On August 14, 2020, the U.S. Department of Justice (“DOJ”) issued Opinion Procedure Release 20-01, its first FCPA Opinion since 2014. The DOJ opinion states that, based on the facts and representations provided by the requesting party, a payment to a foreign state-owned investment bank for legitimate services would not trigger an enforcement action.
The DOJ FCPA Opinion procedures allow companies to obtain an opinion from the Attorney General as to whether certain specified, prospective, and not hypothetical conduct conforms to DOJ’s present enforcement policy. Although FCPA Opinions do not expressly apply to parties that do not join the request for the opinion, they are broadly used to understand the Department’s present enforcement policies. This opinion was originally requested in November 2019, so the response did not come for nine months and after multiple requests for additional information.
According to this most recent Opinion, an unidentified multinational investment advisor headquartered in the U.S. which manages private funds serving institutional investors, acquired a portfolio of assets from a foreign investment bank’s foreign subsidiary (“Country A Office”). As part of that transaction, a separate foreign subsidiary of the investment bank (“Country B Office”) provided services to the U.S. investment advisor related to the transaction. Country B Office then requested a payment of $237,500 from the investment advisor for those services. A foreign government controls a majority of the foreign investment bank (and therefore both Country A Office and Country B Office).
The DOJ stated that it does not presently intend to take enforcement action for the payment to Country B Office based on two primary reasons. First, based on the information and representations provided by the investment advisor, there was no evidence of corrupt intent. Indeed, Country B Office’s Compliance Officer certified that the payment was commensurate with the services provided and is commercially reasonable.
Second, the DOJ opined that the payment would be made to a government instrumentality, not a foreign official. To this point as well, the Compliance Officer of Country B Office certified that the payment would be made to Country B Office’s corporate bank account, would not be used or forwarded to any other entity, and would not be diverted to any individual.
Conclusion and Takeaway
These points are good reminders that while the FCPA prohibits corrupt payments to foreign officials to assist in obtaining or retaining business, it is not a blanket prohibition of all payments to foreign governments or foreign government instrumentalities.
One takeaway from the August Opinion is the DOJ’s emphasis on the certification of the Compliance Officer of Country B Office. This demonstrates that the investment advisor who made the request was performing fulsome due diligence related to the payment request. This type of due diligence is critical for any company making payments to entities owned or controlled by foreign governments.
Heather Hatfield represents clients in corporate investigations, white-collar crime investigations and defense involving the Foreign Corrupt Practices Act (FCPA), complex contract disputes, oil and gas litigation ...
Blake Runions assists clients with broad range of business disputes and investigatory matters, including partnership disputes, internal investigations, and commercial litigation.
Prior to joining the Firm, Blake worked in the ...
Jamie Godsey represents public and private corporations, partnerships, and small companies on a broad range of complex business and commercial litigation. Her experience includes a wide variety of matters such as contractual ...
- Best Practices to Prevent Internal Fraud and Embezzlement
- Cybersecurity Best Practices: Disclosure Requirements for Risk Management, Strategy, and Governance
- Cybersecurity Risk Management Practices for Small and Midsize Businesses
- Overview of New Cybersecurity Disclosure Rules for Public Companies
- Increased Focus on Cybersecurity Warrants Review of Policies and Procedures
- DOJ Issues Expedited FCPA Opinion Procedure
- Companies Must Review Compliance Policies Following New Sanctions of Russian Financial Institutions and Individuals
- Anti-Corruption Enforcement: 2021 Year-In-Review
- Credit Suisse Settlement Carries Broader Lessons about Reputational Risk
- World’s Largest Advertising Group Settles with SEC for $19.2 Million After Ignoring Red Flags
- September 2022
- August 2022
- July 2022
- June 2022
- May 2022
- April 2022
- March 2022
- February 2022
- November 2021
- October 2021
- September 2021
- August 2021
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
- February 2021
- January 2021
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019