United States Directly Sanctions Foreign Government Officials for Corruption

Magnitsky Laws and Sanctions Series, No. 4 | April 6, 2018 | By Hdeel Abdelhady

Departing from Prevailing Legal Standards, United States Directly Sanctions Foreign Government Officials for Corruption

On December 20, 2017, the U.S. President issued Executive Order 13818 “Blocking the Property of Persons Involved in Serious Human Rights Abuse and Corruption.” [1] EO 13818 in substantial part implements the Global Magnitsky Human Rights Accountability Act (“Global Magnitsky Act” or the “Act”), a 2016 law that authorizes the President to freeze certain property and restrict the entry into the United States of “foreign persons” that the President determines, “based on credible evidence,” are responsible for certain corrupt acts and human rights abuses committed wholly or substantially outside of the United States (the “Global Magnitsky Sanctions”).[2]

The Global Magnitsky Sanctions directly target foreign government officials for broadly defined corruption. Under the Global Magnitsky Act, a “foreign person” who is a “government official, or senior associate of such an official” is sanctionable for corruption if such a person is

responsible for, or complicit in, ordering, controlling, or otherwise directing, acts of significant corruption, including the expropriation of private or public assets for personal gain, corruption related to government contracts or the extraction of natural resources, bribery, or the facilitation or transfer of the proceeds of corruption to foreign jurisdictions . . . or has materially assisted, sponsored, or provided financial, material, or technological support for, or goods and services in support of . . . [such corruption].[3]

Under EO 13818, “any foreign person determined . . . to be a current or former government official, or a person acting for or on behalf of such an official, who is responsible for or complicit in, or has directly or indirectly engaged in” the following acts is a blocked (sanctioned) person:

  • “corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery; or
  • the transfer or the facilitation of the transfer of the proceeds of corruption.”[4]

Insofar as the Global Magnitsky Sanctions directly penalize foreign government officials for corrupt acts, they are a departure from prevailing anti-corruption laws and standards that typically target, within jurisdictional limits, private parties who bribe foreign government officials. For example, the U.S. Foreign Corrupt Practices Act (FCPA), which prohibits the bribery of foreign officials to gain business advantage, applies to private parties who bribe or attempt to bribe foreign government officials and are within the legal jurisdiction of the United States by virtue of their U.S. nationality, presence in the United States, or links between their corrupt acts and conspiracies overseas and the territory of the United States.[5] Even expansive readings of the FCPA have claimed—with varying degrees of persuasiveness—the existence of some jurisdictional nexus to the United States.

Embodying the principle that the punishment of government officials for corruption is a matter for national authorities, multilateral anti-corruption treaties defer to national authorities and laws to penalize and adjudicate the solicitation or receipt of bribes or other corruption by their officials. The OECD Anti-Bribery Convention and the UN Convention Against Corruption are paramount examples of international anti-corruption instruments that aim to root out corruption while recognizing the sovereign prerogative of states to regulate and punish the conduct their government officials.[6]

It remains to be seen how the United States will implement the Global Magnitsky Sanctions in the medium- to long-term. To date, 52 individuals and entities have been sanctioned. Given that other countries have adopted and are considering adopting versions of the Global Magnitsky Act, it is likely that the law’s standards and framework will continue to be internationalized.


NOTES

[1] Exec. Order No. 13,818, “Blocking the Property of Persons Involved in Serious Human Rights Abuse or Corruption, 82 Fed. Reg. 60,839 (Dec. 20, 2017) [“EO 13818” or the “Order”].

[2] Global Magnitsky Human Rights Accountability Act, Subtitle F of the National Defense Authorization Act for Fiscal Year 2017, Pub. Law No. 114-328, §§1262-65 at § 1263 (codified at 22 U.S.C. 2656 note) (Dec. 23, 2016).

[3] Pub. Law No. 114-328, § 1263(a)(3)-(4).

[4] Id. at § 1(a)(ii)(B).

[5] Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §§ 78dd-1, et seq. Other U.S. laws effectively reach foreign officials in connection with bribery and other offenses. See, e.g., U.S. Department of Justice and Securities and Exchange Commission, A Resource Guide to the Foreign Corrupt Practices Act, November 2012, 11-12 (discussing the bases for jurisdiction over U.S. and foreign parties and conduct within and outside of the United States). See also MassPoint Legal and Strategy Advisory PLLC,  The World Wide Web of Anti-Corruption Enforcement: Direct and Collateral Consequences for U.S. and Non-U.S. Parties (Private and State-Owned), Nov. 25, 2013, 8 (discussing the FCPA’s jurisdictional (and extraterritorial reach) and noting that the FCPA does not directly reach foreign government officials who receive bribes and discussing FCPA-related U.S. laws that can apply to foreign conduct and persons, including foreign government officials).

[6] OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and Related Documents (described by the OECD as “the first and only international anti-corruption instrument focused on the ‘supply side’ of the bribery transaction.”); United Nations Convention Against Corruption (providing a framework for, inter alia, the adoption by state parties of preventative, proscriptive and other measures against the bribery of government officials (including the criminalization of giving and taking bribes) and observing at Article 4 that “[s]tate parties shall carry out their obligations under this Convention in a manner consistent with the principles of sovereign equality and territorial integrity of States and that of non-intervention in the domestic affairs of other States and . . . [that] [n]othing in this Convention shall entitle a State Party to undertake in the territory of another State the exercise of jurisdiction and performance of functions that are reserved exclusively for the authorities of that other State by its domestic law.”).