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Latest FCPA Opinion Procedure Release Reflects A High Level Of Anxiety

The current era of Foreign Corrupt Practices Act enforcement has led to a high level of anxiety and skittishness over things that should not.  The end result is overcompliance and inefficient use of resources.

Case in point is the latest FCPA Opinion Procedure Release (12-02 – see here).

Despite a directly on point FCPA opinion procedure release from 2011 involving the exact same situation, despite several other directly on-point opinion procedure releases, and despite a statutory affirmative defense concerning reasonable and bona fide expenses concerning promotion, demonstration or explanation of products or services – all of which a first-year associate would be capable of analyzing, the Requestors in Release 12-02 were still apparently skittish enough to go through the time (and no doubt expense) of obtaining a DOJ seal of approval as to conduct that would not raise an eyebrow if directed to a non-foreign official.

In Release 12-02 (dated October 18th), the DOJ received a request “from 19 non-profit adoption agencies headquartered in the U.S.” seeking an opinion “related to their proposal to host 18 government officials from a foreign country during visits to the United States.”  The purpose of the trip “is to allow government officials from the Foreign Country to learn more about the Requestors’ work, which includes processing adoptions in the Foreign Country” and during the trip the officials “will interview the Requestors’ staff members, inspect the Requestors’ files, and meet with families who adopted children from the Foreign Country.”

The release involves the exact same situation at issue in Release 11-01 (here) in which other non-profit adoption agencies sought a DOJ opinion concerning travel by foreign officials.  As noted in this prior post, the DOJ stated its intention that the contemplated conduct did not raise any FCPA issues.

Release 12-02 notes as follows concerning the 18 officials the Requestor is seeking to host.

” 13 are from the government ministry in the Foreign Country that oversees adoptions (the “Adoption Ministry”), and one is the presiding judge of the court in the Foreign Country that ultimately approves or disapproves adoption requests (the “Adoption Court”). The Adoption Ministry exercises discretion in determining whether to issue an opinion approving of an adoption, and the Adoption Court exercises similar discretion in ultimately approving or rejecting adoptions. The remaining officials are the director of the Foreign Country’s agency that oversees orphanages, a minister in the Office of the Foreign Country’s head of government, and two members of the Foreign Country’s legislature. The head of government and legislature play no direct role in the adoption process but can affect the process by appointing and confirming the Minister in charge of the Adoption Ministry and passing adoption-related legislation.”

The Release further states as follows.

“The trip will consist of approximately two days of meetings for each set of government officials (plus travel). Two of the officials will attend two trips, meaning that they will spend approximately four days in the United States (plus travel). The Requestors will pay for the following:

  • Business class airfare on international portions of flights for ministers, members of the legislature, and the director of the Orphanage Agency; coach airfare for  international portions of flights for all other government officials; and coach airfare for domestic portions of flights for all government officials;
  • Two or three nights hotel stay at a business-class hotel;

  • Meals during the officials’ stays; and

  • Transportation between agencies and local transportation.

The amount that the Requestors spend on hotels and meals will not exceed General Services Administration (“GSA”) rates.  The Requestors will pay for business class airfare for high-ranking officials which, as proposed, is permitted by the Foreign Country’s government. The Requestors will pay all expenses directly to the providers and will not give any money, including per diems, directly to the government officials. If some of the trips require staying over a weekend, the Requestors will pay for hotels and meals during those periods, subject to the same limitations above. The Requestors will share the costs of the trips.

The Requestors have also represented, among other things, that:

  • The Requestors plan to organize entertainment events that will be of nominal cost and will involve families who have adopted children from the Foreign Country.  The Requestors are not planning to fund, organize, or host any other entertainment, side trips, or leisure activities for the officials.
  • The Requestors will not have a role in selecting the particular government officials who will travel.  That decision will be made solely by the Foreign Country’s government.
  • The Requestors will host only the designated government officials and not their spouses or family members.

  • Any souvenirs that a Requestor gives the visiting officials will reflect a Requestors’ business or logo and will be of nominal value.

  • Apart from the expenses identified above, the Requestors will not compensate the officials for their visit and will not provide the officials with any stipend or spending money.

  • Costs and expenses will be only those necessary and reasonable to educate the visiting officials about the operations and services of U.S. adoption service providers.

  • The Requestors will not pay any additional money to the Foreign Country’s government or any other entity in connection with this trip.

Under the analysis section of the Release, the DOJ stated as follows.

“Based on their representations and proposed safeguards, the payments that the Requestors propose to make here fall within the same affirmative defense. First, the expenses described above are reasonable under the circumstances. This includes the provision of business class airfare for high-ranking officials, which, as proposed, is permitted by the Foreign Country. Second, the expenses are directly related to the promotion, demonstration, and explanation of the Requestors’ services. The Requestors represent that the purpose of the trip is to demonstrate the Requestors’ work to the government officials by allowing the government officials to interview the Requestors’ staff members, to inspect the Requestors’ files, and to meet with families who have adopted children from the Foreign Country. The proposed itineraries are consistent with this purpose.

Based upon all of the facts and circumstances, as represented by the Requestors, including additional information received from the Requestors and consistent with the prior opinions discussed above, the proposed expenses reflect no corrupt intent and appear to be bona fide promotional expenses.  The expenses contemplated are reasonable under the circumstances and directly relate to “the promotion, demonstration, or explanation of the Requestors’ products or services.”

Accordingly, with respect to the trips that the Requestors propose paying for, based on the representations made in the Request, including those recited above, as well as the Department’s review of supplemental materials submitted by the Requestors, the Department does not presently intend to take enforcement action.”

Like Release 11-01, Release 12-02 speaks volumes as to the high level of anxiety and skittishness in this current era of FCPA enforcement over things that should not.

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