Corruption, Contracts, and Terrorism Financing: The D.C. Circuit Clarifies ATA Risk

Recent litigation in the D.C. Circuit highlights the growing legal risks facing companies operating in conflict-affected and high-corruption environments, particularly where commercial activity intersects with terrorist financing concerns. In Atchley v. AstraZeneca UK Ltd., the court revived claims under the Anti-Terrorism Act (“ATA”) alleging that pharmaceutical and medical equipment companies indirectly financed terrorist attacks in Iraq through corrupt contracting practices. The decision provides important guidance on how courts are applying post-Taamneh standards for secondary (aiding-and-abetting) liability and offers practical lessons for contractors and multinational firms operating abroad.

The Allegations and the Court’s Holding

The plaintiffs are U.S. service members and family members of victims injured or killed in attacks carried out by Jaysh al-Mahdi, a militia linked to Hezbollah that controlled Iraq’s Ministry of Health during the relevant period. They allege that several pharmaceutical companies paid illegal cash bribes and provided off-the-books medical goods to secure contracts with Iraq’s state-owned procurement entity. According to the complaint, those funds and goods were diverted by the militia and used to finance attacks against Americans.

The district court dismissed the case, but the D.C. Circuit initially reversed. After the Supreme Court vacated that decision and remanded for reconsideration in light of Twitter v. Taamneh, the D.C. Circuit again held that the plaintiffs had adequately stated claims for both secondary and primary liability under the ATA.

Applying Taamneh, the court emphasized two core requirements for aiding-and-abetting liability: conscious and culpable participation, and a nexus between the assistance and the terrorist acts that caused injury. The panel concluded that the plaintiffs plausibly alleged both. Unlike the passive provision of generally available services at issue in Taamneh, the defendants were alleged to have engaged in repeated, bespoke, and unlawful transactions, including substantial bribe payments and free goods, while knowing that the Ministry of Health was controlled by a terrorist organization. The court also found a sufficient nexus because the alleged assistance was localized, temporally limited, and directly tied to a defined set of attacks in Iraq.

Practical Takeaways for Contractors and Multinationals

• First, the decision underscores that corruption risks can quickly become terrorism financing risks. Bribes, commissions, and in-kind benefits paid to state-owned entities or officials in unstable regions may expose companies to liability far beyond traditional anti-corruption enforcement.
• Second, courts will look closely at whether conduct departs from ordinary commercial practices. Allegations of “business as usual” are unlikely to shield companies where transactions are structured in unusual or unlawful ways, particularly when those practices persist despite public reporting or internal warning signs.
• Third, knowledge can be inferred from context. On-the-ground presence, use of local agents, widespread media reporting, and internal compliance or security functions may all contribute to a finding that a company knew or should have known its conduct was supporting terrorist activity.
• Finally, the case highlights the importance of integrating threat finance considerations into compliance programs. For government contractors and global firms, effective due diligence, real-time risk monitoring, and empowered compliance personnel are essential not only to meet regulatory expectations, but to mitigate potentially catastrophic litigation and reputational exposure.

As threat finance enforcement and private litigation continue to converge, companies operating in high-risk environments should reassess how their contracting, compliance, and security functions address these evolving risks.