AUGUST 22, 2011, 3:14 PM ET

http://blogs.wsj.com/corruption-currents/2011/08/22/ex-thai-official-tests-reach-of-money-laundering-law-in-foreign-corruption-case/

The Foreign Corrupt Practices Act applies only to companies and individuals that pay bribes. If the Justice Department wants to make a case against foreign officials who demand bribes, prosecutors have to be creative.

In recent years, the department charged two former officials of Honduras’s Empresa Hondureña de Telecomunicaciones, the state-owned telecommunications company, as well as a former Thai tourism official and her daughter with money laundering offenses in connection with FCPA cases.

In the latter case Juthamas Siriwan, the former governor of the Tourism Authority of Thailand, and her daughter Jittsopa Siriwan, are putting the government’s theory to the test. Their lawyers at Kelley Drye & Warren LLP moved to dismiss the charges late last week, mounting what they described as the “first judicial challenge to a novel prosecutorial approach the government recently developed to charge foreign officials allegedly involved in corruption.”

Here’s the background: Prosecutors say that from 2002 to 2007, the elder Siriwan took $1.8 million in bribes from husband-and-wife film producers Gerald and Patricia Green. The Greens were convicted of violating the FCPA in 2009 and the Siriwans were indicted on charges of money laundering and money-laundering conspiracy.

The Siriwans say the Justice Department’s solution for overcoming the FCPA’s limitations—namely, that it doesn’t target corrupt foreign officials—amounts to smoke and mirrors.

The department has recast the transfer of bribes as money-laundering transactions, the lawyers wrote. The charges make each wire transfer “pull double duty” as an alleged bribe and a transaction “designed ‘to promote the carrying on of’ the very same bribe,” they added, quoting the statute.

“No court has allowed the making of a payment that is an essential element of the predicate unlawful activity—such as a bribe in bribery case—constitute ‘promotion’ of that same activity,” the brief said.

The Justice Department has yet to respond to the Siriwans’ motion to dismiss. U.S. District Judge George Wu scheduled a hearing on the issue for Oct. 20.