the U.S. Chamber of Commerce (
),which tax records show is essentially the parent entity of the ILR and is the first signatory on theFeb. 21
even ahead of the ILR, knows very well that ownership of companies around theworld, including in the U.S., is impossible to determine independently. Not only is the Chamberaware of the problem, it has vociferously and formally objected to a U.S. legislative proposal torequire disclosure of the beneficial ownership of companies in the United States and continuesto lobby against efforts to do so.
The Chamber and ILR are literally standing in the way of theirown proposed solution. In the United States and around the world, it is not necessary toidentify the real shareholders or controllers of a corporation in registration documents. If shareholder information is required, nominee shareholders and legal entities may be identified,and only one level of ownership is ever required. The staff of a U.S. company is not likely to beable to independently verify the direct and indirect ownership of foreign companies. If the DOJand SEC are giving any consideration to this proposal, we recommend that those developing the
guidance discuss the issue with the Chief of the DOJ’s Asset Forfeiture and Money Laundering
Section, Jennifer Shasky Calvery.We are concerned by this proposal because it belies a fundamental confusion with respect tothe FCPA.
“Instrumentality” refers to a function, not a particular legal structure.
If a company oragency acts as an instrument of government policy and is effectively controlled by thegovernment, then it is an instrumentality, regardless of its percentage ownership. This virtue of control can be conferred by law, by overlap of executive officers, or even by unspoken custom,so a percentage ownership threshold is not an adequate line of inquiry. We would not supportDOJ guidance that seeks to overturn this basic premise.
In light of the UK Bribery Act’s prohibition of bribery in all commercial transactions, not just
transactions with foreign officials, a multinational company is unlikely to split hairs with respectto whether an entity is state-owned or not. Criminalization of all forms of commercial bribery is
Feb. 21 Ltr.,
Letter from the U.S. Chamber of Commerce to Senators Joseph Lieberman and Susan Collins (Sept. 13, 2011),
http://www.centerforcapitalmarkets.com/wp-content/uploads/2010/04/110913_S1483_The-IncorporationTransparencyandLawEnforcementAct_Senate-2.pdf. The Chamber vaunts its advocacy against the Incorporation
Transparency and Law Enforcement Assistance Act on its own website: “Due to Chamber lobbying and outreach, Senat
or CarlLevin dropped plans to offer S.1483, the Incorporation Transparency and Law Enforcement Assistance Act as an amendment tothe Homeland Security Authorization bill. This bill would place additional regulatory disclosure requirements on all business
entities in the United States.”
U.S. Chamber of Commerce, Capital Markets, Corporate Governance, and Securities Regulation:Policy Accomplishments for 2011,