- FCPA Professor - https://fcpaprofessor.com -

Friday Roundup

Scrutiny alerts and updates and that is why Congress included a facilitation payment exception in the Foreign Corrupt Practices Act.

It’s all here in the Friday Roundup.

Scrutiny Alerts and Updates

Raytheon

The Wall Street Journal reports [1]:

“U.S. authorities are investigating whether payments by Raytheon Technologies Corp. to a consultant for the Qatar Armed Forces may have been bribes intended for a member of the country’s ruling royal family, according to people familiar with the matter.

A lawsuit in California, dismissed last year on jurisdictional grounds, included allegations that Raytheon had funneled around 7 million Qatari riyal, the equivalent of $1.9 million, in payoffs through Digital Soula Systems, a Doha, Qatar-based defense and security-consulting firm that was part-owned by a brother of the country’s emir.

The lawsuit, filed in 2019 by a former Digital Soula Systems director who claimed the QAF had failed to pay for work the consulting firm did on a defense-procurement contract, led to inquiries by the U.S. Securities and Exchange Commission and the U.S. Justice Department, the people familiar with the matter said.

The SEC began making inquiries into the lawsuit’s bribery allegations in the months after it was filed, according to one of the people familiar with the matter. The DOJ soon followed suit, the person added.

[…]

Raytheon publicly disclosed parallel FCPA probes in securities filings last year [see here [2] for the prior post], saying only that authorities were conducting investigations into whether there were improper payments made by Raytheon or its joint venture with France’s Thales SA in the Middle East since 2014. The company hasn’t provided any further details about the probes.”

[3]

O2

Bloomberg reports [4]:

“Phone company O2 is under investigation by the U.K.’s Serious Fraud Office for potentially breaking anti-bribery laws.

O2, which recently merged with Virgin Media, has stated in its annual reports since 2017 that it has been working to address requests from U.K. authorities for disclosures concerning the possible violations.

The probe concerns relationships with certain customers, according to a person familiar with the investigation.

In its most recent regulatory filing [5] in late August, O2 said the investigation is still ongoing and the company had made a “reasonable estimate” of the outcome that’s reflected in its financial statements on June 30.”

That is Why Congress Included a Facilitation Payment Exception in the FCPA

This article [6] about the FCPA risks of doing business in Nigeria states:

“The lapses in governance and administration in Nigeria has created opportunities for systematic corruption and shapes the way business is done. It is now common place for businesses to be asked to pay bribes to obtain a government service.

[…]

It is difficult doing business in Nigeria with its high corruption risk. The challenge is heightened further due to certain salient peculiarities. Though the country is a good investment hub with potentials across various sectors, there are a number of challenges that invite an FCPA violation. There is poor power supply, and you may find yourself in a situation where you need to pay a bribe to keep the lights on. In some regions there is inadequate security, and you may have to hire your own. There are also administrative delays in obtaining relevant permits and licenses, low prosecution of high profile public officials that breach anti-corruption laws and the unavoidable fact that companies frequently interact with government officials.”

What is interesting is that –  because of many of the above mentioned issues – is why Congress chose to include a facilitation payment exception in the FCPA’s anti-bribery provisions.

The FCPA’s legislative history teaches that in passing the FCPA Congress intended to capture only a narrow category of payments and chose not to capture so-called facilitating payments given the difficult and complex business conditions encountered in many foreign countries. Congressional leaders spearheading enactment of the FCPA were clear as to the scope of the law they envisioned. For instance, Senator Church stated:

“Let us be clear that we are not just talking about a little ‘baksheesh’ to grease the palm of some petty clerk in order to speed needed documents on their way through the bureaucratic labyrinth.

A Senate Report stated:

“In drafting the bill . . . the Committee deliberately cast the language narrowly, in order to differentiate between such payments [to a foreign official corruptly intended to induce the recipient to use his influence to secure business, influence legislation or regulations] and low-level facilitating payments sometimes called ‘grease payments.’ Thus, [the bill] would not reach a small gratuity paid to expedite shipment through Customs or the placement of a trans-Atlantic telephone call, to secure required permits, or to ensure that a corporation’s warehouses were not put to the torch. In other words, payments made to expedite the proper performance of duties may be reprehensible, but it does not appear feasible for the United States to attempt unilaterally to eradicate all such payments.

The FCPA facilitation payment exemption states that the anti-bribery provisions “shall not apply to any facilitating or expediting payment to a foreign official … the purpose of which is to expedite or to secure the performance of a routine governmental action by a foreign official …”.

The FCPA defines “routine governmental action” as follows:

“The term “routine governmental action” means only an action which is ordinarily and commonly performed by a foreign official in:

(i) obtaining permits, licenses, or other official documents to qualify a person to do business in a foreign country; (ii) processing governmental papers, such as visas and work orders; (iii) providing police protection, mail pick-up and delivery, or scheduling inspections associated with contract performance or inspections related to transit of goods across country; (iv) providing phone service, power and water supply, loading and unloading cargo, or protecting perishable products or commodities from deterioration; or (v) actions of a similar nature.

The term “routine governmental action” does not include any decision by a foreign official whether, or on what terms, to award new business to or to continue business with a particular party, or any action taken by a foreign official involved in the decision-making process to encourage a decision to award new business to or continue business with a particular party.”

Save Money With FCPA Connect

Keep it simple. Not all FCPA issues warrant a team of lawyers or other professional advisers. Achieve client and business objectives in a more efficient manner through FCPA Connect. Candid, Comprehensive, and Cost-Effective.

Connect [7]