Would Alito’s Defense Prevail Under the FCPA?

For international anti-corruption lawyers and compliance professionals trained by years of vigorous enforcement activity, American domestic political practices can seem surreal.  What is criminal abroad may be acceptable, even constitutionally protected, here. 

Recent revelations that Supreme Court Justice Samuel Alito accepted and did not disclose gifts and hospitality from wealthy benefactors are the latest examples of the disconnect between domestic and international norms. 

According to an article by ProPublica, Alito took a fishing trip to Alaska paid for by hedge fund billionaire Paul Singer, who would later be involved in cases that came before the Supreme Court. The trip involved a seat on a private flight to Alaska, three nights at the King Salmon Lodge and meals at the lodge. Alito, in an unusual op-ed in the Wall Street Journal not long before ProPublica published its findings, defended his failure to recuse himself or disclose the trip. 

The matter raises no FCPA issues since Alito is a domestic government official, not covered by the FCPA, and the FCPA does not provide for prosecution of recipients of bribes in any case. But consider this thought experiment: What if Alito were instead a judicial official of a foreign country, let’s say the United States of Salmon? Would Singer at least be in jeopardy of having violated the FCPA? 

Let’s review the basics of an FCPA violation. There must be (1) a payment, offer or promise of (2) anything of value (3) to a “public official” (4) with “corrupt intent” (5) for the purpose of (6) assisting in obtaining or retaining business. We can presume that Alito would qualify as a “public official,” but what of the other elements?

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Something in the sky: A thing of value

The SEC and DOJ have long been clear that lavish gifts and hospitality fit squarely within the definition of a payment of “anything of value.” The FCPA Resource Guide mentions several examples of enforcement actions where travel and entertainment have constituted a thing of value, including when “a New Jersey-based telecommunications company spent millions of dollars on approximately 315 trips for Chinese government officials, [where they] visited tourist destinations such as … Disney World, Universal Studios, and New York City.”

Justice Alito’s claim that the seat on the private plane was empty and would have gone unused if he had not accepted the invitation would likely be of little exculpatory value to Singer if this were an FCPA inquiry. The point of anti-corruption laws is to prevent bribery — not to keep would-be bribers from overspending their means. Thus, under the FCPA, there is no requirement that a gift cost something extra for the giver, just that it is a “thing of value.” A seat on a private plane is objectively valuable, and if ProPublica’s estimate is to be believed, it could have cost more than $100,000 for a one-way trip. 

Business never personal: The business purpose test

ProPublica details eight Supreme Court appeals involving litigation between the Republic of Argentina and an entity affiliated with Singer, NML Capital. In 2014, the Supreme Court agreed to hear an appeal, and in June of that year, the court ruled in favor of NML Capital with Alito joining the majority. 

Justice Alito and Singer might argue, if the FCPA applied, that the purpose of the fishing trip was not to assist in “obtaining or retaining business.”  At its worst, it was for the purpose of influencing the adjudication of a lawsuit, not the award of a contract or other commercial opportunity, they might say in a letter-of-the-law argument.

However, this element is much broader than the language suggests. In United States v. Kay, the Fifth Circuit wrote that, “Congress meant to prohibit a range of payments wider than only those that directly influence the acquisition or retention of government contracts” and that Congress intended to include “assistance in improving the business opportunities of the payor or his beneficiary, irrespective of whether that assistance be direct or indirect, and irrespective of whether it be related to administering the law, awarding, extending, or renewing a contract, or executing or preserving an agreement.” The FCPA Resource Guide similarly lists “influencing the adjudication of lawsuits or enforcement actions” as an example of actions taken to obtain or retain business.

For where your treasure is, there your heart will be: Corrupt intent

To violate the FCPA, a payment must be made or offered with “corrupt intent.” This is usually defined as intent to wrongfully influence the recipient or to influence the recipient to misuse their official authority. 

Given the fact that Singer had significant business interests that hinged on questions of foreign sovereign immunity and that these questions could be decided in his favor by the Supreme Court, it is not unreasonable to ask whether Singer might have been attempting to influence Alito. 

With that in mind, what about Justice Alito’s claim that he does not know Singer well, met him only on a few occasions outside of the fishing trip and did not know of his role in the case? This seems somewhat implausible given Singer’s widely publicized involvement in the case.  

Moreover, Singer certainly knew Alito and knew that Alito sat on the US (or USS) Supreme Court in a position to potentially issue one or more decisions that could greatly affect Singer’s business interests.  In fact, Alito’s supposed unfamiliarity with Singer may actually hurt Singer’s case. If, as Alito asserts, Singer was not a friend and barely even an acquaintance, then why was Alito invited? The trip cannot be explained away as a reunion between old friends with no ulterior motives. Perhaps Alito is great company, but it seems obvious that he was invited because of his job.  

Ultimately, the best defense of the gifts may be that, given the length of time between the fishing trip and any case coming before the court, the prospect of Alito assisting Singer with a case was simply too speculative and remote to qualify as a bribe, as opposed to a “generalized hope or expectation of ultimate benefit.” That said, while the fishing trip occurred six years before this case was heard by the Supreme Court, the underlying litigation was well underway by the time Alito was invited on the fishing trip, and Singer had various legal matters that could have reached the court.

Cured or smoked?

Justice Alito wrote his op-ed in defense of his decision not to recuse himself or disclose the trip, not in defense of a potential FCPA violation, arguing that, “it was and is my judgment that these facts would not cause a reasonable and unbiased person to doubt my ability to decide the matters in question impartially.”  Whatever one thinks of that assessment, if the FCPA applied, the defense would be swimming upstream.