DOJ Issues First FCPA Advisory Opinion in Six Years
On August 14, 2020, the U.S. Department of Justice (DOJ) issued a Foreign Corrupt Practices Act (FCPA) Opinion Procedure Release, which concluded that fees paid to a foreign government-linked investment bank’s affiliate would not trigger an FCPA enforcement action. This is DOJ’s first FCPA advisory opinion since November 2014, and it comes on the heels of the second edition of the FCPA Resource Guide that was jointly published by DOJ and the U.S. Securities and Exchange Commission (SEC). AGG previously discussed the revised Guide here.
DOJ’s FCPA Opinion Procedure1 provides issuers and domestic concerns with the opportunity to request an opinion from the Attorney General as to whether “specified, prospective – not hypothetical – conduct” complies with current enforcement policy under the anti-bribery provisions of the FCPA. The DOJ will not consider a request unless the portion of the transaction for which the opinion is sought involves only prospective conduct, although an executed contract is not a prerequisite. The request must be accompanied by all material information, including copies of operative documents and detailed statements of collateral understandings. The Procedure expressly provides that DOJ may conduct whatever independent investigation it believes appropriate. An advisory opinion is not binding on any party except the Requestor, and only to the extent that it disclosed accurate and complete facts.
Congress’ goal in directing DOJ to provide advisory opinions is to help small and medium-sized businesses comply with the FCPA. DOJ has issued only 62 opinions since the inception of the program. It released its first opinion in 1980, and it has been six years since it issued its last one. Although the opinion procedure can offer helpful guidance in some circumstances, its relative lack of use can be attributed to the limited circumstances under which DOJ will offer an opinion, the often significant time-lag between requesting and obtaining an opinion, and the availability of private-sector experts who rely on resources such as the FCPA Resource Guide to more expeditiously advise their clients about the legality of contemplated business deals and transactions.
In the August 14 advisory opinion,2 DOJ considered the request of a US-based investment advisor for guidance regarding an intended 0.5% commission payment (equaling approximately $237,500) to a subsidiary of a foreign investment bank in which a foreign government held a majority ownership stake. The commission fee was meant to compensate the bank itself for services rendered in assisting the requestor with acquiring a portfolio of assets from another arm of the investment bank. There was no signed agreement with the bank for the services provided.
DOJ advised that it would not bring an enforcement action in the case. It confirmed that payments to a foreign government “instrumentality” – not a “foreign official” – do not violate the FCPA anti-bribery provisions when there is no intent to influence a foreign official (i.e., an individual). The opinion notes that the investment advisor “sought and received specific, legitimate services” from the foreign bank, whose Chief Compliance Officer certified that the intended payment is “commensurate with the services” and “is commercially reasonable.” Accordingly, because there had been no “corrupt offers, promises or payments of anything of value, directly or indirectly, to any individual in connection with this transaction,” DOJ found that there were “no indicia” that the contemplated payment was intended to corruptly influence a foreign official in violation of the FCPA.
The reasoning of the opinion tracks the test for “instrumentality” under the FCPA as set out by the Eleventh Circuit’s decision in United States v. Esquenazi. As such, the opinion is consistent with prior DOJ guidance, including the second edition of the Resource Guide. While the opinion may not itself be particularly noteworthy, it serves as a reminder about the necessity of conducting effective due diligence in transactions involving foreign-government affiliates, as well as the availability of a pre-clearance procedure that can help companies avoid potential issues with US regulators.
 Available at https://www.justice.gov/sites/default/files/criminal-fraud/legacy/2012/11/14/frgncrpt.pdf
 Available at https://www.justice.gov/criminal-fraud/file/1304941/download