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It’s Been A While … DOJ Issues FCPA Opinion Procedure Release

Thousands of companies face FCPA risks every single day. Many of these companies have legitimate questions as to how its operations in foreign countries could implicate the FCPA. If only there was a procedure in place for companies subject to the FCPA to receive guidance from the DOJ as to its enforcement stance as to particular conduct!

Well … actually there is, but if you haven’t heard about it, don’t feel bad, because the Opinion Procedure Release provisions of the FCPA (15 USC 78dd-1(e)) are often overlooked.

After a year hiatus, (the last opinion was released on July 11, 2008), DOJ has penned Opinion Procedure Release 09-01 (see here [1]).

Given the extent to which the health-care sector has come under FCPA scrutiny, it is not a surprise that the “Requestor” is a “domestic concern” “which designs and manufacturers a specific type of medical device.”

Big picture … the Requestor wants to provide a product sample to a foreign government so that government medical centers can evaluate the product to see if it would be eligible for the government subsidized medical device program. Requestor no doubt was nervous about this given that its competitors were already doing business with the foreign government (whereas Requestor was not) and given that the 100 product samples cost $19,000 each – amounting to a $1.9 million donation.

Based on a number of representations from Requestor, including that none of the product samples would go to government officials, the DOJ stated that it did not intend to take any enforcement action with respect to the proposed conduct because “the proposed provision of 100 medical devices and related items and services fall outside the scope of the FCPA in that the donated products will be provided to the foreign government, as opposed to individual government officials, for ultimate use by patient recipients selected in accordance with specific guidelines …”

Requestor, it would seem, got the certainty it was looking for and can proceed with the arrangement free of FCPA worries.

All of which begs the question … why isn’t the FCPA Opinion Procedure process used more frequently? Common answers often include (i) the opinion expresses only the DOJ’s opinion, but not the SEC’s (obviously relevant to issuers); (ii) the procedure takes too long and the proposed business conduct is time sensitive (note that in 09-01 the Requestor made two supplemental disclosures); and (iii) the Requestor may receive an answer it doesn’t like and thus needlessly raises its FCPA profile.

To read more about the detailed requirements of the FCPA Opinion Procedure process (see here [2]).