Mark A. Srere and Amy J. Conway-Hatcher of Morgan, Lewis & Bockius LLP wrote Legal Expenses for The Recorder (CAL LAW). The article compares the results of U.S. Department of Justice and SEC investigation against Lucent with FCPA Opinion Procedure Release 08-03.
Lucent spent millions of dollars on hundreds of trips for Chinese government officials over a three year period. The trips were primarily sightseeing and leisure activities, including Disneyland, Niagra Falls and the Grand Canyon. Lucent also labeled the attendees as “decision-makers” who could help award new business to the company. See The FCPA Blog’s post on Lucent.
TRACE International under FCPA Opinion Procedure Release 08-03 was merely paying out of pocket costs for journalists to cover the company’s news stories. Local journalists got lunch money and local transportation costs. Out-of-town journalists got some extra travel expenses and more meals.
TRACE tied the payments to expenses directly related to the “promotion, demonstration or explanation of the company’s products or services” and were reasonable in amount. Lucent failed both of these tests under 15 U.S.C. § 78dd-2(c)(2)(A).