This prior post highlighted the DOJ’s recent FCPA Opinion Procedure Release (only the third FCPA opinion procedure release since 2014).
In the release, sought by a “child welfare agency based in the United States,” the DOJ stated that it did not intend to take any enforcement action based on information provided by the Requestor regarding certain expenses for two government officials from a foreign country traveling to the U.S. to visit with families that have adopted children from the Foreign Country.
While the overall conclusion of the release was hardly surprising, there was a surprising snippet from the release that could have been handled better by the DOJ.
In pertinent part, the overall conclusion of the DOJ was that the proposed expenses such as “economy class airfare, domestic lodging at a mid-range hotel, local transportation, and meals (some of which will be in conjunction with family visits and meetings)” “appear to be reasonable and bona fide expenses directly related to “the promotion, demonstration, or explanation of [the Requestor’s] products or services.”
However, the surprising part was that the “Requestor also proposes to organize and pay for the cost of certain recreation, such as a visit to a museum or city tour, with cost not exceeding $100 per person and paid directly to the provider.”
Paying for certain recreation of foreign officials is seemingly not “directly related” to the underlying, legitimate nature of the foreign official’s visit to the U.S.
In fact, several FCPA enforcement actions have included allegations or findings about a company paying for recreation by foreign officials.
For instance, the Airbus enforcement action included allegations that alleged foreign officials – who were in Hawaii for an underlying business purpose – were treated to “golf, scuba diving, snorkeling cruises, horseback riding, ocean kayaking, surfing lessons, and cocktail and luau dinner receptions.”
As highlighted here, the Telefonica Brasil was based entirely on alleged foreign officials attending soccer tournaments.
The United Technologies enforcement action included allegations that the company hosted a golf event attended by alleged foreign officials.
The regulations governing the DOJ’s FCPA Opinion Procedure Program state that upon receiving a request the DOJ shall “respond to the request by issuing an opinion that states whether the prospective conduct, would, for purposes of the DOJ’s present enforcement policy, violate” the FCPA’s anti-bribery provisions. The regulations further state that the DOJ “may also take such other positions or action as it considers appropriate.”
In other words, as to the recent request by the child welfare agency, the DOJ could have still responded with a no enforcement position while at the same time carving out the recreational expenses for the foreign officials. This was a lost opportunity for the DOJ and sends an inconsistent message to the compliance community.
But then again, one way to view certain issues in certain FCPA Opinion Procedure releases is – if you ask the DOJ it will be OK, but if you do it without asking the DOJ, it may not be OK.
It is sort of like parenting. If a teenager asks the parent to use the car, no big deal. But if the teenager uses the same car to go to the same destination without asking the parent – watch out!
