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Latest FCPA Opinion Procedure Release Reflects High Level Of Anxiety

During last month’s House hearing on the FCPA (see here for the prior post) Representative James Sensenbrenner told Greg Andres (DOJ) that if Andres were the general counsel of a company advising the CEO and everyone else, he would likely be advising the company in the “most narrow way” and “exercising the greatest amount of caution.”

Indeed, the current era of FCPA enforcement has led to a high level of anxiety and skittishness over things that should not, with the end result being overcompliance and inefficient use of resources.

Case in point, the latest FCPA Opinion Procedure Release.

Despite a statutory affirmative defense concerning reasonable and bona fide expenses concerning promotion, demonstration or explanation of products or services, and despite several past “on-point” Opinion Procedure Releases that a first-year associate would be capable of analyzing, the Requestor in Release 11-01 was 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

On June 30th, the DOJ released (here) its first FCPA Opinion Procedure Release of the year – a release dealing with reasonable and bona fide travel expenses in connection with the promotion, demonstration or explanation of products or services – an affirmative defense under the FCPA’s anti-bribery provisions.

The Requestor was a “U.S. adoption service provider” that “proposes to pay certain expenses for a trip to the United States by one official from each of two foreign government agencies to learn more about the services provided by the Requestor.”

According to the Release, “the two officials will be selected by their agencies, without the involvement of the Requestor” and the Requestor “has no non-routine business pending before the foreign government agencies that employ these officials.”

The Requestor “intends to pay for economy class air fare, domestic lodging, local transport, and meals” and it represented, among other things, that:

it “will host only the designated officials, and not their spouses or family members;”

it “intends to pay all cost directly to the providers [and] no cash will be provided directly to the officials;

any souvenirs to the officials “would reflect Requestor’s business and/or logo and would be of nominal value;” and

it will not “fund, organize, or host any other entertainment, side trips, or leisure activities for the officials, or provide the officials with any stipend or spending money.”

Based on the Requestor’s representations and the above facts and circumstances, the DOJ stated that “the expenses contemplated are reasonable under the circumstances and directly relate to ‘the promotion, demonstration, or explanation of [the Requestor’s] products or services” and therefore the DOJ “does not presently intend to take any enforcement action with respect to the planned program and proposed payments described in the request.”

For additional commentary on the Release 11-01, see here from Thomas Fox (“the question posed to the Department of Justice (DOJ) is so straight-forward, and has been previously asked and answered, that it is difficult to understand how any first year compliance practitioner did not know the answer to it”); here from Howard Sklar (“this is, simply put, not a situation that should have gone to the DOJ”); and here from the FCPA Blog (“in its first FCPA Opinion Procedure Release of 2011, the DOJ confirmed what should be obvious — that the promotional expenses affirmative defense can be used to pay travel expenses of government officials who are being shown a company’s products”).

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