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Foreign Corrupt Practices Act: United States v. John Blondek, et al. Report

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Updated: Jun 24th, 2022

The (1990) Case United States of America v. John Blondek, Vernon Tull, Donald Castle, and Darrell Lowry refers the legal hearing that was held at the US District Court for the Northern District of Texas, Dallas Division, on account of the mentioned individuals having been charged with conspiring to violate the provisions of the Foreign Corrupt Practices Act (FCPA), which forbids the US subjects to bribe foreign governmental officials.

Specifically, the State (acting on behalf of the US Department of Justice) accused all four defendants of having acted contrary to the statute §78dd-1(a) of the Act. According to this specific statute, it represents a criminal offense, on the part of the US-based publicly-traded company, to “pay money or anything of value to a foreign official or a foreign political party… to influence the official to obtain, retain, or direct business to any person or to secure an improper advantage” (Leibold 228).

Hence, the description of the chain of events that has led to the indictment, as seen by the Judge: “Blondek and Tull were employees of Eagle Bus Company… they paid a $50,000 bribe to Defendants Castle and Lowry (Canadian citizens) to ensure that their bid to provide buses to the Saskatchewan provincial government would be accepted” (“United States v. Blondek” par. 2). Nevertheless, because Castle and Lowry were Canadian citizens, they could not be charged with violating the FCPA per se.

The reason for this is that before being amended in 1998; the Act used to apply only to US citizens/US-based public companies (Marshall 1291). However, because Castle and Lowry did play an active role in bringing about the concerned offense, the State decided to press criminal charges against them, as well, under the conspiracy statute (18 U.S.C. § 371): “It was part of the conspiracy that the defendant’s Lowry and Castle would and did request from Eagle the payment of money” (“United States v. Blondek” par. 12).

This meant that all four individuals had to be tried as a group, and the State’s failure to prove that the statue could be used extraterritorially would result in the defendants’ acquittal, on the ground that at least two of the conspiracy’s participants could not be considered as such, in the legal sense of this word. In its turn, this would automatically imply the absence of any organized group of conspirators, in the first place, and provide defendants with a good reason to ask for the Case to be dismissed.

What convinced the State that it would be indeed legally sound to proceed to press the charge of conspiracy against Blondek, Tull, Castle, and Lowry is that a few months earlier, another Canadian citizen George Morton (who represented Eagle Bus Company in Saskatchewan) pleaded guilty to the same charge. He also agreed to testify against the defendants, in exchange for being offered to sign a plea agreement with the DOJ.

During the trial, Castle and Lowry were quick to point out that as Canadian citizens, they were not covered by the FCPA, which in turn implied that they could not have had any malicious motivation to consider conspiring against the Act, in the first place. Blondek and Tull also claimed that, even though they did try to bribe the Canadian defendants, it did not account for the attempt to conspire against the provisions of the FCPA, on their part. The line of defense, chosen by the defendants, relied on the Court’s would-be willingness to resort to the principle of ‘legal precedent’ while addressing the Case. Such their decision did pay off.

After having deliberated the issue, the Court decreed that no act of conspiracy had taken place, within the context of how all four defendants went about breaking the anti-bribery provisions of the FCPA. The Court’s stance, in this respect, reflected how it went about interpreting the original purpose of the FCPA’s enactment by Congress. As it was pointed out in the final ruling: “Congress was quite explicit about its reasons (to enact the FCPA), but none of these reasons have anything to do with foreign officials. Instead, the exclusive focus was on the U.S. companies and the effects of their conduct within and the United States” (“United States v. Blondek” par. 14).

Among the main legal arguments brought forward by the Court to justify its decision to acquit the defendants of any wrongdoing, concerning the conspiracy statute, was the fact that Congress intended for the FCPA to be used as a ‘thing in itself’. That is, without any attempts being made to indict the covered parties, because of their presumed willingness to undermine the legal power of the Act (Vanasco 170). Consequently, this suggests that while evoking the FCPA to address the act of bribery, the State may never cease paying close attention to what are the formal qualification-criteria, in this regard.

Because Castle and Lowry were Canadian nationals, it automatically exempted them from being considered the subjects of FCPA investigation: “Given that Congress included virtually every possible person connected to the payments except foreign officials, it is only logical to conclude that Congress affirmatively chose to exempt this small class of persons from prosecution” (“United States v. Blondek” par. 20). Therefore, trying to indict foreign nationals under the FCPA by accusing them of having attempted to conspire against the concerned legislation is inconsistent with the ‘letter’ of the law. Consequently, once the conspiracy charge no longer applies to the Canadian-based defenders, there can be very little rationale in persisting to press the same charge against Blondek and Tull, because the very notion of conspiracy presupposes the inter mutual nature of the activity in question.

To substantiate the discursive legitimacy of its decision to acquit the defenders, the Court referred to the outcome of the 1932 case Gebardi v. United States, as such that established a legal precedent for dealing with the situations that presuppose the possibility for the same law to be interpreted from several different perspectives. As this particular case indicates, it is legally inappropriate to go about enforcing a particular law by blaming those who refuse to obey it of having some secret agenda to undermine this law’s societal credibility. The reason for this is apparent – such a course of action derives out of the assumption that the ends justify the means, which in turn stands in a striking contradiction to the very idea that the law must be impartial (Smith 159).

Hence, the Court’s decision: “Defendants Castle and Lowry may not be prosecuted for conspiring to violate the Foreign Corrupt Practices Act, and the indictment against them is dismissed” (“United States v. Blondek” par. 28). Even though it did not take place during the same hearing, but the charges of conspiracy against Blondek and Tull were dropped, as well (Blondek par. 45).

The main consideration that prompted the Court to acquit the defenders is that the enforcement of those legislations that aim to prevent people from acting unethically (such as the FCPA) cannot be achieved by allowing them to be applied selectively, with very little consideration given to whether this practice is itself morally appropriate or not.

Therefore, it will only be logical to refer to the discussed Case as such that exemplifies the importance for plaintiffs and defendants to be fully aware of what accounts for the ‘letter’ and ‘spirit’ of the law, as the actual foundation upon which their line of legal argumentation should be built. Apparently, both of these notions are closely interrelated, which means that within the context of how one indulges in the legal reasoning, the former should not be prioritized (as the focus of one’s attention) above the latter and vice versa.

The Case’s other discursive implication is that one of the main preconditions for defendants/plaintiffs to be able to prevail during the court hearing is their understanding of what was the original purpose of enacting the law that they refer to while trying to substantiate the validity of their case-related claims. In light of what has been said earlier, the Court’s move to acquit the defendants appears fully justified. Thus, it indeed does make much sense referring to the discussed Case as highly educational. After all, in the aftermath of having been exposed to it, one will be able to gain a better understanding of how this country’s justice system operates.

Works Cited

Blondek, John. 2014. Web.

Leibold, Annalisa. “Extraterritorial Application of The FCPA Under International Law.” Willamette Law Review 51.2 (2015): 225-267. Print.

Marshall, Garen. “Increasing Accountability for Demand-Side Bribery in International Business Transactions.” New York University Journal of International Law and Politics 46.4 (2014): 1283-1318. Print.

Smith, Richard. “Combating FCPA Charges: Is Resistance Futile.” Virginia Journal of International Law 54.1 (2013): 157-172. Print.

, 741 F. Supp. 116 (N.D. Tex. 1990). Justia, 1990. Web.

Vanasco, Rocco. “The Foreign Corrupt Practices Act: An International Perspective.” Managerial Auditing Journal 14.4 (1999): 161-262. Print.

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