Just Don’t Call It Bribery
Some Foreign Corrupt Practices Act enforcement actions have focused on “foreign officials” receiving tickets to major sporting events such as the Olympics or World Cup.
In the BHP Billiton enforcement action, the U.S. government stated: “BHP Billiton footed the bill for foreign government officials to attend the Olympics while they were in a position to help the company with its business or regulatory endeavors.”
In the Telefônica Brasil enforcement action, the U.S. government stated: “Telefônica Brasil offered and provided tickets [to the World Cup and Confederations Cup] and hospitality to government officials who were directly involved with, or in a position to influence, legislative actions, regulatory approvals, and business dealings involving the company.”
Put on your FCPA goggles for a second and consider this scenario.
Where Is The Due Diligence?
Most Foreign Corrupt Practices Act enforcement actions include, in whole or in part, allegations about various third parties and how they are used to facilitate things of value being provided to foreign officials.
The FCPA’s third-party payment provisions can result in a company being liable for the acts of third parties even in the absence of actual knowledge of the third party’s activities by including concepts such as willful blindness, conscious disregard etc.
Because of this, due diligence of third parties is an important component of FCPA compliance.
The term appears approximately 80 times in the DOJ/SEC issued FCPA Guidance including the following: “Risk-based due diligence is particularly important with third parties and will also be considered by DOJ and SEC in assessing the effectiveness of a company’s compliance program.”
Thinking Of The FCPA And FEPA In Reverse
A public official corruptly demanded, sought, received, and accepted something of value from a company in return for being influenced in the performance of an official act – specifically agreeing to help influence the award of a contract to a company who provided the official with the thing of value.
Sounds like a relatively straight-forward Foreign Corrupt Practices Act enforcement action and a fact scenario ripe for enforcement under the recently enacted Foreign Extortion Prevention Act (FEPA).
However, the above fact scenario does not involve a foreign official who demanded and received payments from a U.S. company, but rather a U.S. official who demanded and received payments from a South Korean company. (See here for the recent DOJ release).
About Those Provisions Mentioned In The Recent Opinion Procedure Release
The recent DOJ FCPA Opinion Procedure Release (see here for the prior post) involved a U.S. based company (a provider of training events and logistical support) which held a contract with a U.S. government agency to establish training events in which the company provides logistical support for foreign government personnel.
As stated in the release: “this logistical support, in turn, includes providing stipend payments to foreign officials who attend these training events. The stipends are intended to pay for meals that are not required to be served during the event, along with driving mileage costs for certain event participants.” In connection with these events, the company proposed to pay certain stipend amounts to a U.S. Government Officer, which the U.S. Officer will subsequently deliver to foreign officials.”
According to the release, the U.S. Government advised the company that “the stipends are authorized by a particular United States law: the Foreign Assistance Act of 1961 – specifically Sections 129 and 636.”
Curious as to these provisions?
I was too and here is what they say in pertinent part:
Just Don’t Call It Bribery
Here in Packerland, there is much angst over the apparent reluctance of Aaron Rodgers to return to the Green Bay Packers as quarterback.
This is no small matter as Rodgers is the reigning NFL MVP and … well … this is Packerland.
Some Packer fans are not sitting on the sidelines as passive observers. For instance, Mr. Brews Taphouse is offering Rodgers (along with his fiance) free burgers and beer for life if he agrees to finish his career with the Packers.