One common Foreign Corrupt Practices Act hypothetical that has been repeated often over the last couple of months sort of goes like this. The current COVID-19 crisis presents increased FCPA risks because, among other things, businesses are scrambling to secure personal protective equipment (PPE) for their workers and some of this PPE may be located in foreign countries and/or manufactured by foreign governments or state-owned or state controlled enterprises. (See here, here, here, and here for examples).
I’ve never really understood this hypothetical. Among other things, in the FCPA’s 40+ year history I am not aware of any enforcement action in which the alleged improper conduct occurred in connection with the purchase of a good or service rather than in connection with selling or facilitating the sale of a good or service.
Moreover, as highlighted in this prior post, the FCPA has, among other elements, a corrupt intent element.
As highlighted below, during a webinar yesterday Daniel Kahn (Senior Deputy Chief, U.S. Department of Justice Criminal Division – Fraud Section) addressed a version of this hypothetical.
In pertinent part, Kahn was asked:
“You get a word on your hotline that your country manager in Mexico made a facilitating payment to get personal protective equipment across the border so they can keep food production going … FCPA problem?”
“It’s a very good question. … There is obviously not going to be a general defense for coronavirus … that said obviously we’re going to be looking at two things, one we will obviously be looking at the statute itself and looking to make sure that a payment would fall under the FCPA – would qualify as an FCPA violation. If you are making a payment because you are tying to protect your workers – that doesn’t seem to me to qualify as corrupt intent – again that strikes me more as an example of a duress type of payment where you are trying to prevent harm coming to your employees.
The other thing we are going to look at is obviously our discretion. … If we are talking about a payment that needed to be made in order to get protective equipment to workers, whether it is healthcare workers, whether workers in a meat processing plant or otherwise we’re obviously going to be looking at the purpose of the payment and trying to figure out whether it is worth our resources to be investigating and prosecuting that type of case.”