Are Royals Foreign Officials Under The FCPA?

• Published date: 10 July 2020
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law, Securities
• Law Firm: Shearman & Sterling LLP
• Author: Mr Philip Urofsky and Oyinkan Muraina

Is the Prince of Wales a government official? Are his brothers? Are Saudi princes? Does it matter if the "royal" is in the line of succession (or for Saudi princes, amongst those eligible to ascend to the throne) and, if so, does it matter how far down the line?

Congress originally enacted the FCPA in 1977, prohibiting U.S. persons (and later other persons with a U.S. connection) from bribing foreign officials to obtain an improper business advantage. Since that time, businesses pursuing opportunities in countries with large royal families struggle with whether members of those royal families should be considered "foreign officials."

Despite the importance of this issue - and the time spent by compliance professionals analyzing it - there have been to date no cases and only partial guidance issued by the enforcement authorities. Thus, as in many areas in the FCPA, the burden remains on companies to carefully evaluate multiple nonbinding and often non-determinative factors in deciding whether and how to proceed in doing business.

See the ACR's two-part series on managing corruption risk when hiring and training foreign officials and their relatives overseas: "Risks and Challenges" (Jul. 27, 2016) and "Practical Compliance Guidance" (Aug. 10, 2016).

Categorizing Royals

The FCPA defines "foreign official" broadly: "any officer or employee of a foreign government or any department, agency, or instrumentality thereof ... or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality." How does a "royal" fit within this definition?

Ultimately, this determination will be, of course, country-specific and fact-dependent requiring a close examination of that country's governance, constitutionally, legally and practically. There are very few countries today with true monarchies, in which a king or queen exercises direct power over the operations of the country's government. In such countries, certainly the monarch would seem to be a government official, but what of other royals? Even in countries in which the monarch acts as a largely ceremonial head of state, the monarch and some members of the royal family might still exercise significant behind-the-scenes influence.

The FCPA's definition of "foreign official" is autonomous, i.e., it does not depend on how a foreign country's own law defines the status of a member of the royal family. Nevertheless, foreign law is instructive. For instance, the United Kingdom has had an act of succession on its books since 1534, outlining the terms and order of succession to the crown. However, Prince Andrew threw a wrench in the royal order when reports emerged that, during official trade...