In terms of understanding the FCPA and particularly the knowledge standard for a violation of the anti-bribery provisions, attorneys, international lawyers, in-house counsel, and others providing legal advice need to fully understand what constitutes sufficient knowledge for there to be a violation. It is critical to understand that actual knowledge is not a prerequisite for a violation.
When an individual or entity “is aware of a high probability of the existence of” activity prohibited by the anti-bribery provisions but does not have actual knowledge of the circumstance, the individual or entity is nonetheless deemed to “know” of the existence of the circumstance. An individual or entity is deemed to have the requisite knowledge of an activity by a third party if the individual or entity (1) “is aware that such person is engaging in such conduct, that such circumstance exists, or that such result is substantially certain to occur” or (2) “has a firm belief that such circumstance exists or that such result is substantially certain to occur.” An individual or entity is also deemed to have the requisite knowledge if either is aware of the “high probability” of a circumstance that is required for a violation of the anti-bribery provisions.
Knowledge can be established under the anti-bribery provisions when it appears that the act is made with conscious disregard of or willful blindness to the evident purpose of the offer or payment. Failing to learn the purpose of the offer or payment through negligence does not constitute a conscious disregard or willful blindness. This is not the equivalent of recklessness. There must be “an awareness of a high probability of the existence of the circumstance.” A “‘defendant must be shown to have decided not to learn the key fact.'”
“[K]nowledge of a fact may be inferred where the defendant has notice of the high probability of the existence of the fact and has failed to establish an honest, contrary disbelief.” The inference cannot be overcome by “deliberate avoidance of knowledge,” “willful blindness,” or “conscious disregard” of the “required circumstance or result.”
15 U.S.C. §§ 78dd-1(f)(2)(B); -2(h)(3)(B); -3(f)(3)(B).
Id., §§ 78dd-1(f)(2)(A); -2(h)(3)(A); -3(f)(3)(A).Id., §§ 78dd-1(f)(2)(B); -2(h)(3)(B); -3(f)(3)(B). In ruling on the admissibility of evidence in a motion in limine, United States v. Kozeny, 643 F. Supp. 2d 415, 440 (S.D.N.Y. 2009), the trial court found “[t]hat Azerbaijan was known to be a corrupt nation, that the post-Communist privatization processes in other countries have been tainted by corrupt practices, that SOCAR was a strategic asset of Azerbaijan, and that Kozeny was notorious as the ‘Pirate of Prague’ makes it probable that Bourke was aware that Azeri officials were being bribed in order to ensure the privatization of SOCAR.”
Id., at 417-18. “The modern conscious avoidance doctrine . . . is that ‘[w]hen knowledge of the existence of a particular fact is an element of an offense, such knowledge is established if a person is aware of a high probability of its existence, unless he actually believes that it does not exist.'” United States v. Nektalov, 461 F.3d 309, 314 (2d Cir. 2006) (quoting Leary v. United States, 395 U.S. 6, 89 S. Ct. 1532, 23 L. Ed. 2d 57 (1969)).The legislative history of the 1988 amendments to the FCPA clearly state that “‘simple negligence’ or ‘mere foolishness’ should not be the basis for liability.” H.R. CONF. REP. NO. 576, 100th Cong., 2d Sess. 919 (1988), reprinted in 1988 U.S.C.C.A.N. 1949. See Nektalov, 461 F.3d at 315 (holding that it is “essential to the concept of conscious avoidance that the defendant must be shown to have decided not to learn the key fact, not merely to have failed to learn it through negligence.”). See also United States v. Abreu, 342 F.3d 183, 188 (2d Cir. 2003) (rejecting argument “premised on the common misconception that the conscious avoidance theory allows the prosecution to establish knowledge by proving only that the defendant should have known of a certain fact, even if he did not actually know it”); United states v. Ferrarini, 219 F.3d 145, 157 (2d Cir. 2000) (conscious avoidance cannot be established when the factual context should have apprised the defendant of the unlawful nature of his conduct and have instead required that the defendant have been shown to have decided not to learn the key fact). H.R. CONF. REP. NO. 576, supra note 5, at 920. The Conferees quoted from United States v. Jacobs, 475 F.2d 270, 287 n.37 (2d Cir. 1973), in explaining the understanding that was reached with respect to knowledge:
Knowledge that the goods have been stolen may be inferred form circumstances that would convince a man of ordinary intelligence that this is the fact. The element of knowledge may be satisfied by proof that a defendant deliberately closed his eyes to what otherwise would have been obvious to him. Thus, if you find that a defendant acted with reckless disregard of whether the bills were stolen and with a conscious purpose to avoid learning the truth, the requirement of knowledge would be satisfied unless the defendant actually believed they were not stolen.
H.R. CONF. REP. NO. 576, supra note 5, at 920 (emphasis in Conference Report).
Nektalov, 461 F.3d at 315.H.R. CONF. REP. NO. 576, supra note 5, at 921.
Id. (citing United States v. Marique Aribizo, 833 F.2d 244, 249 (10th Cir. 1987) (deliberate avoidance of knowledge); United States v. Kaplan, 832 F. 2d 676, 682 (1st Cir. 1987) (willful blindness)).