Author: Doug Cornelius

FCPA Opinion Procedure Release 01-03 came from company that, with the assistance of a foreign dealer, submitted a bid to a foreign government for the sale of equipment to the government. The dealer made comments that implied thast dealer would make payments to a government officials for the bid to be accepted.

After investigation by the company, they found no truth behind the comments.

FCPA Opinion Procedure Release 03-01 came from a U.S. company looking to purchase another company and its foreign subsidiaries. In the diligence process the requestor found FCPA violations and reported them to the DOJ and SEC. The requestor wanted to stop liability for the past FCPA violations of the target.

FCPA Opinion Procedure Release 04-01 came from a U.S. law firm proposing to sponsor, in conjunction with a ministry of the People’s Republic of China, a Comparative Law Seminar on Labor and Employment Law in the People’s Republic of China and the United States of America, to be held in Beijing, China. The stated purpose of the seminar is to educate legal and human resources professionals from the PRC and the United States about labor and employment laws and their practical applications in the PRC and the U.S. to facilitate understanding, compliance, and development of the laws of both jurisdictions.

The requestor would pay for the following costs of the seminar: conference rooms; interpreter services; receptions and meals during the seminar; transportation costs for Chinese government officials who do not live in Beijing to travel to the seminar; hotel accommodation for Chinese government officials participating in the seminar; and translation and printing of seminar materials.

The requestor has represented, among other things, that:

1. it has no business before the entities that may send officials to the seminar;
2. it is unaware of any pending or anticipated business between the clients who will be invited to the seminar and the Chinese officials who will attend;
3. it has obtained written assurance, a copy of which has been provided to the Department of Justice, from the Deputy Director of the Department of Legal Affairs for the Ministry that the requestor’s sponsorship of the seminar and its payment of the expenses described in the request violate no law of the PRC;
4. it is not selecting the particular officials who will be invited to the seminar; rather, the Ministry will select who will participate in the seminar;
5. it intends to pay all costs directly to the providers or reimburse costs incurred only upon presentation of a receipt;
6. it will not advance funds or pay reimbursements in cash;
7. it will not provide any free “gifts”; or “tokens”; to attendees or presenters, including Ministry personnel; and
8. other than the costs specified in the request, the requestor will not compensate the Ministry or any other Chinese government official for their participation in the seminar.

FCPA Opinion Procedure Release 04-02 came from an investor group of JPMorgan Partners Global Fund, Candover 2001 Fund, 3i Investments plc, who were acquiring certain companies and assets from ABB Ltd.  relating to ABB’s upstream oil, gas, and petrochemical businesses. On July 6, 2004, the DOJ announced guilty pleas to violations of the Foreign Corrupt Practices Act [“FCPA”] entered in the United States District Court for the Southern District of Texas by ABB Vetco Gray, Inc. and ABB Vetco Gray (UK) Ltd., two of the entities being acquired by the Requestors.

These guilty pleas came after the Requestor’s diligence on ABB and discovery of the FCPA issues.

This Release was to prevent future liability of the requestor for the prior violations of ABB.

FCPA Opinion Procedure Release 04-03 came from a U.S. law firm proposing to sponsor a trip to the United States by twelve officials of a ministry of the People’s Republic of China to provide the Ministry officials an opportunity to meet primarily with U.S. public-sector officials to discuss (1) U.S. regulation of employment issues, labor unions, and workforce safety; and (2) the institutions and procedures through which legal conflicts in the workplace are resolved.

The requestor intends to pay the travel, lodging, meals, and insurance for the twelve officials and one translator.

The requestor has represented, among other things, that:

1. it has no business before the entities that may send officials on the visit;
2. it has obtained written assurance, a copy of which has been provided to the Department of Justice, from the Deputy Director of the Department of Legal Affairs of the Ministry that the requestor’s sponsorship of the visit and its payment of the expenses described in the request violate no law of the PRC;
3. it is not selecting the particular officials who will be invited; rather, the Ministry will select who will participate in the visit;
4. it will host only officials working for the Ministry, related government agencies, and necessary interpreters;
5. it intends to pay all costs directly to the providers; no funds would be paid directly to the Ministry or other government officials;
6. it will not pay any expenses for spouses, family, or other guests of the officials; and
7. apart from meals and receptions connected to meetings or speakers or the events it is planning for the officials, it will not fund, organize, or host any entertainment or leisure activities for the officials, nor will it provide the officials with any stipend or spending money.

FCPA Opinion Procedure Release 04-04 was requested by a U.S. company proposing to fund a study tour of foreign officials who are members of a committee drafting a new law on mutual insurance, an industry in which the Requestor conducts business.

In its request, the Requestor made the following representations:

1. It has no business in the foreign country or with the foreign government, except for certain reinsurance contracts purchased in the global market and a Representative Office;
2. It is not aware of any pending or anticipated business in the foreign country or with the foreign government;
3. It is not selecting the particular officials who will travel, which decision is solely being made by the foreign government;
4. It intends to pay all costs directly to providers or to reimburse costs only upon presentation of a receipt;
5. It will not provide any gifts or tokens to the officials; and
6. Other than the expenses identified in the request, it will not compensate the foreign government or the government officials for their participation in the Study Tour.

FCPA Opinion Procedure Release 06-01 comes from a company wanting to contribute money to a regional customs department or the Ministry of Finance in an African country as part of a pilot project to improve local enforcement of anti-counterfeiting laws. The Requestor seeks to make the monetary contribution to the Counterparty in order for the agency to fund incentive awards to local customs officials to improve local enforcement relating to seizures of counterfeit products bearing the trademarks of the Requestor and its competitors.

The requestor planned to put these safeguards in place:

• First, the Requestor will make its contribution to the incentive compensation fund by electronic transfer to an official government bank account in the African country controlled by and in the name of the Counterparty, and will require written confirmation that the account is a valid government account, subject to periodic internal audit by the relevant government authorities.
• Second, the Requestor will be notified, upon a seizure of suspected counterfeit items by local customs officials, and will examine the suspect goods to confirm they are in fact counterfeit.  The Requestor further represents that payments to Award Candidates will not be distributed unless and until destruction of the counterfeit goods is confirmed by delivery of a destruction certificate to the Counterparty (a copy of which would be sent to the Requestor).
• Third, the Requestor will have no part in choosing the Award Candidates, and the Counterparty will have sole control over, and full responsibility for, the appropriate distribution of funds.  The Requestor, however, will require written evidence that its entire contribution was used only to pay identified Award Candidates and that the awards were based upon a predetermined award eligibility criteria and calculation method.
• Fourth, the Requestor will monitor the efficacy of the incentive program and discuss with the Counterparty during periodic reviews whether changes or refinements are necessary.  As part of its monitoring effort, the Requestor will monitor the number of notices received from local Customs officials relating to relevant seizures during each six-month period and follow the progression of such seizures.
• Fifth, the Requestor will require as part of its MOU with the Counterparty that the Counterparty will retain for five years the records of the distribution and receipt of funds, and shall permit inspection of such records by the Requestor upon request during the life of the pilot project and for three years thereafter.

FCPA Opinion Procedure Release 06-02 comes from a company looking to hire a law firm to help prepare foreign exchange applications and represent the company during the review process. The company plans to take steps to ensure that the law firm does not make any improper payments and to implement a variety of anti-corruption measures.

FCPA Opinion Procedure Release 07-01 comes from US company looking to bring delegates from an Asian country to the U.S. an educational and promotional tour of one of the requestor’s U.S. operations sites.

The stated purpose of the visit is to familiarize the delegates with the nature and extent of the requestor’s operations and capabilities and to help establish the requestor’s business credibility. The requestor is interested in participating in future operations in the foreign country similar to those it conducts in the U.S. The visit will last for four days and will be limited to domestic economy class travel to one U.S. operations site only. The requestor also intends to pay for the domestic lodging, local transport, and meals for the six officials. The foreign government plans to pay the costs of the international airfare.

The requestor represented that:

• it does not currently conduct operations in the foreign country or with the foreign government, although it is interested in pursuing such opportunities in the future;
• it has obtained written assurance, a copy of which has been provided to the Department of Justice, from an established law firm with offices in both the U.S. and the foreign country that the requestor’s sponsorship of the visit and its payment of the expenses described in the request is not contrary to the law of the foreign country;
• it did not select the delegates who will participate in the visit; rather, the foreign government selected the delegates;
• to the requestor’s knowledge, the delegates have no direct authority over decisions relating to potential contracts or licenses necessary for operating in the foreign country;
• it will host only officials working for the relevant foreign ministries and one private government consultant;
• it intends to pay all costs directly to the providers; no funds will be paid directly to the foreign government or the delegates;
• it will not pay any expenses for spouses, family, or other guests of the officials;
• any souvenirs that the requestor may provide to the delegates would reflect the requestor’s name and/or logo and would be of nominal value;
• apart from meals and receptions connected to meetings, speakers, or events the requestor is planning for the officials, it will not fund, organize, or host any entertainment or leisure activities for the officials, nor will it provide the officials with any stipend or spending money; and
• all costs and expenses incurred by the requestor in connection with the visit will be properly and accurately recorded in the requestor’s books and records.

The DOJ found that the expenses are reasonable under the circumstances and directly relate to “the promotion, demonstration, or explanation of [the requestor’s] products or services.” 15 U.S.C. §§ 78dd-1(c)(2)(A) and 78dd-2(c)(2)(A)

FCPA Opinion Procedure Release 07-02 comes from a U.S. insurance company regarding the payment of expenses for foreign government officials coming to the U.S. for an educational program. The DOJ found the promotional expenses to fall within the promotional expenses affirmative defense of being reasonable under the circumstances and relate to the promotion, demonstration or explanation of the the product or service (15 U.S.C. § 78dd-2(c)(2)(A)).

The Requestor represented:

• The Requestor will not pay any expenses related to the foreign officials’ travel to or from the United States, or their participation in the NAIC internship program.
• The Requestor has no non-routine business under consideration by the relevant foreign government agency.
• The Requestor’s routine business before the relevant foreign government agency consists primarily of reporting of operational statistics, reviewing the qualifications of additional agents, and onsite inspections of operations. Such routine business is guided by administrative rules with identified standards.
• The Requestor’s only work with other entities within the foreign government consists of collaboration on insurance-related research, studies, and training.
• The Requestor will not select the particular officials who will travel. That decision will be made solely by the foreign government.
• The Requestor will host only the designated officials, and not their spouses or family members.
• The Requestor intends to pay all costs directly to the providers; in the event that an expense requires reimbursement, the Requestor will only do so, up to a modest daily minimum, upon presentation of a written receipt.
• Any souvenirs that the Requestor gives the visiting officials would reflect Requestor’s business and/or logo and would be of nominal value, e.g., shirts or tote bags.
• Apart from the expenses identified above, the Requestor will not compensate the foreign government or the officials for their visit, nor will it 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.
• The training visit will be for a six-day period (five days of training plus travel time), and costs and expenses will be only those necessary and reasonable to educate the visiting officials about the operation of a U.S. company in the Requestor’s industry.