U.S. District Court Dismisses Corruption Prosecution By Narrow Application of U.S. Law

On April 16, 2002, U.S. District Court Judge David Hittner of the U.S. District Court for the Southern District of Texas, Houston Division delivered a bow to the U.S. Government by narrowing the interpretation of amendments to the Foreign Corrupt Practices Act (FCPA). Judge Hittner dismissed an indictment on the grounds that bribes paid to Haitian officials were only intended to reduce customs duties and sales taxes and not to obtain or retain business. The case involves the indictment of David Kay and the superceding indictment of Douglas Murphy. The indictment alleges that the defendants, as president and vice president of American Rice, Inc. (“ARI”) made improper payments to officials in the Republic of Haiti to reduce customs duties and sales taxes owed by ARI to the Haitian Government. The court rejected the House report as authoritative because in 1988 Congress again amended the FCPA in 1998 in response to the Organization for Economic Cooperation and Development Convention on Combating Bribery of Foreign Officials in international Business Transactions (the OECD Convention). The OECD Convention had asked Congress to criminalize payments made for foreign officials “in order to obtain or retain business or other improper advantage in the conduct of international business."