## Facts

- David Kay and Douglas Murphy were executives of American Rice, Inc. (ARI), a U.S. company exporting rice to Haiti through its subsidiary, Rice Corporation of Haiti (RCH).
- A superseding indictment alleged Kay and Murphy arranged corrupt payments to Haitian customs and other officials.
- The alleged purpose of the payments was to induce officials to accept false import documents understating the quantity and/or value of rice.
- The understatement allegedly allowed ARI/RCH to avoid substantial Haitian customs duties and sales taxes.
- The indictment alleged the payments were made to assist ARI in “obtaining or retaining business” in Haiti by lowering costs and maintaining profitability and competitive position.
- The district court dismissed the indictment under Rule 12(b), concluding that bribes to reduce customs duties and sales taxes were, as a matter of law, outside the FCPA’s “obtain or retain business” requirement.
- The United States appealed.

## Issues

1. Whether corrupt payments to foreign officials to obtain unlawful reductions in customs duties and sales taxes can satisfy the FCPA requirement that the payment be made to assist in “obtaining or retaining business.”
2. Whether an indictment that tracks the statutory language and alleges the requisite business purpose is sufficient even without detailed allegations specifying what business was obtained or how the cost reductions translated into obtaining or retaining business.

## Decision

- The Fifth Circuit reversed the dismissal and remanded.
- The court held that bribes to obtain unlawful tax or customs benefits can provide an improper competitive advantage and therefore can fall within the FCPA’s “obtain or retain business” element.
- The court held the superseding indictment sufficiently stated an FCPA offense because it alleged corrupt payments to foreign officials and alleged they were made for the purpose of assisting ARI in obtaining or retaining business, even without specifying the precise business or mechanism of impact.
- The court emphasized that such tax- and duty-related payments could, but do not necessarily, violate the FCPA; liability depends on proof that the payments were intended to assist in obtaining or retaining business.

## Legal Principles

- The FCPA’s “obtain or retain business” element is not limited to bribes aimed at securing discrete government contracts or concessions.
- Corrupt payments intended to secure an improper cost advantage (including unlawful reductions of foreign taxes or customs duties) may satisfy the business-purpose element when the advantage is intended to help obtain, keep, or direct business.
- On a motion to dismiss, an indictment is sufficient if it alleges the essential elements of the offense and provides notice of the charged conduct; the government need not plead all subsidiary details of how the business-purpose element will be proved.
- The “core of criminality” for FCPA anti-bribery charges is the bribery of a foreign official to induce corrupt performance of official duties; detailed proof of the business nexus is for trial, not a pleading prerequisite.

## Conclusion

The Fifth Circuit held that alleged bribes to Haitian officials to reduce customs duties and sales taxes could satisfy the FCPA’s business-purpose element when intended to help a company compete and retain or obtain business, and it reinstated the indictment because it adequately alleged the statutory elements.


United States v. Kay, 359 F.3d 738 (5th Cir. 2004)